Delcath Announces Agreement for Extinguishment of Convertible Notes with Majority Holder
August 28 2017 - 06:30AM
Agreement Contingent upon Shareholder Vote in
Favor of the Proposed Reverse Stock Split Voting Deadline
Extended to September 7, 2017
Delcath Systems, Inc. (NASDAQ:DCTH), an interventional oncology
Company focused on the treatment of primary and metastatic liver
cancers, announces that the Company has negotiated an agreement for
the extinguishment of its 2016 Convertible Notes from the holder of
the majority of the Notes. The transaction is contingent upon
the Company effecting a reverse stock split which requires
shareholder approval through the current consent solicitation. If
fully executed, the agreement will extinguish approximately 90% of
the remaining $12.6 million in debt related to the Convertible
Notes.
“We negotiated this agreement as a means of
reducing future potential dilution from the Convertible Notes after
a reverse stock split. We strongly urge shareholders to vote in
favor of the proposed reverse stock split as it will now trigger
the extinguishment of a substantial portion of the Convertible
Notes. The proposed reverse stock split will also allow us to
regain compliance with the Nasdaq Minimum Bid Price, which provides
liquidity and other benefits to shareholders. Additionally, we
believe a successful reverse stock split will provide the Company
with the flexibility to raise new equity capital at potentially
more beneficial terms, allowing us to continue to support our
Clinical Development Program and commercial efforts in Europe where
we believe shareholder value ultimately resides,” stated Jennifer
K. Simpson, Ph.D., MSN, CRNP President and CEO of
Delcath.
Under the terms of this new agreement, effective
immediately, the Company’s Series A and B preferred shares will be
redeemed and $1.65 million in restricted cash related to the
Convertible Notes will be released to the Company. Following
shareholder approval of the proposed reverse stock split, several
additional transactions will occur to extinguish the Convertible
Notes held by the majority Note Holder: the Note Holder shall
release all restrictions on the $6.4 million of remaining
restricted cash; the Note Holder shall redeem $4.0 million of
Convertible Note; the Company and the Note Holder shall exchange
$2.4 million of the remaining Convertible Notes for new warrants to
purchase 40.0 million shares of Common Stock at an exercise price
of $0.35. A final amount of $3.8 million in debt will remain
outstanding until converted or redeemed in accordance with the
original Convertible Note agreement. These transactions are
estimated on a pre-split basis and will be subject to adjustment by
the split ratio determined by its Board of Directors upon approval
of the reverse split proposal.
A Vote in Favor of the Reverse Stock Split Proposal is
Required to Trigger Extinguishment Agreement and Maintain Nasdaq
Listing
If approved by the shareholders, a reverse stock
split will bring the company’s stock price above $1.00 allowing the
Company to meet NASDAQ’s minimum bid price requirement.
Should the Company not obtain approval for a
reverse stock split, it is likely that the Company will be delisted
from Nasdaq. Further, the Convertible Notes will not be
extinguished because the Notes will likely be the primary or only
source of funding once the Company is listed on an alternate
market.
For these reasons, the Company’s Board of
Directors encourages all shareholders to support the proposed
reverse stock split. Shareholders are encouraged to read the
Company’s Definitive Schedule 14A in detail for full information
regarding the proposed reverse stock split.
Voting Deadline Extended to September 7, 2017 with
Allowance to Change Consent
In order to properly consider this new
information, the Company has amended its Consent Proposal materials
to extend the consent deadline to September 7, 2017 and to permit
shareholders to change their consents after initial submission by
submitting a new consent form. Shareholders may also vote by
calling (800) 454-8683 or by visiting www.proxyvote.com.
Proposal on Effecting a Reverse Stock
Split
Delcath recently filed a Definitive Schedule 14A
detailing a proposed reverse stock split, subject to shareholder
approval. Delcath needs the ability to issue common shares to fund
operations, support clinical programs, and explore alternative
equity financing opportunities. However, the Company is currently
at the maximum amount of authorized shares of common stock under
its Certificate of Incorporation. Without a significant increase in
available authorized shares, the Company is unable to undertake any
type of equity financing. The proposed reverse stock split will
reduce the number of shares outstanding and provide Delcath with
the flexibility to raise equity capital and support its important
clinical trials and commercial efforts in Europe.
In addition, the reverse stock split will allow
Delcath to regain compliance with NASDAQ Capital Markets minimum
bid price requirements, which provides liquidity and other
important benefits to the Company and its investors.
About Delcath Systems
Delcath Systems, Inc. is an interventional
oncology Company focused on the treatment of primary and metastatic
liver cancers. Our investigational product – 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 and associated side effects. We have commenced a global
Phase 3 FOCUS clinical trial for Patients with Hepatic Dominant
Ocular Melanoma (OM), and plans to initiate a Registration trial
for intrahepatic cholangiocarcinoma (ICC) by the end of 2017
contingent on effecting the reverse stock split as outlined in the
Company’s consent proposal. Melphalan/HDS has not been approved by
the U.S. Food & Drug Administration (FDA) for sale in
the U.S. In Europe, our system has been commercially
available since 2012 under the trade name Delcath Hepatic CHEMOSAT®
Delivery System for Melphalan (CHEMOSAT), where it has been used at
major medical centers to treat a wide range of cancers of the
liver.
Forward Looking
StatementsPrivate 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 and ICC clinical trial
programs, timely enrollment and treatment of patients in the
global Phase 3 OM clinical trial, IRB or ethics committee clearance
of the Phase 3 OM and ICC Registration trial protocols
from participating sites and the timing of site activation
and subject enrollment in each trial, 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 including the key markets of Germany and
the UK, 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,, 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.
Contact:
Scott Gordon
President - CoreIR
Email: investorrelations@delcath.com