Delcath Systems Reports First Quarter 2024 Results and Business Highlights

Rhea-AI Summary

Delcath Systems (Nasdaq: DCTH) reported its Q1 2024 financial results and business highlights on May 14, 2024. The company recognized $3.1 million in total revenue, a significant increase from $0.6 million in Q1 2023, driven by sales of HEPZATO KIT and CHEMOSAT. Delcath updated its U.S. center activation guidance to 20 by end of 2024, activated six new centers, and has five more preparing for activation. The company raised $7.0 million in a private placement and has cash reserves totaling $27.2 million.

Delcath appointed Martha S. Rook, Ph.D., as COO and received a permanent J-code and pass-through payment status for HEPZATO KIT from CMS effective April 1, 2024. Research and development expenses decreased to $3.7 million, while selling, general, and administrative expenses rose to $8.8 million, mainly due to commercial launch activities. The company also published pivotal Phase 3 FOCUS study results on HEPZATO KIT for treating unresectable metastatic Uveal Melanoma in the Annals of Surgical Oncology.

Positive

• Revenue for Q1 2024 increased to $3.1 million from $0.6 million in Q1 2023.
• Activated six new treatment centers and plans to have 20 centers by the end of 2024.
• Raised $7.0 million in a private placement, boosting cash reserves to $27.2 million.
• Appointed experienced industry leader Martha S. Rook, Ph.D., as COO.
• Received permanent J-code and transitional pass-through payment status for HEPZATO KIT from CMS.
• Published positive pivotal Phase 3 FOCUS study results for HEPZATO KIT.

Negative

• Research and development expenses were $3.7 million, showing a decrease primarily due to reduced clinical trial activities.
• Selling, general, and administrative expenses rose significantly to $8.8 million from $4.2 million in Q1 2023, driven by commercial launch activities.

Financial Analyst

Delcath Systems reported a notable increase in revenue for Q1 2024, reaching $3.1 million, up from $0.6 million in the same period last year. This significant rise is largely attributed to the sales of HEPZATO KIT and CHEMOSAT. The company also saw a substantial private placement financing of $7.0 million, which bolstered their cash reserves to $27.2 million as of March 31, 2024.

However, it's important to consider the rise in selling, general and administrative expenses, which more than doubled compared to the previous year, primarily due to launch activities and an expanded commercial team. While the increased revenue and financing are positive signs, the higher expenses should be closely monitored to ensure they translate into sustainable growth.

For retail investors, the key takeaway is the strong revenue growth, offset by rising operational costs. The private placement shows strong investor confidence. Overall, the company's financial position appears to be improving, but the long-term impact will depend on controlling expenses and continuing revenue growth.

Medical Research Analyst

The publication of the Phase 3 FOCUS study results for HEPZATO KIT in the Annals of Surgical Oncology is a significant milestone. This study focuses on patients with unresectable metastatic uveal melanoma, a rare and aggressive cancer. The permanent, product-specific J-code (J9248) and the transitional pass-through payment status granted by CMS are important for improving the product's accessibility and reimbursement, potentially driving sales growth.

For investors, the validation of HEPZATO KIT through a peer-reviewed journal and favorable CMS reimbursement status indicates a positive outlook for the product's adoption and revenue potential. The strategic activation of new treatment centers further supports wider market penetration, which is essential for long-term growth.

This development highlights the company's commitment to advancing its oncology pipeline and could result in increased market share in the oncology space, benefiting patients and investors alike.

Market Research Analyst

Delcath's aggressive expansion strategy, with a goal to activate 20 treatment centers by the end of 2024, indicates a strong push to increase market penetration and availability of HEPZATO KIT. The activation of six centers in Q1 2024, with additional centers in anticipation, demonstrates the company's proactive approach to meet market demand.

The recent $7.0 million private placement not only strengthens the company's financial position but also reflects confidence from existing investors and senior executives. This could signal a positive sentiment from insiders about the company's future prospects. However, the rise in administrative costs related to the commercial launch is a factor to watch, as it must be aligned with revenue growth for sustainable profitability.

