On March 27, 2023 Delcath Systems, Inc. (Nasdaq: DCTH), an interventional oncology company focused on the treatment of primary and metastatic cancers of the liver, reported business highlights and financial results for the fourth quarter and full year ended December 31, 2022 (Press release, Delcath Systems, MAR 27, 2023, View Source [SID1234629361]).

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Recent Business Highlights

During and since the fourth quarter, Delcath Systems, Inc. (Delcath or the Company):

Received an acceptance of the NDA resubmission from the U.S. Food and Drug Administration (FDA) for Hepzato Kit (melphalan hydrochloride for injection/Hepatic Delivery System) with a Prescription Drug User Fee Act (PDUFA) target action date of August 14, 2023,

Priced a financing that is expected to provide an initial upfront funding of $25 million, with up to an additional $60 million tied to satisfaction of milestones, in gross proceeds to Delcath through a private placement. The financing was led by Vivo Capital with participation from Logos Capital, BVF Partners LP, Stonepine Capital Management, LLC, Serrado Capital LLC and existing investor, Rosalind Advisors,

Completed in December a private placement with existing investors priced at market for a total of $11.2 million funds raised in 2022,

Announced the rotation of its Board of Directors with John R. Sylvester appointed as Chairman, and

Reached terms of settlement to end its dispute with medac, its former distributor in Europe.
In addition, during and since the fourth quarter, independent investigators published:

Updated results from the CHOPIN phase 1B trial in which seven patients with advanced uveal melanoma treated with CHEMOSAT and ipilimumab plus nivolumab show a median PFS of 29.1 months at a median follow-up of 29.1 months, and

Results of a Single Center Study in the treatment of Cholangiocarcinoma (CCA) in which the authors concluded that percutaneous hepatic perfusion (PHP) with CHEMOSAT is an effective and safe treatment option for patients with advanced CCA and has the potential to prolong life in patients with inoperable, treatment-refractory liver metastases. The authors highlighted the increasing importance of locoregional forms of therapy in the treatment of CCA and that the new edition of the German S3 cancer guideline "Diagnostics and Therapy of Hepatocellular Carcinoma and Biliary Carcinomas" now includes PHP with melphalan for the treatment of inoperable iCCA or eCCA liver metastases.
"With the FDA setting an August 14, 2023, PDUFA date we have crossed a significant milestone for the Company." said Gerard Michel, Chief Executive Officer of Delcath. Mr. Michel added, "We are gratified with the support from both our existing investors and our new investors, all of whom are highly regarded healthcare-focused funds. Their support, potentially totaling up to $85 million, subject to satisfaction of milestones, we believe validates the clinical relevance of and the commercial opportunity for Hepzato in metastatic ocular melanoma. Further, it positions Delcath to execute on HEPZATO commercialization plans upon potential FDA approval. Finally, we eagerly await the publication of interim results from the phase II portion of the CHOPIN study which should provide critical additional information about the potential utility of CHEMOSAT used in sequence with immune checkpoint inhibitors."

Income Statement Highlights.

Fourth Quarter 2022 Results

Product revenue for the three months ended December 31, 2022 was approximately $0.6 million, compared to $0.2 million for the prior year period, from our sales of CHEMOSAT in Europe. This increase in product revenue is primarily due to direct product sales for the fourth quarter of 2022 compared to the revenue share arrangement with our distribution partner in Europe during the fourth quarter of 2021. Other income for the three months ended December 31, 2022 was $1.9 million due to the acceleration of deferred revenue caused by the termination of the medac license agreement.

Research and development expenses for the three months ended December 31, 2022 were $4.4 million, compared to $3.6 million in the prior year quarter. The growth in R&D expense is primarily due to increased activity related to the expenses incurred for the preparation of our NDA resubmission which occurred on February 14, 2023. Selling, general and administrative expenses for the three months ended December 31, 2022 were approximately $3.8 million, compared to $3.0 million in the prior year quarter. The increase in general and administrative expenses was primarily due to higher headcount related costs such as higher share-based compensation expense.

The Company recorded a net loss for the three months ended December 31, 2022 of $8.5 million, $0.86 per share (basic and diluted), compared to a net loss of $5.3 million, $0.69 per share (basic and diluted), for the same period in 2021.

Full Year 2022 Results

Product revenue for the year ended December 31, 2022 was approximately $2.5 million, compared to $1.3 million for the prior year from sales of CHEMOSAT in Europe. Other income for the year ended December 31, 2022 was $0.2 million compared to $2.3 million in the prior year primarily due to the termination of the medac license agreement in December last year.

Research and development expenses for the year ended December 31, 2022 were $18.6 million compared to $13.8 million in the prior year with the increase due to preparation for the pre-NDA meeting in April 2022 and expenses related to the NDA resubmission. Selling, general and administrative expenses for the year ended December 31, 2022 were approximately $17.3 million compared to $13.6 million in the prior year with the increase primarily due to the pending launch of HEPZATO in the United States and the accrual for the settlement of the medac litigation.

The Company recorded a net loss for the year ended December 31, 2022, of $36.5 million, $4.12 per share (basic and diluted), compared to a net loss of $25.6 million $3.59 per share (basic and diluted) for the year ended December 31, 2021.

Balance Sheet Highlights

On December 31, 2022, the Company had cash, cash equivalents and restricted cash totaling $11.8 million, as compared to cash, cash equivalents and restricted cash totaling $26.9 million on December 31, 2021. During the years ended December 31, 2022, and December 31, 2021, the Company used $25.0 million and $22.6 million, respectively, of cash in our operating activities. The use of cash in operating activities was partially offset by two private placements during 2022 resulting in net proceeds of $10.9 million. On March 15, 2023, the Company returned to Avenue Venture Opportunity Fund L.P. the $4.0 million held in the restricted cash to paydown a portion of the outstanding loan balance.

On December 13, 2022, the Company closed a private placement for the issuance and sale of 1,448,889 shares of common stock and 692,042 pre-funded warrants to purchase common stock to certain investors. Each share of common stock was sold at a price per share of $2.90 and the pre-funded warrants were sold at a price of $2.89 per pre-funded warrant. The pre-funded warrants have an exercise price of $0.01 per share of common stock and are immediately exercisable. The Company received gross proceeds from the private placement of approximately $6.2 million before deducting offering expenses.

Conference Call Information

Delcath will host a conference call today, on March 27, 2023, at 4:30 PM Eastern Time to discuss results for its fourth quarter and full year ended December 31, 2022 and provide a business update.

To participate in this event, dial approximately 5 to 10 minutes before the beginning of the call.

Event Date: Monday March 27, 2023

Time: 4:30 PM Eastern Time

Participant Numbers: Toll Free: 1-833-630-1960
International: 1-412-317-1841
Webcast: View Source

CONFERENCE REPLAY

US Toll Free: 1-877-344-7529

International Toll: 1-412-317-0088

Replay Access Code: 7305121

End Date: April 03, 2023