NEW YORK, Aug. 8, 2017 /PRNewswire/ -- 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 and six months ended
June 30, 2017.
Highlights from the second quarter of 2017 and recent weeks
include:
- Revenue for the second quarter of 2017 increased 20% to
$0.6 million from $0.5 million in the prior-year
quarter;
- Revenue for the first six months of 2017 increased 44% to
$1.3 million from $0.9 million in the prior-year period;
- Inclusion of CHEMOSAT in Dutch Health Authorities Guidelines
(published in July 2017) as a
recommended treatment for ocular melanoma liver metastases;
- Reduction of an additional $9.5
million in principal amount related to the Company's
Convertible Notes, with $12.6 million
in debt remaining; and
- Raised $2.0 million through the
issuance of Series B preferred shares to current noteholders, which
are convertible into common shares at $0.153 per share.
Proposal on Effecting a Reverse Stock Split
Delcath recently filed a Definitive Schedule 14A detailing a
proposed reverse stock split, subject to shareholder approval.
Delcath needs the ability to issue common shares to fund
operations, support clinical programs, service the amortization of
its Convertible Note and explore alternative equity financing
opportunities. However, the Company is currently at the maximum
amount of authorized shares of common stock under its Certificate
of Incorporation. Without a significant increase in available
authorized shares, the Company is unable to access the $11.8 million of cash in the restricted accounts
associated with the Convertible Notes issued last year, or to
undertake any type of equity financing. The proposed reverse stock
split will reduce the number of shares outstanding and provide
Delcath with the flexibility to raise equity capital and support
its important clinical trials and commercial efforts in
Europe.
In addition, the reverse stock split will allow Delcath to
regain compliance with NASDAQ Capital Markets continued-listing
requirements, which provides liquidity and other important benefits
to the Company and its investors. It is important to note that the
floor price for the Convertible Note will adjust with the effected
reverse stock split ratio to a minimum of $1.00. Delcath believes this will serve to
support the stock price following a split and reduce future
potential dilution related to the Convertible Notes.
For these reasons, the Company's Board of Directors encourage
all investors to support the proposed reverse stock split.
Investors are encouraged to read the Company's Definitive Schedule
14A in detail for full information regarding the proposed reverse
stock split.
Management Commentary
"During the first half of 2017 we continued to advance our
clinical development programs in ocular melanoma liver metastases
(OM) and intrahepatic cholangiocarcinoma (ICC), while making steady
progress with the ongoing commercialization of CHEMOSAT in
Europe," said Jennifer K. Simpson, Ph.D., MSN, CRNP President
and CEO of Delcath.
"Revenues for the second quarter of 2017 increased 20% from a
year ago, demonstrating continued growing demand in our core
markets. This increase is largely driven by the recent
establishment of ZE diagnostic-related (DRG) reimbursement for
CHEMOSAT in Germany. We continue to leverage this positive
German reimbursement to support our efforts to obtain market access
and payment in other markets such as the U.K. and the Netherlands, where there is growing
interest in and use of CHEMOSAT. This is evidenced by the
recent inclusion of CHEMOSAT in the Dutch Health Authorities
treatment guidelines for ocular melanoma liver metastases, an
important step toward eventual reimbursement coverage of CHEMOSAT
in the Dutch market.
"Our primary focus continues to be on the clinical trials that
comprise our Clinical Development Program (CDP), where we believe
shareholder value ultimately lies. Our CDP consists of our FOCUS
Phase 3 clinical trial of Melphalan/HDS in hepatic dominant OM (the
FOCUS trial) and our intrahepatic cholangiocarcinoma (ICC) pivotal
trial, which is scheduled to initiate enrollment by the end of
2017. The objective for our Phase 2 trial program in hepatocellular
carcinoma (HCC) and ICC was to identify an efficacy signal worthy
of further clinical investigation. This objective was met by the
retrospective data collection performed by European investigators
last year, which informed our development path for ICC. The U.S.
Food and Drug Administration (FDA) endorsed that development
pathway via a Special Protocol Assessment agreement negotiated
earlier this year. With the Phase 2 trial program goals now
met, we have terminated enrollment in the Phase 2 trials in order
to devote available resources to the FOCUS Trial and the Phase 3
ICC pivotal trial.
"In March, we announced a SPA with the FDA for a pivotal trial
of our Melphalan/HDS to treat ICC. As with the FOCUS trial, this
SPA indicates that the trial design adequately addresses objectives
that, if met, will support regulatory requirements for approval of
Melphalan/HDS in the treatment of ICC. Since announcing the SPA we
have been working with potential trial sites with the goal of
initiating patient enrollment by the end of 2017. We are committed
to executing this trial in a financially prudent manner and for
this reason initiation of enrollment is contingent on effecting the
reverse stock split as outlined in our consent proposal.
