On November 13, 2018 Delcath Systems, Inc. (OTCQB: DCTH), an interventional oncology company focused on the treatment of primary and metastatic liver cancers, reported its financial results for the quarter ended September 30, 2018 (Press release, Delcath Systems, NOV 13, 2018, View Source;p=RssLanding&cat=news&id=2377027 [SID1234531279]).
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Highlights from the third quarter of 2018 and recent weeks include:
First patients treated in the Company’s amended Phase 3 clinical trial in ocular melanoma liver metastases (the FOCUS Trial)
Raised $7.0 million in net proceeds from the September 2018 rights offering
Revenue from European sales for the quarter of approximately $0.8 million and $2.4 million for the first nine months of 2018, an increase of approximately 20% over the first nine-months of 2017
First patient treated in global Phase 3 clinical trial for intrahepatic cholangiocarcinoma (ICC) (the ALIGN Trial)
Publication of ICC outcomes data in European Radiology
Positive results from prospective and retrospective studies on CHEMOSAT presented at 2018 CIRSE annual conference
3rd Data Safety Monitoring Board (DSMB) of the Phase 3 FOCUS clinical trial has again recommended that the study continue without modification;
Management Commentary
"Our third quarter was a productive period for Delcath during which we took major steps to advance our Clinical Development Program while working to resolve the cash constraints and other restrictions that have impeded our ability to operate," said Jennifer K. Simpson, Ph.D., MSN, CRNP President and CEO of Delcath.
"During the quarter, we began aggressively rolling out the amended protocol for our FOCUS registration trial in ocular melanoma liver metastases, activating centers in both the United States and Europe and treating the first patients under the new single arm protocol. We continue to work toward our goal of completing enrollment in this trial by the end of the first half of 2019."
"In October, we announced treatment of the first patient in our registration trial of Melphalan Hydrochloride for Injection for use with the Delcath Hepatic Delivery System (Melphalan/HDS) to treat patients with ICC (the ALIGN Trial.) The ALIGN Trial is based on a positive efficacy signal observed in a multi-center analysis in the ICC tumor type with CHEMOSAT in Europe, which were published in European Radiology. In this orphan population where there exists an unmet medical need, this trial provides us with a second pathway to commercial drug approval in the United States, and, if successful, we believe will be an important value driver for the Company."
"During our third quarter we also completed our September 2018 Rights Offering, through which we secured approximately $7.2 million in net proceeds. Though the Rights Offering provided the capital that allowed us to advance our plans during the quarter, it fell short of our expectations. We will require and continue to seek additional capital to complete the clinical trials on which shareholder value ultimately depends."
"Though we still face many challenges, we have taken significant steps to advance our clinical and commercial programs and to obtain the financial resources required to realize PHP therapy’s potential," concluded Dr. Simpson.
Third Quarter 2018 Financial Results
Revenue for the three months ended September 30, 2018 was $0.8 million, up from $0.7 million for the prior year period driven by the establishment of reimbursement coverage of CHEMOSAT procedures in Germany. Selling, general and administrative expenses were approximately $2.3 million compared to $2.9 million in the prior year quarter, a decrease related to costs associated with the Company’s shareholder meetings held in 2017 that were not incurred in 2018, and a reduction in independent audit fees incurred in 2017 that were not required in 2018. Research and development expenses for the current quarter increased to $4.1 million from $2.3 million in the prior year quarter, driven by increase costs associated primarily due to the ongoing accrual of the Company’s Phase 3 FOCUS trial. Total operating expenses for the current quarter were $6.4 million compared with $5.1 million in the prior year quarter.
The Company recorded a net loss for the three months ended September 30, 2018, of $8.9 million, a decrease of $3.7 million, or 29.5%, compared to a net loss of $12.6 million for the same period in 2017. This decrease in net loss is primarily due to a $1.9 million decrease in interest expense, a $1.8 million reduction in loss on debt extinguishment and a $1.2 million increase in the change in the fair value of the warrant liability, all non-cash items. This decrease was slightly offset by a $1.2 million increase in operating expenses primarily related to increased investment in our clinical trial initiatives.
Balance Sheet Highlights
At September 30, 2018, the Company had cash, cash equivalents and restricted cash totaling $10.0 million, as compared to cash, cash equivalents and restricted cash totaling $5.3 million at December 31, 2017 and $10.9 million at September 30, 2017. During the nine months ended September 30, 2018 and September 30, 2017, the Company used $12.9 million and $11.7 million respectively, of cash in its operating activities. Including the $850,000 raised in November 2018 through the issuance of Series D Preferred Shares, the Company believes that its capital resources are adequate to fund its operating activities into December 2018.
September 2018 Rights Offering
In September 2018, the Company completed the sale of 4,667,811 shares of its common stock, with net proceeds after expenses of approximately $7.0 million.