Delcath Systems Announces $7 Million Private Placement

Rhea-AI Summary

Delcath Systems, Inc. (DCTH) announces a private placement transaction with accredited investors, issuing common stock and pre-funded warrants, expecting gross proceeds of $7 million. The company plans to utilize the funds for working capital and general corporate purposes.

Insights

Financial Analyst

The private placement transaction by Delcath Systems represents a strategic move to bolster its working capital and address general corporate needs. The influx of approximately $7 million, though relatively modest for the biotech sector, indicates investor confidence, particularly as the transaction includes participation from executives and board members. However, the reliance on internal stakeholders raises questions about external investor interest. The pricing of the common stock and pre-funded warrants suggests a discount to the market, which is a common strategy to incentivize investment but can dilute existing shareholders' value.

Furthermore, the structure involving pre-funded warrants, exercisable at a nominal price, is typically employed to provide immediate funds while offering potential upside to investors. The impact on the stock market could be mixed; the capital raise may be viewed positively as it supports the company's growth, but the potential dilution and the need for a capital infusion could signal underlying financial challenges. Investors should monitor the subsequent registration of these securities with the SEC, as it will facilitate liquidity and potentially impact the stock's trading dynamics.

Market Research Analyst

Delcath's focus on interventional oncology positions it within a niche but growing segment of the healthcare market. The use of net proceeds for working capital suggests an immediate need to fund ongoing operations or research and development activities. For stakeholders, the timing and size of this private placement could reflect the company's strategic planning cycle and its current stage of product development.

An analysis of the broader market shows that private placements are common among biotech firms seeking to fund research without incurring debt. However, the market's reaction to such news can hinge on the company's pipeline's perceived potential and the terms of the deal. In Delcath's case, the terms indicate a potential increase in financial flexibility, which could be essential for advancing clinical trials or expanding market reach. Long-term benefits may include accelerated product development, but the immediate dilutive effect on current shareholders cannot be ignored.

Legal Expert

The legal framework governing the private placement is important for ensuring compliance with the Securities Act of 1933. Delcath's commitment to file registration statements for the resale of the common stock and shares issuable upon exercise of the Pre-Funded Warrants aligns with regulatory requirements and signals transparency to the market. The exclusion from registration under the Securities Act, leveraging an exemption, is a tactical approach to expedite funding while deferring the broader disclosure and regulatory review process associated with public offerings.

Investors should be aware of the potential risks associated with unregistered securities, including limited liquidity and the absence of public market pricing information. The company's pledge to register these securities for resale is a positive step, but until the SEC registration is complete, the securities cannot be freely traded, which may limit their appeal to some investors. This legal nuance is a double-edged sword, providing short-term capital at the cost of immediate liquidity.

NEW YORK, March 15, 2024 /PRNewswire/ -- Delcath Systems, Inc. (Nasdaq: DCTH), an interventional oncology company focused on the treatment of primary and metastatic cancers of the liver, today announced that it has entered into a securities purchase agreement with certain accredited investors comprised of existing investors, Delcath Executives and members of its Board of Directors, for a private placement transaction (the "Private Placement").

Delcath will issue and sell 876,627 shares of its common stock (the "Common Stock") at a price per share of $3.72, and, to certain investors, in lieu of shares of Common Stock, 1,008,102 pre-funded warrants to purchase up to 1,008,102 shares of Common Stock (the "Pre-Funded Warrants") at a price per Pre-Funded Warrant of $3.71. The Pre-Funded Warrants will have an exercise price of $0.01 per share of Common Stock, be immediately exercisable and remain exercisable until exercised in full.

Delcath expects to receive gross proceeds from the Private Placement of approximately $7 million before deducting offering expenses payable by Delcath.

Delcath intends to use the net proceeds from the Private Placement for working capital purposes and other general corporate purposes.

The Private Placement is expected to close on March 19, 2024, subject to the satisfaction of customary closing conditions.

The securities to be sold in the Private Placement, including the shares of common stock underlying the Pre-Funded Warrants, have not been registered under the Securities Act of 1933, as amended, or state securities laws as of the time of issuance and may not be offered or sold in the United States absent registration with the Securities and Exchange Commission ("SEC") or an applicable exemption from such registration requirements. Delcath has agreed to file one or more registration statements with the SEC registering the resale of the Common Stock and the shares issuable upon exercise of the Pre-Funded Warrants purchased in the Private Placement.

