GlobeNewswire Inc | Aug 13, 2020 04:01PM EDT

August 13, 2020

NEW YORK, Aug. 13, 2020 (GLOBE NEWSWIRE) -- Delcath Systems, Inc. (NASDAQ: DCTH), an interventional oncology company focused on the treatment of rare primary and metastatic cancers of the liver, announces financial results for the quarter ended June 30, 2020, and will host an earnings call on August 13, 2020 at 4:30 p.m.

Recent Corporate Highlights:

-- Completed a $22 million public offering, led by healthcare-focused investors, to allow completion of the Companys Phase 3 registration trial of Melphalan/HDS in liver-dominant metastatic ocular melanoma (mOM) and refiling of a New Drug Application (NDA) with FDA. -- Uplisted to the NASDAQ Capital Market. -- Announced management and board transitions. -- Initiated pre-commercialization work for Melphalan/HDS in mOM. -- Initial physician and payer surveys have highlighted the high-unmet medical need in mOM as well as the expectation of ultra-orphan oncology pricing dynamic for Melphalan/HDS.

Expected Milestones:

-- Late 2020/early 2021 COVID-19 has affected clinical trials globally, including our Phase 3 FOCUS registration trial for Melphalan/HDS in liver-dominant ocular melanoma. Importantly, however, throughout these months, the trial protocol remained intact and ongoing trial patients continued to receive treatments. While access to clinical sites for data entry and monitoring was severely restricted during the quarter, the majority of the studys European and US sites began to ease these restrictions subsequent to quarter end. In addition, we implemented a number of steps to increase data monitoring efforts in light of the impact of the pandemic. Based on the current trajectory of site access, management is focused on delivering top-line results by year-end 2020/early 2021. -- Mid-2021 New Drug Application (NDA) submission of Melphalan/HDS in liver-dominant mOM. During the quarter management took steps to ensure progress on key elements of our NDA submission. Those included, among other things, required non-clinical studies and Chemistry, Manufacturing and Controls (CMC) work to ensure that any potential COVID-19 clinical data delays would not affect our timelines to NDA submission. -- Initiation of additional clinical studies for Melphalan/HDS in liver-dominant orphan cancers of high unmet-medical need. During the quarter, in-line with the overall restructuring efforts, management initiated a comprehensive review of the multitude of potential pipeline opportunities available for the Company to pursue, as potential label-expansion, beyond mOM. The analysis comprises available clinical evidence, based on the European commercial experience, where Melphalan/HDS is approved as a device-only configuration under the brand name CHEMOSAT, as well as the potential US commercial opportunity. Based on the conclusions of this analysis Delcath expects to initiate at least one additional clinical development program of Melphalan/HDS in coming quarters.

John Purpura, interim CEO of Delcath commented, Q2 was a transformational quarter for Delcath. The recent $22 million public offering along with ourNASDAQ uplisting have been the culmination of a strategic restructuring achieved over the last year. With $51.5 million raised in the 12-month period ended June 30, 2020, led by fundamental healthcare focused investors, Delcath has been restructured, recapitalized and refocused. Our current cash resources, along with expected cash milestones from our European commercialization partner, medac GmBH, provide us with a sufficient runway through multiple value inflection points. These include completion of our Phase 3 FOCUS trial in metastatic ocular melanoma and the refiling of a New Drug Application (NDA) with FDA by mid-2021.

Mr. Purpura added, Working towards the possibility of having Melphalan/HDS available as a treatment for mOM patients, who have limited therapeutic options, is Delcaths top priority. With Melphalan/HDS set for potential FDA approval in the second half of 2021, as the only labelled mOM-specific therapy in the US, Delcath has begun pre-commercialization activities which it intends to accelerate in coming quarters. Initial work has highlighted oncologists perceptions of the high-unmet medical need of mOM patients, the potential front-line positioning of Melphalan/HDS in this setting and the expectation of attractive ultra-orphan pricing dynamics for our therapy.

Mr. Purpura concluded, Interventional Oncology has become, in recent years, an integrated, fast-growing segment of cancer care. We believe that Melphalan/HDS is uniquely positioned as a potentially well differentiated, high-value, interventional oncology treatment paradigm targeting orphan and ultra-orphan indications of high unmet medical need. Beyond mOM, Delcath is currently looking to initiate additional studies in one or more liver-dominant metastatic indications for which Melphalan/HDS could be applicable. We expect the next 12 months to be transformational for Delcath and are looking forward to providing updates on our progress throughout.

