NEW YORK, March 16, 2018 (GLOBE NEWSWIRE) -- Delcath Systems, Inc. (OTCQB:DCTH), an interventional oncology
Company focused on the treatment of primary and metastatic liver cancers, announces financial results for the twelve months ended
December 31, 2017.
Highlights from the fourth quarter of 2017 and recent weeks include:
- Revenue from European sales for 2017 increased 35% to $2.7 million from $2.0 million in 2016;
- Satisfaction of all obligations under the privately placed senior secured convertible notes issued to two institutional
investors in June 2016;
- Completed a $5.0 million capital raise in February 2018;
- Modified the Special Protocol Agreement (SPA) with the U.S. Food and Drug Administration (FDA) for the Company’s
Phase 3 clinical trial of Melphalan Hydrochloride for Injection for use with the Delcath Hepatic Delivery System (Melphalan/HDS)
to treat patients with hepatic dominant ocular melanoma (OM);
- Announced that the independent Data Safety Monitoring Board (DSMB) of the Phase 3 FOCUS clinical trial recommended that the
study continue without modification; Reported the 500th CHEMOSAT treatment in Europe;
- Announced results from a multi-center analysis of Delcath’s Percutaneous Hepatic Perfusion (PHP) therapy in the peer-reviewed
Journal of Surgical Oncology; largest data set outside of clinical trial showed manageable toxicity and overall median
overall survival of 15.3 months, and;
- Secured a commercial supply of melphalan through an agreement with Tillomed Laboratories for use with the company’s
CHEMOSAT® Delivery System for Melphalan, where it is marketed in Europe for the treatment of a wide range of cancers of
the liver.
Management Commentary
“For much of the second half of 2017 and recent weeks, our focus has been on easing the cash constraints and
other restrictions related to our capital structure,” said Jennifer K. Simpson, Ph.D., MSN, CRNP President and CEO of Delcath.
“These limitations necessitated a series of transactions during the second half of 2017 and the early weeks of 2018 that have
permitted us to exit our 2016 Convertible Note, invest in our clinical development program, and advance our commercialization
efforts for CHEMOSAT in Europe. We continue to work to resolve the remaining issues and to secure new equity financing
under less dilutive terms to execute our plan and create value for our shareholders.”
"Despite cash constraints, total revenues for fiscal year 2017 increased 35% over the prior year, continuing the
steady growth in our core European markets. This growth was supported by the establishment of ZE diagnostic-related (DRG)
reimbursement for CHEMOSAT in Germany, which we are leveraging to obtain market access and reimbursement in other regions such as
the United Kingdom and the Netherlands. In the Netherlands, Dutch Health Authorities have included CHEMOSAT treatment in their
published guidelines for OM liver metastases. We are hopeful that inclusion in the national guidelines and the support of
clinicians treating patients with CHEMOSAT will support an application for reimbursement in this market. Since launching CHEMOSAT
in Europe, over 500 commercial CHEMOSAT procedures have been performed.
“In our clinical development program, we achieved an important milestone in December 2017 when the independent
DSMB for our Phase 3 FOCUS clinical trial for patients with hepatic dominant OM completed a pre-specified review of safety data and
recommended that the study continue without modification. This confirms our own observations of the improvements in the safety
profile of PHP therapy based on prior research and our commercial experience with CHEMOSAT in Europe. We were also happy to
announce a SPA modification agreement with the FDA to revise the FOCUS trial’s eligibility criteria to permit a greater extent of
extra-hepatic disease by removing the size restriction, number and location of extra-hepatic lesions, in conjunction with a
treatment plan for the extra-hepatic metastases. We requested this protocol modification to improve patient access to this
important clinical trial for appropriately selected patients. In an ultra-orphan indication like OM, striking the appropriate
balance between eligibility criteria and patient access can be a challenge. We are pleased that the FDA agreed to this
modification, and hope that once approved by the European Competent Authorities, ethics boards and institutional review boards of
our participating clinical trial sites, this protocol modification will help accelerate enrollment in this registration trial.
“Enrollment in our FOCUS Phase 3 Trial has been slower than anticipated, and our ability to take proactive steps
to support enrollment was limited by the cash constraints we operated under in 2017. With the rollout of the SPA protocol
modification to participating centers underway, we hope to accelerate enrollment in 2018 and expect to update our enrollment
projections in the second half of this year. Any impact on enrollment from the SPA modification is not expected to be immediate,
and it is unlikely that enrollment for this trial will be completed in time to submit an NDA to the FDA in 2019.
“For our pivotal trial in intrahepatic cholangiocarcinoma (ICC), we continue to work with potential trial sites
with a view to opening the trial in the first half of 2018. Our ICC pivotal trial is based on the prior work done in our
Phase 2 trial program in hepatocellular carcinoma (HCC) and ICC, which had the objective of identifying 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. We have closed enrollment in the Phase 2 trials to devote available
resources to the FOCUS Trial and the planned ICC pivotal trial.