This press release shall not constitute an offer to sell or a solicitation of an offer to buy these securities nor shall there be any sale of these securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.

About Delcath Systems, Inc.

Delcath Systems, Inc. is an interventional oncology company focused on the treatment of primary and metastatic liver cancers. The company's proprietary products, HEPZATO KIT (Hepzato (melphalan) for Injection/Hepatic Delivery System) and CHEMOSAT® Hepatic Delivery System for Melphalan percutaneous hepatic perfusion (PHP) are designed to administer high-dose chemotherapy to the liver while controlling systemic exposure and associated side effects during a PHP procedure.

In the United States, HEPZATO KIT is considered a combination drug and device product and is regulated and approved for sale as a drug by the FDA. HEPZATO KIT is comprised of the chemotherapeutic drug melphalan and Delcath's proprietary Hepatic Delivery System (HDS). The HDS is used to surgically isolate the liver while simultaneously filtrating hepatic venous blood during melphalan infusion and washout. The use of the HDS results in loco-regional delivery of a relatively high melphalan dose, which can potentially induce a clinically meaningful tumor response with minimal hepatotoxicity and reduce systemic exposure. HEPZATO KIT is approved in the United States as a liver-directed treatment for adult patients with metastatic uveal melanoma (mUM) with unresectable hepatic metastases affecting less than 50% of the liver and no extrahepatic disease, or extrahepatic disease limited to the bone, lymph nodes, subcutaneous tissues, or lung that is amenable to resection or radiation. Please see the full Prescribing Information, including BOXED WARNING for the HEPZATO KIT.

In Europe, the device-only configuration of the HDS is regulated as a Class III medical device and is approved for sale under the trade name CHEMOSAT Hepatic Delivery System for Melphalan, or CHEMOSAT, where it has been used in the conduct of percutaneous hepatic perfusion procedures at major medical centers to treat a wide range of cancers of the liver.

Safe Harbor / Forward-Looking Statements

The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements made by the Company or on its behalf. This press release contains forward-looking statements, which are subject to certain risks and uncertainties, that can cause actual results to differ materially from those described, in particular, the statements regarding our Private Placement and expected gross proceeds and the expected uses of the proceeds from the Private Placement. The words "anticipate," "believe," "continue," "could," "estimate," "expect," "intend," "may," "plan," "potential," "predict," "project," "should," "target," "will," "would" and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. Factors that may cause such differences include, but are not limited to, uncertainties relating to: the Company's commercialization plans and its ability to successfully commercialize the HEPZATO KIT; the Company's successful management of the HEPZATO KIT supply chain, including securing adequate supply of critical components necessary to manufacture and assemble the HEPZATO KIT; successful FDA inspections of the facilities of the Company and those of its third-party suppliers/manufacturers; the Company's successful implementation and management of the HEPZATO KIT Risk Evaluation and Mitigation Strategy; the potential benefits of the HEPZATO KIT as a treatment for patients with primary and metastatic disease in the liver; the Company's ability to obtain reimbursement for the HEPZATO KIT; and the Company's ability to successfully enter into any necessary purchase and sale agreements with users of the HEPZATO KIT. For additional information about these factors, and others that may impact the Company, please see the Company's filings with the Securities and Exchange Commission, including those on Forms 10-K, 10-Q, and 8-K. However, new risk factors and uncertainties may emerge from time to time, and it is not possible to predict all risk factors and uncertainties. Accordingly, 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:

Investor Relations Contact:
Ben Shamsian
Lytham Partners
646-829-9701
shamsian@lythampartners.com

 

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SOURCE Delcath Systems, Inc.

FAQ

What did Delcath Systems, Inc. (DCTH) announce?

Delcath Systems, Inc. announced a private placement transaction with certain accredited investors, issuing common stock and pre-funded warrants.

How many shares of common stock will Delcath issue in the private placement?

Delcath will issue 876,627 shares of its common stock at a price per share of $3.72.

What is the price per Pre-Funded Warrant in the private placement?

The price per Pre-Funded Warrant is $3.71, with an exercise price of $0.01 per share of Common Stock.

What are the expected gross proceeds from the private placement?

Delcath expects gross proceeds of approximately $7 million before deducting offering expenses.

When is the expected closing date of the private placement?

The Private Placement is expected to close on March 19, 2024, subject to customary closing conditions.

Have the securities to be sold in the private placement been registered?

The securities, including the shares of common stock and Pre-Funded Warrants, have not been registered at the time of issuance.