Retail investors should note the company's clear strategy to expand its market presence and the potential for increased revenue from new centers. This expansion, coupled with the financial backing and insider confidence, suggests a positive trajectory, though execution risks remain.

Conference Call Today at 8:30 am Eastern Time

QUEENSBURY, N.Y., May 14, 2024 /PRNewswire/ -- Delcath Systems, Inc. (Nasdaq: DCTH) ("Delcath" or the "Company"), an interventional oncology company focused on the treatment of primary and metastatic cancers of the liver, today reported financial results and business highlights for the first quarter ended March 31, 2024.

Recent Business Highlights
During and since the first quarter, Delcath:

• Recognized over $2.0 million of revenue from sales of HEPZATO KIT (melphalan/Hepatic Delivery System) and $1.1 million in CHEMOSAT sales through March 31, 2024;
  
  
• Updated U.S. center activation guidance from 15 active centers to a total of 20 active centers by the end of 2024;
  
  
• Activated four treating centers during the first quarter with an additional two centers in April. A further five centers are accepting patient referrals in anticipation of activation;
  
  
• Raised $7.0 million in a private placement transaction with certain accredited investors comprised of existing investors, Delcath senior executives, and members of its Board of Directors;
  
  
• Appointed Martha S. Rook, Ph.D, an experienced industry leader with more than 25 years of academic and industry experience, as Chief Operating Officer; 
  
  
• Received a permanent, product-specific J-code (J9248) and transitional pass-through payment status for HEPZATO KIT from the Centers for Medicare & Medicaid Services (CMS) which became effective on April 1, 2024;
  
  
• Executed an amendment with Synerx Pharma, LLC and Mylan Teoranta for Delcath's supply of melphalan hydrochloride which extends the term of the original agreement to December 31, 2028; and
  
  
• Announced the publication of results from the pivotal Phase 3 FOCUS study of HEPZATO KIT in patients with unresectable metastatic Uveal Melanoma on May 4, 2024, in the journal Annals of Surgical Oncology.

"We continue to make steady progress in the training and activation of new treatment centers which is a testament to both the emerging role of HEPZATO in the treatment of patients with metastatic uveal melanoma and the capability and dedication of our field force," said Gerard Michel, Delcath's Chief Executive Officer. "We are committed to expanding the availability of HEPZATO to patients in need and I am confident that we will reach our goal of 20 treating centers by the end of 2024."

First Quarter 2024 Results
Cash, cash equivalents and investment totaled $27.2 million as of March 31, 2024, which includes a $7.0 million private placement financing which closed on March 19, 2024.  

Total revenue for the quarter ended March 31, 2024 was $3.1 million compared to $0.6 million for the same period in the prior year from our sales of HEPZATO in the U.S. and CHEMOSAT in Europe. 

Research and development expenses for the quarter ended March 31, 2024, were $3.7 million compared to $4.6 million for the same period in the prior year. The change in research and development expenses is primarily due to a decrease in clinical trial activities and expenses related to the FDA inspection offset by an increase in personnel related expenses. 

Selling, general and administrative expenses for the quarter ended March 31, 2024, were $8.8 million compared to $4.2 million for the same period in the prior year. The increase primarily relates to commercial launch activities including marketing-related expenses and additional personnel in the commercial team.

Conference Call Information
To participate in this event, dial in approximately 5 to 10 minutes before the beginning of the call.

Event Date:	Tuesday, May 14, 2024
Time:	8:30 AM Eastern Time
Participant Numbers
Toll Free:	1-833-630-1960
International:	1-412-317-1841
Webcast:	https://app.webinar.net/PKDyZ5PV2aB
Conference Replay
US Toll Free:	1-877-344-7529
International Toll:	1-412-317-0088
Replay Access Code:	9490444
End Date:	May 21, 2024

About Delcath Systems, Inc., HEPZATO KIT and CHEMOSAT
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. 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.