"Though the recent months have been financially difficult, we remain committed to advancing our clinical and
commercial programs. We are continuously working to improve our ability to operate so we can realize the potential of PHP therapy
and return value to our shareholders," concluded Dr. Simpson.
2017 Financial Results
Total revenue for the year ended December 31, 2017 of $2.7 million was an increase of 35% when compared to the
$2.0 million total for 2016. The increase is the result of greater product sales in Europe in 2017 as Delcath continued to
see increased market acceptance of its product, particularly in Germany where the establishment of the ZE code contributed to an
increase in treatments.
Research and development (R&D) expenses for 2017 increased to $10.5 million from $8.4 million for the prior
year, largely as a result of costs associated with the Company’s ongoing Phase 3 FOCUS Trial. Selling, general and administrative
expenses for 2017 increased to $9.7 million from $9.4 million in 2016, primarily due to an increase in Delaware corporate taxes,
independent audit fees, and costs associated with the Company’s efforts to secure approval for a reverse stock split.
For the year ended December 31, 2017, derivative instrument income increased to $15.1 million from $12.8 million for the year ended
December 31, 2016. The increase of $2.3 million is due to the issuance of the November 2017 warrants and the subsequent
mark-to-market adjustment at December 31, 2017.
The Company had a net loss for the year ended December 31, 2017 of $45.1 million, an increase of $27.1 million,
or 151.1%, compared to the net loss of $18.0 million for the same period in 2016. Approximately $2.3 million is related to an
increase in operating expenses primarily related to increased investment in clinical trial initiatives. The balance of the increase
is related to several non-cash items, including a $7.4 million increase in interest expense primarily related to the amortization
of debt discounts and a $29.9 million loss on the settlement of the convertible note debt, which was partially offset by a $2.3
million change in the fair value of the warrant liability and a $9.6 million gain on the extinguishment of the June 2016 Series C
Warrants.
The 2016 net loss included a $14.3 million increase in interest expense primarily related to the amortization of
debt discounts and a $1.4 million increase in operating expenses primarily related to increased investment in clinical trial
initiatives. This was offset by a $12.2 million change in the fair value of the warrant liability, a non-cash item, and a $0.2
million improvement in gross profit due to increased sales.
Balance Sheet Highlights
As of December 31, 2017, Delcath had cash and cash equivalents of $4.0 million, compared with $4.4 million as of
December 31, 2016. During 2017 the Company used $15.4 million of cash to fund operating activities.
On February 9, 2018, the Company closed a registered offering of 212.0 million shares of common stock, 38.0
million pre-funded warrants to purchase 38.0 million shares of common stock and warrants to purchase an aggregate of 500.0 million
shares of common stock for total gross proceeds of approximately $5.0 million.
Delcath believes it has sufficient capital and access to committed capital to fund its operating activities
through May of 2018.
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). 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, 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:
Delcath Investor Relations
Email: investorrelations@delcath.com
--Financial Tables to Follow--
|
DELCATH SYSTEMS, INC. |
Consolidated Statements of Operations and
Comprehensive Loss |
for the twelve months ended December 31, 2017, 2016
and 2015 |
(in thousands, except share data) |
|
|
|
|
|
|
|
|
|
Year ended December 31, |
|
|
|
2017 |
|
|
|
2016 |
|
|
|
2015 |
|
Revenue |
|
$ |
2,715 |
|
|
$ |
1,992 |
|
|
$ |
1,747 |
|
Cost of goods sold |
|
|
(701 |
) |
|
|
(550 |
) |
