On May 9, 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 three months ended March 31, 2017 (Press release, Delcath Systems, MAY 9, 2017, View Source [SID1234518928]). Schedule your 30 min Free 1stOncology Demo! Highlights for the first quarter of 2017 and recent weeks include:
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First quarter 2017 revenue of $0.74 million, an increase of 100% compared with revenue of $0.37 million in prior year quarter;
CHEMOSAT treatment milestone set by SPIRE Southampton Hospital in the U.K. with more than 100 CHEMOSAT treatments performed, including eight treatments on a single patient;
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 (OS), 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.
"During the first three months of 2017 we continued to advance our clinical development programs in ocular melanoma liver metastases and intrahepatic cholangiocarcinoma, while making steady progress with commercialization of CHEMOSAT in Europe," said Jennifer K. Simpson, Ph.D., MSN, CRNP President and CEO of Delcath. "As we announced recently, we have concluded a new SPA agreement 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 about 40 clinical sites in the U.S. and Europe, with the primary endpoint of overall survival and with secondary and exploratory endpoints that include safety, progression-free survival, objective response rate and quality-of-life measures. The trial is designed to be cost-effective and conducted in a financially prudent manner, with modest investment in this fiscal year. In conjunction with the FOCUS Trial in ocular melanoma liver metastases, our clinical development programs now include two paths toward potential U.S. market approvals.
"In Europe, we continue to make steady progress with the commercialization of CHEMOSAT. Our first quarter revenue of more than $0.7 million was double the prior year period’s sales, driven primarily by national reimbursement in Germany under the ZE system. With coverage under the ZE system now in place, we expect product sales growth from this market for the remainder of 2017. Elsewhere in Europe, we continue to focus on building the clinical and pharmacoeconomic data to support reimbursement applications in other key markets. We expect that positive negotiations for coverage in Germany will support our efforts for payment levels in other markets such as the U.K. and the Netherlands. Securing reimbursement coverage in additional European markets remains critical to future revenue growth for CHEMOSAT," concluded Dr. Simpson.
First Quarter Financial Results
Revenue for the three months ended March 31, 2017 was $0.74 million, an increase of 100% from $0.37 million for the prior year period. Selling, general and administrative expenses were approximately $2.4 million, unchanged from the prior year quarter. Research and development expenses for the current quarter increased to $2.3 million from $1.3 million in the prior year quarter. Total operating expenses for the current quarter were $4.7 million compared with $3.7 million in the prior year quarter.
The Company reported a net loss for the 2017 first quarter of $11.3 million, or $0.25 per share based on 45.1 million weighted average common shares outstanding, compared with a net loss in the prior year period of $1.8 million or $1.25 per share based on 1.5 million weighted average common shares outstanding. The increase is primarily due to an $8.4 million increase in interest expense primarily related to the amortization of debt discounts, a non-cash item, and a $1.0 million increase in operating expenses primarily related to increased investment in clinical trial initiatives. This was offset by a $0.4 million change in the fair value of the warrant liability, a non-cash item, and a $0.27 million improvement in gross profit due to higher sales.
Balance Sheet Highlights
As of March 31, 2017, Delcath had cash and cash equivalents of $6.4 million, compared with $4.4 million as of December 31, 2016. During the first quarter of 2017, the Company used $3.8 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 end of 2017.
Recent Financial Transactions
On April 2, 2017, Delcath entered into separate Warrant Repurchase Agreements with each of the investors named on the Schedule of Buyers attached to our Securities Purchase Agreement dated June 6, 2016. Pursuant to the Warrant Repurchase Agreements, each investor agreed to a Controlled Account Release in an aggregate amount equal to $7,876,312, which funds in each case were paid to the respective investor in exchange for cancellation of the Warrants issued to each investor under the Securities Purchase Agreement. Delcath anticipates that the cash remaining in the Controlled Accounts after this transaction will be sufficient to fund operating activities through the end of 2017.