Investor Relations Contact:
Westwicke Partners
investorrelations@delcath.com

 

DELCATH SYSTEMS, INC.
Condensed Consolidated Balance Sheets
(Unaudited)
(in thousands, except share and per share data)
	March 31, 2024		December 31, 2023
Assets
Current assets
Cash and cash equivalents	$           11,760		$           12,646
Restricted cash	50		50
Short-term investments	15,360		19,808
Accounts receivable, net	1,564		241
Inventory	3,634		3,322
Prepaid expenses and other current assets	1,278		1,091
Total current assets	33,646		37,158
Property, plant and equipment, net	1,336		1,352
Right-of-use assets	1,117		103
Total assets	$           36,099		$           38,613
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable	$             1,487		$             1,012
Accrued expenses	4,395		5,249
Lease liabilities, current	102		37
Loan payable	2,408		5,239
Convertible notes payable	4,949		4,911
Total current liabilities	13,341		16,448
Warrant liability	6,160		5,548
Lease Liabilities, non-current	1,016		—
Other liabilities, non-current	962		840
Total liabilities	21,479		22,836
Commitments and contingencies
Stockholders' equity
Preferred stock, $0.01 par value; 10,000,000 shares authorized; 16,809 and 24,819 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively	—		—
Common stock, $0.01 par value; 80,000,000 shares authorized; 25,439,319 shares and 22,761,554 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively	254		228
Additional paid-in capital	530,482		520,576
Accumulated deficit	(516,273)		(505,162)
Accumulated other comprehensive loss	157		135
Total stockholders' equity	14,620		15,777
Total liabilities and stockholders' equity	$           36,099		$           38,613

 

DELCATH SYSTEMS, INC.
Condensed Consolidated Statements of Operations and Comprehensive Loss
(Unaudited)
(in thousands, except share and per share data)
	Three months ended March 31,
	2024		2023
Product revenue	$             3,139		$                597
Other revenue	—		—
Total revenues	3,139		597
Cost of goods sold	(903)		(181)
Gross profit	2,236		416
Operating expenses:
Research and development expenses	3,700		4,576
Selling, general and administrative expenses	8,814		4,165
Total operating expenses	12,514		8,741
Operating loss	(10,278)		(8,325)
Change in fair value of warrant liability	(612)		—
Interest expense, net	(199)		(688)
Other (expense) income	(22)		13
Net loss	(11,111)		(9,000)
Other comprehensive (loss) income:
Unrealized gain on investments	8		—
Foreign currency translation adjustments	14		19
Total comprehensive loss	$         (11,089)		$           (8,981)
Common share data:
Basic and diluted loss per common share	$             (0.45)		$             (0.77)
Weighted average number of basic and diluted shares outstanding	24,887,180		11,622,384

 

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SOURCE Delcath Systems, Inc.

FAQ

What were Delcath Systems' Q1 2024 earnings?

Delcath Systems reported Q1 2024 earnings of $3.1 million in total revenue.

What is the revenue increase for Delcath Systems in Q1 2024 compared to Q1 2023?

Delcath Systems' revenue increased to $3.1 million in Q1 2024 from $0.6 million in Q1 2023.

How many new treatment centers did Delcath Systems activate in Q1 2024?

Delcath Systems activated six new treatment centers in Q1 2024.

What is Delcath Systems' goal for U.S. center activations by the end of 2024?

Delcath Systems aims to have 20 active treatment centers by the end of 2024.

How much did Delcath Systems raise in the recent private placement transaction?

Delcath Systems raised $7.0 million in a recent private placement transaction.

What are Delcath Systems' cash reserves as of March 31, 2024?

Delcath Systems' cash reserves totaled $27.2 million as of March 31, 2024.

Who is the new Chief Operating Officer of Delcath Systems?

Martha S. Rook, Ph.D., was appointed as the new Chief Operating Officer of Delcath Systems.

What is the significance of the J-code received by Delcath Systems for HEPZATO KIT?

The J-code provides a permanent, product-specific code for HEPZATO KIT, easing reimbursement processes.

What were Delcath Systems' research and development expenses for Q1 2024?

Research and development expenses were $3.7 million for Q1 2024.

Why did Delcath Systems' selling, general, and administrative expenses increase in Q1 2024?

The increase to $8.8 million was primarily due to commercial launch activities and additional personnel.