Delcath Announces Third Quarter Financial Results

On November 11, 2016 Delcath Systems, Inc. (NASDAQ: DCTH), an interventional oncology company focused on the treatment of primary and metastatic liver cancers, reported financial results for the three and nine months ended September 30, 2016 (Press release, Delcath Systems, NOV 11, 2016, View Source;p=RssLanding&cat=news&id=2221745 [SID1234516515]).

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Highlights for the third quarter of 2016 and recent weeks include:

Raised $1,275,000 through an underwritten public offering of common stock and warrants;
Expanded the FOCUS Phase 3 Trial in hepatic dominant ocular melanoma to include 10 new research centers in the U.S. and Europe;
Presented data from two single-institution studies conducted in Germany on the use of the Delcath Hepatic CHEMOSAT Delivery System to treat patients with liver metastases in scientific posters at the Cardiovascular and Interventional Radiology Society of Europe (CIRSE) annual meeting;
Announced acceptance for publication of a retrospective review study, "Chemosaturation Percutaneous Hepatic Perfusion: A Systemic Review," by Dr. Arndt Vogel, et al, in the prestigious journal Advances in Therapy; and
Sponsored the Ocular Melanoma Foundation Eye Am Not Alone patient education retreat.
"Throughout the third quarter we continued to make steady progress in our clinical development program for Melphalan/HDS and in our efforts to advance CHEMOSAT as a commercially viable treatment option for primary and metastatic liver cancers in Europe," said Jennifer K. Simpson, Ph.D., MSN, CRNP, President and Chief Executive Officer of Delcath. "We also recently secured an additional $1.275 million in financing via a small fundraise in October, which will bridge us to receipt of the first cash release from the committed financing we announced in June 2016. Assuming all conditions are satisfied, we expect the anticipated quarterly releases throughout 2017 will fund our clinical development plan through the end of 2017, while also supporting our commercial activities in Europe.

"The presentation and publication of data supportive of CHEMOSAT continued during our third quarter. This includes a retrospective review study conducted by a team led by Dr. Arndt Vogel of the University of Hanover in Germany, which was accepted for publication by the prestigious peer-reviewed journal, Advances in Therapy. This study originated as a white paper produced by our Experts Panel in 2015, and we are pleased that the potential for CHEMOSAT to treat primary and metastatic liver cancers as identified by our experts will now reach a wider audience. Also during the quarter investigators from Asklepios Barmbek Clinic and Hanover Medical School in Germany, and Southampton University Hospital in the United Kingdom, presented compelling data from their single-institution investigations. These data provide us with considerable confidence that similar results may be formally validated by the trials that comprise our Clinical Development Plan, and we look forward to additional presentations and publications of data in support of CHEMOSAT throughout the remainder of the year and beyond.

"Negotiations by hospitals in Germany to determine reimbursement levels for CHEMOSAT under the ZE national system are expected to conclude during our fourth quarter. We believe that favorable reimbursement levels defined through this process will support growth in procedure volumes in Germany and provide important validation for reimbursement appeals in other markets in Europe.

"The advances we made in 2016 have positioned us to achieve important clinical inflection points in our FOCUS trial and our global Phase 2 program in HCC and ICC, as we work to expand global access to CHEMOSAT for the benefit of patients suffering with primary and metastatic liver cancers," concluded Dr. Simpson.

Third Quarter Financial Results

Total revenues for the third quarter of 2016 and 2015 were $0.4 million. Selling, general and administrative expenses for the third quarter of 2016 were $2.4 million, compared with $2.3 million for the same period in 2015, primarily attributable to a slight increase in facility and professional expenses. Research and development expenses increased to $2.7 million for the 2016 third quarter from $1.7 million for the same period in 2015, primarily due to increased investment in clinical development initiatives, specifically the global Phase 3 FOCUS clinical trial.

Total operating expenses for the third quarter of 2016 increased to $5.0 million from $4.0 million for the same period in 2015. This reflects an increase in clinical development initiatives.

The Company recorded a net loss for the three months ended September 30, 2016 of $1.0 million, or $0.66 per share, a decrease of $1.4 million from a net loss of $2.4 million, or $1.96 per share, for the same period in 2015. This was primarily driven by amortization of debt discounts related to the convertible note issued in June 2016 and a change in the fair value of the warrant liability, a non-cash item.

Nine Month Financial Results

Total revenues for the first nine months of 2016 and 2015 were $1.3 million. Selling, general and administrative expenses for the first nine months of 2016 were $7.0 million, an improvement of $0.8 million or 11% from $7.8 million reported for the same period in 2015, primarily attributable to a reduction in facility expenses related to the lease restructurings. Research and development expenses during the first nine months of 2016 increased to $6.0 million compared with $4.1 million for the same period in 2015, primarily due to increased investment in clinical development initiatives.

Total operating expenses for the first nine months of 2016 were $13.0 million compared with $12.0 million for the same period in 2015.

The Company recorded a net loss for the nine months ended September 30, 2016 of $9.5 million, or $6.39 per share, a decrease of $0.1 million from a net loss of $9.6 million, or $10.75 per share, for the nine months ended September 30, 2015. This was primarily driven by amortization of debt discounts related to the convertible note issued in June 2016 and a change in the fair value of the warrant liability, a non-cash item.

Balance Sheet Highlights

As of September 30, 2016, Delcath had cash and cash equivalents of $3.7 million, compared with $12.6 million as of December 31, 2015. During the first nine months of 2016, the Company used $10.6 million in cash to fund its operating activities. In June 2016, Delcath issued $35.0 million of senior convertible notes and related common stock purchase warrants and in October 2016, the Company raised $1,275,000 through an underwritten public offering of common stock and warrants. As a result, Delcath believes it has sufficient capital to fund its operating activities through the end of 2017.