|
|
(462 |
) |
Gross profit |
|
|
2,014 |
|
|
|
1,442 |
|
|
|
1,285 |
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
Selling, general and administrative expenses |
|
|
9,684 |
|
|
|
9,434 |
|
|
|
10,009 |
|
Research and development expenses |
|
|
10,495 |
|
|
|
8,448 |
|
|
|
6,486 |
|
Total operating expenses |
|
|
20,179 |
|
|
|
17,882 |
|
|
|
16,495 |
|
Operating loss |
|
|
(18,165 |
) |
|
|
(16,440 |
) |
|
|
(15,210 |
) |
Change in fair value of the warrant liability, net |
|
|
15,103 |
|
|
|
12,780 |
|
|
|
564 |
|
Gain on warrant extinguishment |
|
|
9,613 |
|
|
|
— |
|
|
|
— |
|
Loss on debt settlements and extinguishments |
|
|
(29,924 |
) |
|
|
— |
|
|
|
— |
|
Interest expense |
|
|
(21,703 |
) |
|
|
(14,328 |
) |
|
|
(67 |
) |
Other income (expense) |
|
|
(41 |
) |
|
|
17 |
|
|
|
9 |
|
Net loss |
|
$ |
(45,117 |
) |
|
$ |
(17,971 |
) |
|
$ |
(14,704 |
) |
Other comprehensive loss: |
|
|
|
|
|
|
Foreign currency translation adjustments |
|
$ |
83 |
|
|
$ |
(33 |
) |
|
$ |
(28 |
) |
Comprehensive loss |
|
$ |
(45,034 |
) |
|
$ |
(18,004 |
) |
|
$ |
(14,732 |
) |
|
|
|
|
|
|
|
Common share data: |
|
|
|
|
|
|
Basic and diluted loss per share* |
|
$ |
(6.50 |
) |
|
$ |
(3,707 |
) |
|
$ |
(5,096 |
) |
|
|
|
|
|
|
|
Weighted average number of basic and diluted shares outstanding* |
|
|
7,019,316 |
|
|
|
4,847 |
|
|
|
2,887 |
|
|
|
|
|
|
|
|
*reflects a one-for-sixteen (1:16) reverse stock split effected on
July 21, 2016 and a one-for-three hundred and fifty (1:350) reverse stock split effected on November 6, 2017. |
|
|
DELCATH SYSTEMS, INC. |
Consolidated Balance Sheets |
as of December 31, 2017 and 2016 |
(in thousands, except share and per share data) |
|
|
|
|
|
|
|
December 31, |
|
December 31, |
|
|
|
2017 |
|
|
|
2016 |
|
Assets |
|
|
|
|
Current assets |
|
|
|
|
Cash and cash equivalents |
|
$ |
3,999 |
|
|
$ |
4,409 |
|
Restricted cash |
|
|
1,325 |
|
|
|
27,287 |
|
Accounts receivables, net |
|
|
317 |
|
|
|
403 |
|
Inventories |
|
|
1,248 |
|
|
|
660 |
|
Prepaid expenses and other current assets |
|
|
700 |
|
|
|
698 |
|
Deferred financing costs |
|
|
— |
|
|
|
699 |
|
Total current assets |
|
|
7,589 |
|
|
|
34,156 |
|
Property, plant and equipment, net |
|
|
1,298 |
|
|
|
1,083 |
|
Total assets |
|
$ |
8,887 |
|
|
$ |
35,239 |
|
|
|
|
|
|
Liabilities and Stockholders' Equity (Deficit) |
|
|
|
|
Current liabilities |
|
|
|
|
Accounts payable |
|
$ |
3,846 |
|
|
$ |
594 |
|
Accrued expenses |
|
|
3,408 |
|
|
|
3,407 |
|
Convertible notes payable, net of debt discount |
|
|
— |
|
|
|
13,343 |
|
Warrant liability |
|
|
560 |
|
|
|
18,751 |
|
Total current liabilities |
|
|
7,814 |
|
|
|
36,095 |
|
Deferred revenue |
|
|
— |
|
|
|
30 |
|
Other non-current liabilities |
|
|
395 |
|
|
|
604 |
|
Total liabilities |
|
|
8,209 |
|
|
|
36,729 |
|
|
|
|
|
|
Commitments and contingencies |
|
|
|
|
|
|
|
|
|
Stockholders' Equity (Deficit) |
|
|
|
|
Preferred stock, $.01 par value; 10,000,000 shares authorized; no
shares
issued and outstanding at December 31, 2017 and December 31, 2016,
respectively |
|
|
— |
|
|
|
— |
|
Common stock, $.01 par value; 500,000,000 shares authorized;
114,055,137 and
11,805 shares issued and 114,054,851 and 11,750 shares outstanding
at December 31, 2017 and December 31, 2016, respectively* |
|
|
1,141 |
|
|
|
— |
|
Additional paid-in capital |
|
|
324,378 |
|
|
|
277,790 |
|
Accumulated deficit |
|
|
(324,832 |
) |
|
|
(279,188 |
) |
Treasury stock, at cost; 1 share at December 31, 2017 and December
31, 2016,
respectively* |
|
|
(51 |
) |
|
|
(51 |
) |
Accumulated other comprehensive loss |
|
|
42 |
|
|
|
(41 |
) |
Total stockholders' equity (deficit) |
|
|
678 |
|
|
|
(1,490 |
) |
Total liabilities and stockholders' equity (deficit) |
|
$ |
8,887 |
|
|
$ |
35,239 |
|
|
|
|
|
|
*reflects a one-for-sixteen (1:16) reverse stock split effected on July
21, 2016 and a one-for-three hundred and fifty (1:350) reverse stock split effected on November 6, 2017. |
|
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