Enrollment in our FOCUS Phase 3 clinical trial of Melphalan/HDS
in hepatic dominant OM (the FOCUS trial) has been proceeding more
slowly than we expected. We have been continually reviewing the
pace of recruitment in this study, and have discovered reluctance
among some patients to participate as there was no mechanism to
receive the experimental treatment at any time if they were
randomized to the best alternative care arm. In a rare and
deadly disease such as OM, it is not surprising that patients
facing few treatment options would be reluctant to participate in a
trial where there is no opportunity to receive the experimental
treatment and where treatment is commercially available on a
private pay basis in Europe. We are currently exploring
options that will allow us to accelerate enrollment, which include
adding new sites in both the U.S. and Europe. We have
recently added several European clinical sites that are expected to
provide increased patient flow starting this fall. We remain
on track to conduct an interim safety analysis by the end of this
year.
"Throughout the balance of 2017 we remain dedicated to advancing
the clinical programs for our innovative Melphalan/HDS as well as
to our commercialization efforts for CHEMOSAT in Europe. In
order to support these important programs and create value, we need
to enhance our capital structure, which begins with a favorable
vote on the reverse stock split," concluded Dr.
Simpson.
Second Quarter Financial Results
Revenue for the second quarter of 2017 was $0.6 million, an increase of 20% from
$0.5 million for the second quarter
of 2016. Selling, general and administrative expenses
increased modestly to $2.5 million in
the 2017 second quarter from $2.3
million in the prior-year quarter. Research and
development expenses for the second quarter of 2017 increased to
$2.5 million from $1.9 million in the prior-year
quarter. Total operating expenses for the current
quarter were $5.0 million compared
with $4.2 million in the prior-year
quarter.
The Company recorded a net loss for the three months ended
June 30, 2017, of $2.0 million, a decrease of $4.7 million, or 70.9%, compared to a net loss of
$6.7 million for the same period in
2016. This decrease in net loss is primarily due to a $9.6 million gain on the extinguishment of the
June 2016 Series C Warrants which was
offset by a $5.3 million increase in
interest expense related to the convertible note, both non-cash
items. Additionally, there was a $1.2
million decrease in the change in the fair value of the
warrant liability, a non-cash item, offset by a $0.8 million increase in operating expenses
primarily related to increased investment in our clinical trial
initiatives.
Six Month Financial Results
Revenue for the first half of 2017 was $1.3 million, an increase of 44% from
$0.9 million for the first half of
2016. Selling, general and administrative expenses in the
first half of 2017 were approximately $4.9
million compared with $4.7
million in the prior-year period. Research and
development expenses for the first six months of 2017 increased to
$4.8 million from $3.3 million in the first six months of
2016. Total operating expenses for the first half of
2017 were $9.8 million compared with
$8.0 million in the prior-year
quarter.
The Company recorded a net loss for the six months ended
June 30, 2017, of $13.3 million, an increase of $4.8 million, or 56.5%, compared to a net loss of
$8.5 million for the same period in
2016. This increase in net loss is primarily due to a $13.7 million increase in interest expense
primarily related to the amortization of debt discounts, offset by
a $9.6 million gain on the
extinguishment of the June 2016
Series C Warrants, both non-cash items. Additionally, there was a
$1.8 million increase in operating
expenses primarily related to increased investment in our clinical
trial initiatives, offset by $0.4
million increase in gross profit and a $0.7 million increase in the change in the fair
value of the warrant liability, a non-cash item.
Balance Sheet Highlights
As of June 30, 2017, Delcath had
cash and cash equivalents of $1.8
million, compared with $4.4
million as of December 31,
2016. In addition, the Company has $12.9 million in restricted cash primarily
related to the Convertible Notes issued in June 2016. During the six months ended
June 30, 2017, the Company used
$8.1 million of cash to fund
operating activities. Assuming the Company is able to effect a
reverse stock split as proposed in its recent consent solicitation
statement filed with the SEC on July 26,
2017, management believes that its capital resources are
adequate to fund operating activities through the end of 2017.
Recent Financial Transactions
In July 2017 Delcath issued two
series of preferred stock (Series A Preferred Stock and Series B
Preferred Stock) in transactions with holders of its Convertible
Note. The Series A shares were issued to address a short-term
valuation issue for common shares delivered to the Note holders to
close an installment period. Through the Series A Preferred Shares
placement, the Company was able to value the open installment
shares such that the amount of debt remaining under the Convertible
Note was reduced by $4.2 million. The
Series B Preferred Shares, which are convertible to common shares
at $0.153, allowed the Company to
raise $2.0 million in unrestricted
cash.
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.
Contact:
Scott
Gordon
President - CoreIR
Email: investorrelations@delcath.com
-Tables to Follow-
Delcath Systems,
Inc.
