NEW YORK, Nov. 6, 2013 /PRNewswire/ -- Delcath
Systems, Inc. (NASDAQ: DCTH) today reported financial results and
operational developments for the fiscal third quarter and nine
months ended September 30, 2013.
Developments for the quarter and recent weeks subsequent to quarter
end are as follows:
- Finalizing plans to initiate a global Phase 2 efficacy and
safety study to investigate its Melphalan Hepatic Delivery System
(Melphalan HDS) for first-line treatment of patients with
unresectable hepatocellular carcinoma (HCC); the U.S. Food &
Drug Administration (FDA) granted the Company orphan drug
designation for melphalan in the treatment of patients with
HCC
- The Company raised approximately $7.5
million in gross proceeds in an offering of shares of its
common stock and warrants to purchase common stock; cash and cash
equivalents as of September 30, 2013
were $27.7 million; combined with
October financing activities, pro forma cash and cash equivalents
were approximately $35 million
- The Company completed a reorganization of its operations,
reducing headcount by a further 33% and lowering its cash
utilization by more than 50% compared to the same quarter in the
prior year; the Company expects to reduce operating costs in 2014
by approximately $10 million compared
to 2013, while focusing resources on its clinical development
program
- The Company's Board of Directors appointed Jennifer K. Simpson and Graham G. Miao as Interim Co-Presidents and
Co-CEOs following the separation of Eamonn
P. Hobbs from the Company; a Transition Committee was formed
to assist the Board and senior management in implementing a
leadership transition plan and its evaluation of potential
strategic alternatives for the Company
- Delcath received a complete response letter (CRL) from the U.S.
Food & Drug Administration (FDA) regarding the
non-approval of the Company's New Drug Application (NDA) for
Delcath's MelblezTM Kit (Melblez (melphalan) for
Injection for use with the Delcath Hepatic Delivery System) for the
treatment of patients with unresectable ocular melanoma metastatic
to the liver; the Company is evaluating the requirements
contained in the letter, and will review potential regulatory paths
forward with the FDA for the indication of ocular melanoma liver
metastasis
"The actions we took this quarter were designed to optimize
utilization of available resources on continued CHEMOSAT clinical
adoption in Europe and our
clinical development program for HCC," commented Jennifer Simpson, Interim Co-President and
Co-CEO. "We are currently pursuing a focused market access approach
in Europe by seeking interim
reimbursement mechanisms for CHEMOSAT procedures in Germany and the United Kingdom, where adoption of CHEMOSAT has
been strongest. In addition, we continue to evaluate various
interim reimbursement pathways in other target countries in the EU.
We believe these mechanisms will help build the foundation for
commercialization and help support long-term revenue growth."
"In looking at the HCC market, we believe our greatest potential
opportunity is in the first line setting," continued Dr. Simpson.
"As a result, we have modified our proposed clinical trial
accordingly, and will be seeking comments from the FDA. Subject to
agreement by the FDA, we now anticipate enrolling our first patient
in our HCC Phase 2 trial in the first quarter of 2014."
Financial Results
For the third quarter ended September 30,
2013, total revenue was $72,000 compared with total revenue of
$39,000 in the in third quarter
2012. Operating expenses decreased by approximately 44% to
$6.8 million from $12.2 million for the same period in 2012. The
decrease is primarily due to a significant reduction in expenses
related to the Company's NDA submission to the FDA, as well as the
Company's overall cost management efforts. Operating loss was
$6.7 million, which included non-cash
stock-based compensation income of $0.2
million, as compared with an operating loss of $12.2 million, including $1.1 million in non-cash stock-based compensation
expense, in the year ago period.
"During the quarter, the proactive decisions we made have
enabled our organization to be more efficient and lowered our cash
utilization by 53% compared to the prior year period. We expect
that these actions will reduce annual operating costs by
approximately $10 million while
preserving our ability to invest in our clinical strategy,"
commented Graham Miao, Interim
Co-President and Co- CEO. "With our current cash balance, buoyed
with the just completed capital raise, we have strengthened our
balance sheet, which we believe will allow us to execute our
strategy into 2015."
