On August 11, 2021 Delcath Systems, Inc. (Nasdaq: DCTH), an interventional oncology company focused on the treatment of rare primary and metastatic cancers of the liver, reported business highlights and financial results for the second quarter ended June 30, 2021 (Press release, Delcath Systems, AUG 11, 2021, View Source [SID1234586367]).
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Recent Business Highlights
During and since the second quarter the company:
Had positive efficacy results presented from its FOCUS Phase III trial of HEPZATO KIT (melphalan hydrochloride for injection/hepatic delivery system) in patients with liver dominant metastatic ocular melanoma (mOM) at the American Society of Clinical Oncology (ASCO) (Free ASCO Whitepaper) Annual Meeting. The oral presentation by the study’s Lead Investigator, Dr. Jonathan Zager, Chief Academic Officer, Chair, USF Department of Oncologic Sciences, Moffitt Cancer Center, included data based on 79 of 91 treated HEPZATO patients showing an overall response rate of 29.2% with a 95% confidence interval lower bound of 20%. Given the magnitude by which the lower bound exceeded the 8.3% prespecified threshold for success, the primary endpoint of the trial has been met regardless of the outcome of patients who have not yet been evaluated. Patient level response data were also presented for this same patient set, indicating that 44% of evaluable patients in the HEPZATO arm had a 30% or greater reduction in target tumor lesions at one or more time points versus 17% for patients enrolled in the Best Alternative Care arm.
Announced that the United Kingdom’s National Institute for Health and Care Excellence, has updated its guidance for the Delcath CHEMOSAT Hepatic Delivery System for Melphalan (CHEMOSAT) in the treatment of patients with metastases in the liver from Ocular Melanoma. Under this designation, private insurance may be more likely to fund treatment with CHEMOSAT, some regional funding may be more accessible, and a process is now available to seek national reimbursement.
Entered into a debt facility with Avenue Venture Opportunities Fund, L.P. providing up to $20 million with an initial $15 million funded at close
Was added to the Russell Microcap Index. Membership in the Russell Microcap Index, which remains in place for one year, means automatic inclusion in the appropriate growth and value style indexes. FTSE Russell determines membership for its Russell indexes primarily by objective, market-capitalization rankings and style attributes.
"During the quarter we announced new patient level data at ASCO (Free ASCO Whitepaper) that further strengthens the case that HEPZATO would offer a compelling clinical benefit to patients were it approved by the FDA," said Gerard Michel, CEO of Delcath. "With additional capital from the just closed transaction with Avenue Venture Opportunities Fund, Delcath has the required resources to accomplish its strategic priorities – the filing of the HEPZATO NDA in early 2022, preparing for the subsequent US launch when approved, and expanding the development of HEPZATO into additional areas of high unmet need."
First Quarter 2021 Financial Results:
Income Statement Highlights.
Product revenue for the three months ended June 30, 2021 was approximately $536 thousand, compared to $379 thousand for the prior year period from our sales of CHEMOSAT procedures in Europe. Selling, general and administrative expenses were approximately $3.3 million compared to $2.3 million in the prior year quarter. Research and development expenses for the quarter were $3.5 million compared to $2.2 million in the prior year quarter. Total operating expenses for the quarter were $6.8 million compared with $4.5 million in the prior year quarter. Expenses for the quarter included approximately $1.6 million of stock option expense compared to no stock option expense in the prior year quarter.
The company recorded a net loss for the three months ended June 30, 2021, of $6.4 million, compared to a net income of $4.3 million for the same period in 2020
Balance Sheet Highlights.
On June 30, 2021, we had cash, cash equivalents and restricted cash totaling $19.4 million, as compared to cash, cash equivalents and restricted cash totaling $16.2 million at June 30, 2020. During the three months ended June 30, 2021 and June 30, 2020, we used $11.7 million and $13.1 million, respectively, of cash in our operating activities.
On August 6th, we closed a $20 million venture debt financing transaction with Avenue Venture Opportunities Fund ("Avenue Venture Fund"). The initial tranche of the Loan is $15 million, including $4 million which has been funded into a restricted account and will be released upon achievement of certain milestones. The Company may request an additional $5 million of gross proceeds between October 1, 2022 and December 31, 2022, which will be funded at Avenue Venture Fund’s discretion.
Also, on August 6th, we amended two existing convertible notes through an extension of the term of the notes until 2024 and lowered the conversion factor in consideration for the notes becoming subordinate to the Avenue Venture Fund debt.
Additional details concerning the Avenue Venture Fund facility and modification of the existing convertible notes will be contained in the company’s Current Report on Form 8-K to be filed with the Securities and Exchange Commission.
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