|
Condensed
Consolidated Statements of Operations and Comprehensive
Loss
|
(Unaudited)
|
(in thousands, except
share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
June 30,
|
|
Six months ended
June 30,
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Product
revenue
|
|
$
584
|
|
$
511
|
|
$
1,327
|
|
$
880
|
Cost of goods
sold
|
|
135
|
|
150
|
|
354
|
|
261
|
Gross
profit
|
|
449
|
|
361
|
|
973
|
|
619
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
Selling, general and
administrative expenses
|
|
2,532
|
|
2,287
|
|
4,947
|
|
4,663
|
Research and
development costs
|
|
2,518
|
|
1,945
|
|
4,840
|
|
3,289
|
Total operating
expenses
|
|
5,050
|
|
4,232
|
|
9,787
|
|
7,952
|
Operating
loss
|
|
(4,601)
|
|
(3,871)
|
|
(8,814)
|
|
(7,333)
|
Change in fair value
of the warrant liability, net
|
|
(38)
|
|
(1,181)
|
|
1,200
|
|
491
|
Gain on warrant
extinguishment
|
|
9,613
|
|
-
|
|
9,613
|
|
-
|
Interest income
(expense)
|
|
(6,916)
|
|
(1,614)
|
|
(15,282)
|
|
(1,631)
|
Other income
(expense)
|
|
(1)
|
|
(1)
|
|
7
|
|
(7)
|
Net loss
|
|
$
(1,943)
|
|
$
(6,667)
|
|
$
(13,276)
|
|
$
(8,480)
|
Other comprehensive
loss:
|
|
|
|
|
|
|
|
|
Foreign currency
translation adjustments
|
|
$
(30)
|
|
$
(1)
|
|
$
(8)
|
|
$
(10)
|
Comprehensive
Loss
|
|
$
(1,973)
|
|
$
(6,668)
|
|
$
(13,284)
|
|
$
(8,490)
|
|
|
|
|
|
|
|
|
|
Common share
data:
|
|
|
|
|
|
|
|
|
Basic loss per
share*
|
|
$
(0.01)
|
|
$
(4.41)
|
|
$
(0.09)
|
|
$
(5.72)
|
Diluted loss per
share*
|
|
$
(0.01)
|
|
$
(4.41)
|
|
$
(0.09)
|
|
$
(5.72)
|
|
|
|
|
|
|
|
|
|
Weighted average
number of basic common shares outstanding*
|
|
252,264,959
|
|
1,510,752
|
|
148,674,658
|
|
1,483,148
|
Weighted average
number of diluted common shares outstanding*
|
|
252,264,959
|
|
1,510,752
|
|
148,722,094
|
|
1,483,148
|
|
|
|
|
|
|
|
|
|
*reflects a
one-for-sixteen (1:16) reverse stock split effected on July 21,
2016
|
DELCATH SYSTEMS,
INC.
|
Consolidated
Balance Sheets
|
as of June 30, 2017
and December 31, 2016
|
(in thousands, except
share and per share data)
|
|
|
|
|
|
|
|
June
30,
|
|
December
31,
|
|
|
2017
|
|
2016
|
|
|
(Unaudited)
|
|
|
Assets
|
|
|
|
|
Current
assets
|
|
|
|
|
Cash and cash
equivalents
|
|
$
1,816
|
|
$
4,409
|
Restricted
cash
|
|
12,861
|
|
27,287
|
Accounts receivables,
net
|
|
384
|
|
403
|
Inventories
|
|
1,040
|
|
660
|
Prepaid expenses and
other current assets
|
|
499
|
|
698
|
Deferred financing
costs
|
|
771
|
|
699
|
Total current
assets
|
|
17,371
|
|
34,156
|
Property, plant and
equipment, net
|
|
1,232
|
|
1,083
|
Total
assets
|
|
$
18,603
|
|
$
35,239
|
|
|
|
|
|
Liabilities and
Stockholders' Equity (Deficit)
|
|
|
|
|
Current
liabilities
|
|
|
|
|
Accounts
payable
|
|
$
990
|
|
$
594
|
Accrued
expenses
|
|
3,579
|
|
3,407
|
Convertible notes
payable, net of debt discount
|
|
12,598
|
|
13,343
|
Warrant
liability
|
|
43
|
|
18,751
|
Total current
liabilities
|
|
17,210
|
|
36,095
|
Deferred
revenue
|
|
32
|
|
30
|
Other non-current
liabilities
|
|
494
|
|
604
|
Total
liabilities
|
|
17,736
|
|
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 June 30, 2017 and December 31, 2016,
respectively
|
|
—
|
|
—
|
Common stock, $.01
par value; 500,000,000 shares authorized; 424,526,067 and 4,131,527
shares issued and 424,408,256 and 4,112,417 shares outstanding at
June 30, 2017 and December 31, 2016, respectively*
|
|
4,245
|
|
41
|
Additional paid-in
capital
|
|
289,186
|
|
277,749
|
Accumulated
deficit
|
|
(292,464)
|
|
(279,188)
|
Treasury stock, at
cost; 110 shares at June 30, 2017 and December 31, 2016,
respectively*
|
|
(51)
|
|
(51)
|
Accumulated other
comprehensive loss
|
|
(49)
|
|
(41)
|
Total stockholders'
equity (deficit)
|
|
867
|
|
(1,490)
|
Total liabilities and
stockholders' equity (deficit)
|
|
$
18,603
|
|
$
35,239
|
|
|
|
|
|
*reflects a
one-for-sixteen (1:16) reverse stock split effected on July 21,
2016
|
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content:http://www.prnewswire.com/news-releases/delcath-announces-second-quarter-2017-financial-results-300500839.html
SOURCE Delcath Systems, Inc.