For the nine months ended September 30,
2013, total revenue was approximately $452,000, of which $300,000 was related to the recognition of
previously deferred revenue. Total operating expenses for the nine
months ended September 30, 2013
decreased by approximately 35% to $27.6
million from $42.2 million for
the same period in 2012. Operating loss for the nine months ended
September 30, 2013 was $27.5 million, which included $0.6 million in non-cash stock-based compensation
expense, as compared with an operating loss of $42.0 million, including $2.9 million in non-cash stock-based compensation
expense, in the year ago period.
Delcath raised approximately $23.2
million before related expenses through the Company's
At-the-Market (ATM) equity offering program during the nine months
ended September 30, 2013, including
approximately $2.3 million in the
third quarter. As of October 31,
2013, there was approximately $47
million available under the ATM program. In addition,
the Company raised $9.0 million
before related expenses through its Committed Equity Financing
Facility (CEFF) program during the nine months ended September 30, 2013. At September 30, 2013, there was approximately
$24 million available under the CEFF
program.
Cash and cash equivalents as of September
30, 2013 were $27.7 million,
compared with $23.7 million at
December 31, 2012. Combined with
October financing activities, pro forma cash and cash equivalents
were approximately $35 million.
During the nine months ended September
30, 2013, cash used in operating activities was $28.9 million, a 29% reduction compared to
$40.7 million in the comparable nine
month period in 2012. The decrease in cash utilization was in part
due to a reduction in NDA submission-related costs, and improved
organizational and operational efficiencies.
With the recently announced reorganization, management believes
the Company is on track to meet previously established guidance of
$6-7 million cash burn in the fourth
quarter of 2013 and a quarterly average cash burn projection of
$5-6 million in 2014. The Company
will continue to examine additional cost effectiveness strategies,
while focusing resources on clinical adoption and corporate
development programs.
Conference Call and Webcast
The Company will host a conference call today, November 6, 2013 at 4:30
p.m. ET. The dial-in numbers for the conference call are
800-706-7745 (U.S. participants) and 617-614-3472 (international
participants); both numbers require passcode 38516673. To access
the live webcast, go to the Events & Presentations page on the
Investor Relations section of the Company's website at
http://www.delcath.com/investors/events
A taped replay of the call will be available beginning
approximately two hours after the call's conclusion and will be
available for seven days. Dial-in numbers for the replay are
888-286-8010 and 617-801-6888 for U.S. and International callers,
respectively. The replay passcode for both U.S. and International
callers is 31858222. An archived webcast will also be available at
http://www.delcath.com/investors/events
About Delcath Systems
Delcath Systems, Inc. is a specialty pharmaceutical and medical
device company focused on oncology. Our proprietary drug/device
combination product, the Delcath Hepatic Delivery System, is
designed to administer high dose chemotherapy and other therapeutic
agents to the liver, while controlling the systemic exposure of
those agents. The Company's initial focus is on the treatment of
primary and metastatic liver cancers. Outside of the United States, our proprietary product to
deliver and filter melphalan hydrochloride is marketed under the
trade name Delcath Hepatic CHEMOSAT® Delivery System for melphalan
hydrochloride. The Company obtained authorization to affix a CE
Mark for the Generation Two CHEMOSAT Delivery System for Melphalan
in April 2012. The right to affix the
CE mark allows the Company to market and sell the CHEMOSAT Delivery
System for Melphalan in Europe.
The Delcath Hepatic Delivery System for Melphalan has not been
approved for sale in the United
States by the United States Food and Drug
Administration. The Company has initiated plans to
investigate Melphalan Hydrochloride for Injection for use with the
Delcath Hepatic Delivery System for primary liver cancer.
