On March 29, 2017 Delcath Systems, Inc. (NASDAQ:DCTH), an interventional oncology Company focused on the treatment of primary and metastatic liver cancers, reported financial results for the 12 months ended December 31, 2016 (Press release, Delcath Systems, MAR 29, 2017, View Source;p=RssLanding&cat=news&id=2257229 [SID1234518333]).
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Highlights for the fourth quarter of 2016 and recent weeks include:
Fourth quarter 2016 revenue increased 54.0% to $0.7 million and full year 2016 revenue increased 18% to $2.0 million;
Fully established national reimbursement coverage in Germany under ZE system;
Significantly expanded the number of clinical sites for the Company’s global Phase 3 clinical trial for patients with hepatic dominant ocular melanoma (the FOCUS Trial);
Announced a Special Protocol Assessment (SPA) agreement with the U.S. Food and Drug Administration (FDA) for the design of a pivotal trial of Melphalan/HDS to treat patients with intrahepatic cholangiocarcinoma (ICC);
The American Journal of Clinical Oncology published a single-center retrospective review finding that the Company’s investigational percutaneous hepatic perfusion (PHP) with Melphalan/HDS offered promising results with a doubling of overall survival and significantly longer progression-free survival (PFS) and hepatic progression-free survival (HPFS) compared with other targeted therapies; and
Favorable data from two institutions were presented at the Regional Cancer Therapies Symposium and showed strong tumor response and overall survival with the Company’s investigational PHP therapy in patients with ocular melanoma that metastasized to the liver.
"Fiscal year 2016 was devoted to the advancement of our global FOCUS Trial in ocular melanoma liver metastases as well as other important clinical initiatives for our Melphalan/HDS as a treatment for primary and metastatic liver cancers, while at the same time we continued to facilitate the commercial availability of CHEMOSAT in Europe," said Jennifer K. Simpson, Ph.D., MSN, CRNP, President and Chief Executive Office of Delcath.
"Our FOCUS Trial was initiated in January 2016 under an SPA with the FDA to evaluate Melphalan/HDS as a treatment for ocular melanoma that has metastasized to the liver. During the year we activated more than 20 leading U.S. and European cancer centers as participating clinical sites in this study. We plan to have approximately 40 sites activated by the end of summer 2017.
"In addition, we recently announced a new SPA with the FDA for the initiation of a pivotal trial for the use of Melphalan/HDS in patients with ICC. This new trial will enroll approximately 295 ICC patients at approximately 40 clinical sites in the U.S. and Europe, with the primary endpoint of overall survival and secondary and exploratory endpoints including safety, progression-free survival, overall response rate and quality-of-life measures. We’ve designed this trial to be cost effective and intend to pursue it in a financially prudent manner. Given the sequential nature of the trial design, our investment in this study will be modest in 2017 as the Melphalan/HDS segment of the study will not occur until late in the year.
"In Europe, we continued to grow revenue and focus our efforts on obtaining favorable reimbursement in key markets. We believe our ZE national reimbursement in Germany, along with the continued presentation and publication of data supporting the use of CHEMOSAT by leading clinical experts validates our access efforts in other markets across Europe.
"During the year we also secured committed financing through a securities purchase agreement with an institutional investor to issue $35 million of senior convertible notes and common stock purchase warrants. Assuming all conditions are satisfied, we expect the quarterly releases of capital throughout 2017 will fund our clinical development plan through the end of the year, while also supporting our commercial activities in Europe.
"The commercial and clinical progress made throughout 2016 has been steady and we look forward to expanding access to our potentially life-saving PHP therapy for patients around the world afflicted with primary and metastatic liver cancer," concluded Dr. Simpson.
2016 Financial Results
Total revenue for 2016 of $2.0 million increased 18% from $1.7 million for 2015. Selling, general and administrative expenses for 2016 decreased to $9.4 million from $10.0 million in 2015. For 2016, research and development expenses increased to $8.4 million from $6.5 million in 2015. Total operating expenses for 2016 were $17.9 million compared with $16.5 million for 2015.
The Company reported a net loss for 2016 of $18.0 million or $10.59 per share based on 1.7 million weighted average common shares outstanding, compared with a net loss for 2015 of $14.7 million or $14.56 per share based on 1.0 million weighted average common shares outstanding. The increase is primarily due to a $14.3 million increase in interest expense primarily related to the amortization of debt discounts, a non-cash item, 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 higher sales.
Balance Sheet Highlights
As of December 31, 2016, Delcath had cash and cash equivalents of $4.4 million, compared with $12.6 million as of December 31, 2015. During 2016 the Company used $14.2 million of cash to fund operating activities. Delcath believes it has sufficient capital and access to committed capital to fund its operating activities through the first quarter of 2018.