NEW YORK, June 7, 2016 /PRNewswire/ -- Delcath Systems,
Inc. (NASDAQ: DCTH), a specialty pharmaceutical and medical device
company focused on oncology with an emphasis on the treatment of
primary and metastatic liver cancers, announces it has entered into
a securities purchase agreement with an institutional investor to
issue $35.0 million of senior
convertible notes (the Notes) and related common stock purchase
warrants. The Notes will be issued at an 8% original issue
discount. The aggregate proceeds of $32.2
million will be used to fund the Company's ongoing
operations, commercial activities and clinical development
programs, including its global Phase 3 trial with Melphalan/HDS in
hepatic dominant ocular melanoma (the FOCUS Trial) and its global
Phase 2 program with Melphalan/HDS in hepatocellular carcinoma
(HCC) and intrahepatic cholangiocarcinoma (ICC).
Of the $32.2 million in aggregate
proceeds, $3 million will be
unrestricted and immediately and freely available for use by the
Company and its subsidiaries. The remaining $29.2 million will be subject to a cash covenant
restricting its use and requiring it to be held in certain control
accounts of the Company. Subsequently, $3.0 million of the restricted cash shall become
unrestricted cash on the 20th trading day after the
later of the stockholder approval of the transaction in accordance
with NASDAQ rules, or the six-month anniversary of the closing date
(such 20th trading day, the Trigger Date). Thereafter,
the remaining $26.2 million of
restricted cash will become unrestricted in equal quarterly
installments starting the 30th trading day after the
Trigger Date, such that the balance will become unrestricted by
December 29, 2017, subject to the
fulfillment of certain equity conditions.
The Notes will be convertible, at the option of the holder, at
110% of the market price (the Conversion Price) into a fixed number
of common shares. The market price will be determined on the
closing date and will be based on the Volume Weighted Average Price
(VWAP) of the three trading days immediately prior to the closing
date. Commencing on the 20th trading day after the
six-month anniversary of the closing date, and for each
20th trading day period thereafter, the Notes will
amortize in equal installments payable in common stock (at the
installment conversion price with pre-delivery and a $0.05 floor), subject to the fulfillment of
certain equity conditions, or, at the Company's option, in
cash.
The Company has the right to redeem the notes with restricted
cash or any other cash of the Company, at its option, at any time
after the earlier of March 31, 2017
or such time as at least $18 million
of restricted cash shall have become unrestricted cash under the
terms of the Notes.
Roth Capital Partners acted as sole placement agent for the
offering.
"This committed financing provides us with the resources to
advance our clinical development plan through the end of 2017 while
also supporting our commercialization programs in Europe," said Jennifer
K. Simpson, Ph.D., MSN, CRNP, President and Chief Executive
Office of Delcath. "We are positioned to achieve important clinical
inflection points in our FOCUS trial and our global Phase 2 program
in HCC and ICC, which we believe represent the fastest path to U.S.
FDA approval and ultimately the generation of shareholder value.
This financing will be valuable to our efforts to expand global
access to our Melphalan/HDS for the benefit of patients suffering
with primary and metastatic liver cancers."
In addition to the Notes, the Company will issue common stock
purchase warrants in a quantity equal to 85% of the number of
shares of common stock the institutional investor would receive if
the Notes were converted in full at the initial Conversion Price on
the closing date (without regards to any limitations on conversion
set forth therein). The warrants will be initially
exercisable one year after their initial issuance date and expire
five years thereafter. The warrants will include a one-time,
downward-only reset of the warrant exercise price based on the
market price on the maturity date, and for 75% of the warrants a
corresponding adjustment of the number of warrant shares such that
the aggregate exercise price of the warrants remains the same after
the reset.
For additional information concerning the details of the
financing, please refer to the Form 8-K to be filed by Delcath with
the Securities and Exchange Commission.
The Notes, warrants and shares of common stock issuable upon
conversion or exercise thereof have not been registered under the
Securities Act or any applicable state securities laws and may not
be offered or sold absent such registration or pursuant to an
available exemption from such registration requirements. This press
release does not constitute an offer to sell or the solicitation of
an offer to buy any of the securities nor shall there be any sale
of any of the securities in any jurisdiction in which such offer,
solicitation or sale would be unlawful.
About Delcath Systems
Delcath Systems, Inc. is a specialty pharmaceutical and
medical device company focused on oncology with a principal focus
on the treatment of primary and metastatic liver cancers. Our
proprietary Melphalan Hydrochloride for Injection for use with the
Delcath Hepatic Delivery System (Melphalan/HDS) is designed to
administer high-dose chemotherapy to the liver while controlling
systemic exposure. In April 2012 we obtained
authorization to affix a CE Mark to our second-generation system,
which is currently marketed in Europe as a device under
the trade name Delcath Hepatic CHEMOSAT® Delivery System for
Melphalan (CHEMOSAT). In the U.S. the Melphalan/HDS system is
considered a combination drug and device product, and is regulated
as a drug by the U.S. Food and Drug Administration (FDA).
Melphalan/HDS has not been approved for sale in the U.S. We have
commenced our global Phase 3 FOCUS clinical trial for Patients with
Hepatic Dominant Ocular Melanoma (OM) and a global Phase 2 clinical
trial in Europe and the U.S. to investigate the
Melphalan/HDS system for the treatment of primary liver cancer
(HCC) and intrahepatic cholangiocarcinoma (ICC).
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: the timing and results
of the Company's clinical trials including without limitation
the OM, HCC ,and ICC clinical trial programs, timely
enrollment and treatment of patients in the global Phase 3 FOCUS
Clinical Trial for Patients with Hepatic Dominant Ocular Melanoma
and the global Phase 2 HCC and ICC clinical trials, IRB or ethics
committee clearance of the Phase 2 HCC/ICC and/or Phase 3
OM protocols from participating sites and the timing of
site activation and subject enrollment in each trial, the impact,
if any, of publication of the Phase 3 trial manuscript to support
the Company's efforts, the impact of the presentations
at major medical conferences and future clinical results consistent
with the data presented, approval of Individual Funding Requests
for reimbursement of the CHEMOSAT procedure, the impact, if
any of ZE reimbursement on potential CHEMOSAT product use and
sales in Germany, clinical
adoption, use and resulting sales, if any, for the CHEMOSAT system
to deliver and filter melphalan in Europe, the Company's ability to successfully
commercialize the Melphalan HDS/CHEMOSAT system and the potential
of the Melphalan HDS/CHEMOSAT 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 remaining requirements of the
FDA's Complete Response Letter and provide the same in a timely
manner, approval of the current or future Melphalan HDS/CHEMOSAT
system for delivery and filtration of melphalan or other
chemotherapeutic agents for various indications in the U.S. and/or
in foreign markets, actions by the FDA or other foreign regulatory
agencies, the Company's 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, our ability to maintain NASDAQ listing, and
uncertainties regarding the Company's 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.
Investor Contact:
Anne Marie Fields
LHA
212-838-3777
afields@lhai.com
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SOURCE Delcath Systems, Inc.