Private Securities Litigation Reform Act of 1995 provides a
safe harbor for forward-looking statements made by the Company or
on its behalf. This news release contains forward-looking
statements, which are subject to certain risks and uncertainties
that can cause actual results to differ materially from those
described. Factors that may cause such differences include, but are
not limited to, uncertainties relating to: efficiencies and
reduction in cash utilization achieved through September 2013 staff reductions, the
leadership transition plan and its impact on the Company, the
timing and results of future clinical trials including without
limitation the HCC trials, clinical adoption, use and resulting
sales, if any, for the CHEMOSAT system to deliver and filter
melphalan in Europe, our ability
to successfully commercialize the chemosaturation system and the
potential of the chemosaturation system as a treatment for patients
with primary and metastatic disease in the liver, our ability to
obtain reimbursement for the CHEMOSAT system in various markets,
the Company's ability to satisfy the requirements of the
FDA's Complete Response Letter and provide the same in a
timely manner, approval of the current or future chemosaturation
system for delivery and filtration of melphalan, doxorubicin or
other chemotherapeutic agents for various indications in the US
and/or in foreign markets, actions by the FDA or other foreign
regulatory agencies, our ability to successfully enter into
strategic partnership and distribution arrangements in foreign
markets and the timing and revenue, if any, of the same,
uncertainties relating to the timing and results of research and
development projects,, and uncertainties regarding our ability to
obtain financial and other resources for any research, development,
clinical trials and commercialization activities. These factors,
and others, are discussed from time to time in our filings with the
Securities and Exchange Commission. You should not place undue
reliance on these forward-looking statements, which speak only as
of the date they are made. We undertake no obligation to publicly
update or revise these forward-looking statements to reflect events
or circumstances after the date they are made.
Contact
Information:
|
|
Investor
Contact:
|
Media
Contact:
|
Michael
Polyviou/Patty Eisenhaur
|
John
Carter
|
EVC
Group
|
EVC Group
|
212-850-6020/951-316-0577
|
212-850-6021
|
DELCATH SYSTEMS,
INC.
|
Condensed
Consolidated Balance Sheets
|
as of September
30, 2013 and December 31, 2012
|
(Unaudited)
|
(in thousands,
except share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September
30,
|
|
|
December
31,
|
|
|
|
|
|
2013
|
|
|
2012
|
Assets:
|
|
|
|
|
|
|
|
Current
assets
|
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
27,735
|
|
$
|
23,726
|
|
Accounts
receivables
|
|
111
|
|
|
144
|
|
Inventories,
net
|
|
963
|
|
|
1,105
|
|
Prepaid expenses and
other current assets
|
|
1,200
|
|
|
1,457
|
|
|
Total current
assets
|
|
30,009
|
|
|
26,432
|
|
Property, plant and
equipment, net
|
|
3,293
|
|
|
4,042
|
|
|
Total
assets
|
|
$
|
33,302
|
|
$
|
30,474
|
|
|
|
|
|
|
|
|
|
Liabilities and
Stockholders' Equity:
|
|
|
|
|
|
Current
liabilities
|
|
|
|
|
|
|
Accounts
payable
|
$
|
684
|
|
$
|
939
|
|
Accrued
expenses
|
|
|
3,375
|
|
|
5,790
|
|
Warrant
liability
|
|
863
|
|
|
3,427
|
|
|
Total current
liabilities
|
|
4,922
|
|
|
10,156
|
|
|
|
|
|
|
|
|
|
Long Term
Liabilities
|
|
|
|
|
|
|
|
Deferred
revenue
|
|
|
7
|
|
|
309
|
|
Accrued
expenses
|
|
|
490
|
|
|
-
|
|
|
Total long term
liabilities
|
|
497
|
|
|
309
|
|
|
|
|
|
|
Commitments and
contingencies
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
|
|
Stockholders'
equity
|
|
|
|
|
|
|
Preferred stock, $.01
par value; 10,000,000 shares authorized; no shares issued and outstanding at September 30,
2013 and December 31, 2012
|
|
-
|
|
|
-
|
|
Common stock, $.01
par value; 170,000,000 shares authorized; 103,318,021 and 76,849,033 shares issued and
103,289,921 and 76,820,933 shares outstanding at September 30, 2013
and December 31, 2012, respectively
|
|
1,033
|
|
|
768
|
|
Additional paid-in
capital
|
|
250,821
|
|
|
218,063
|
|
Accumulated
deficit
|
|
(224,341)
|
|
|
(198,808)
|
|
Treasury stock, at
cost; 28,100 shares at September 30, 2013 and December 31, 2012
|
|
(51)
|
|
|
(51)
|
|
Accumulated other
comprehensive income
|
|
421
|
|
|
37
|
|
|
Total stockholders'
equity
|
|
27,883
|
|
|
20,009
|
|
|
Total liabilities and
stockholders' equity
|
$
|
33,302
|
|
$
|
30,474
|
|
|
|
|
|
|
|
|
|
Delcath Systems,
Inc.
|
Condensed
Consolidated Statements of Operations and Comprehensive
Loss
|
for the three and
nine months ended September 30, 2013 and 2012
|
(Unaudited)
|
(in thousands,
except share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
Product
revenue
|
$
|
72
|
|
$
|
39
|
|
$
|
152
|
|
$
|
146
|
Other
revenues
|
|
-
|
|
|
-
|
|
|
300
|
|
|
-
|
Total
revenue
|
|
72
|
|
|
39
|
|
|
452
|
|
|
146
|
Cost of goods
sold
|
|
(23)
|
|
|
-
|
|
|
(386)
|
|
|
-
|
Gross
profit
|
|
49
|
|
|
39
|
|
|
66
|
|
|
146
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and
administrative1
|
$
|
4,573
|
|
$
|
6,960
|
|
$
|
16,919
|
|
$
|
21,604
|
|
Research and
development1
|
|
2,178
|
|
|
5,254
|
|
|
10,639
|
|
|
20,589
|
Total operating
expenses
|
|
6,751
|
|
|
12,214
|
|
|
27,558
|
|
|
42,193
|
Operating
loss
|
|
(6,702)
|
|
|
(12,175)
|
|
|
(27,492)
|
|
|
(42,047)
|
Change in fair value
of warrant liability, net
|
|
(497)
|
|
|
446
|
|
|
2,345
|
|
|
1,025
|
Interest
income
|
|
2
|
|
|
9
|
|
|
18
|
|
|
16
|
Other expense and
interest expense
|
|
(9)
|
|
|
(93)
|
|
|
(404)
|
|
|
(204)
|
Net loss
|
$
|
(7,206)
|
|
$
|
(11,813)
|
|
$
|
(25,533)
|
|
$
|
(41,210)
|
Common share
data:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted
loss per share
|
$
|
(0.07)
|
|
$
|
(0.18)
|
|
$
|
(0.27)
|
|
$
|
(0.72)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
number of basic and diluted common
shares outstanding
|
|
100,068,998
|
|
|
67,219,224
|
|
|
94,023,834
|
|
|
56,844,697
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive
income (loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency
translation adjustments
|
$
|
15
|
|
$
|
87
|
|
$
|
384
|
|
$
|
83
|
Comprehensive
loss
|
$
|
(7,191)
|
|
$
|
(11,726)
|
|
$
|
(25,149)
|
|
$
|
(41,127)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note 1:
|
|
|
|
|
|
|
|
|
|
|
|
|
Includes non-cash
stock-based compensation as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months
ended September 30,
|
|
Nine Months
Ended September 30,
|
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
|
Selling, general and
administrative
|
$
|
(159)
|
|
$
|
665
|
|
$
|
370
|
|
$
|
1,828
|
|
Research and
development
|
|
(67)
|
|
|
372
|
|
|
217
|
|
|
1,094
|
|
Total stock-based
compensation expense
|
$
|
(225)
|
|
$
|
1,073
|
|
$
|
587
|
|
$
|
2,922
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SOURCE Delcath Systems, Inc.