Second Quarter 2020 Financial Results:

Income Statement Highlights. Product revenue for the three months ended June 30, 2020 was approximately $262 thousand, compared to $221 thousand for the prior year period from our sales of CHEMOSAT procedures in Europe. Selling, general and administrative expenses were approximately $2.3 million compared to $2.7 million in the prior year quarter. Research and development expenses for the second quarter were $2.2 million compared to $1.7 million in the prior year quarter. Total operating expenses for the second quarter were $4.5 million compared with $4.4 million in the prior year quarter.

We recorded a net loss for the three months ended June 30, 2020, of $4.3 million, compared to a net loss of $6.0 million for the same period in 2019.

Balance Sheet Highlights. At June 30, 2020, we had cash, cash equivalents and restricted cash totaling $16.2 million, as compared to cash, cash equivalents and restricted cash totaling $10.2 million at December 31, 2019 and $1.4 million at June 30, 2019. During the three months ended June 30, 2020 and June 30, 2019, we used $7.9 million and $3.2 million, respectively, of cash in our operating activities. In Q2 we made a number of one-time cash payments not indicative of the usual cash usage trend totaling approximately $3.3 million, including compensation payable subsequent to resignations of executives and a director, and past-due payables.

We believe our cash resources and anticipated milestone payments, are adequate to fund our operating activities into mid-year 2021.

Conference Call Information

To participate in this event, dial approximately 5 to 10 minutes before the beginning of the call. Please ask for the Delcath Second Quarter Conference Call when reaching an operator.

Date: August 13, 2020 Time: 4:30 PM Eastern Time Toll Free: (833) 937-1050 International: (845) 403-8302

The call will also be available over the Internet and accessible at: https://www.webcaster4.com/Webcast/Page/2475/36568.

DELCATH SYSTEMS, INC.AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(Unaudited)(In thousands)

Three months ended Six months ended June30, June30, 2020 2019 2020 2019 Product revenue $ 262 $ 221 $ 437 $ 311 Other revenue 117 191 235 371 Cost of goods sold (168 ) (172 ) (246 ) (268 )Gross profit 211 240 426 414 Operating expenses: Research and 2,223 1,714 5,197 5,011 development expensesSelling, general andadministrative 2,257 2,653 4,573 5,203 expensesTotal operating 4,480 4,367 9,770 10,214 expensesOperating loss (4,269 ) (4,127 ) (9,344 ) (9,800 ) Change in fair valueof the warrant ? 10 (2,832 ) 17 liability, netLoss on issuance of ? (6 ) ? (6 )financial instrumentInterest expense (52 ) (1,837 ) (109 ) (4,064 )Other income 46 1 149 ? Net loss (4,275 ) (5,959 ) (12,136 ) (13,853 ) Deemed dividend fortriggering of warrant (55 ) ? (55 ) ? down round featureNet loss attributableto common $ (4,330 ) $ (5,959 ) $ (12,191 ) $ (13,853 )stockholders Net loss $ (4,275 ) $ (5,959 ) $ (12,136 ) $ (13,853 ) Other comprehensive (loss) income:Foreign currencytranslation (1 ) (23 ) 65 (74 )adjustmentsTotal other $ (4,276 ) $ (5,982 ) $ (12,071 ) $ (13,927 )comprehensive loss Common share data: Basic loss per common $ (1.90 ) $ (58.50 ) $ (10.40 ) $ (134.55 )shareDiluted loss per $ (1.90 ) $ (58.50 ) $ (10.40 ) $ (134.55 )common share Weighted averagenumber of basic 2,273,187 101,862 1,171,994 102,956 shares outstandingWeighted averagenumber of diluted 2,273,187 101,862 1,171,994 102,956 shares outstanding

DELCATH SYSTEMS, INC.AND SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE SHEETS(Unaudited)(In thousands)

June30, December31, 2020 2019 Assets Current assets Cash and cash equivalents $ 16,011 $ 10,002 Restricted cash 181 181 Accounts receivables, net 147 21 Inventories 723 654 Prepaid expenses and other current assets 1,992 1,759 Total current assets 19,054 12,617 Property, plant and equipment, net 864 735 Right-of-use assets 525 860 Total assets $ 20,443 $ 14,212 Liabilities and Stockholders' Equity (Deficit) Current liabilities Accounts payable $ 2,174 $ 4,533 Accrued expenses 5,429 6,947 Lease liabilities, current portion 508 664 Warrant liability ? 3,368 Total current liabilities 8,111 15,512 Deferred revenue 2,613 2,860 Lease liabilities, long-term portion 17 197 Convertible notes payable, long-term 2,000 2,000 Total liabilities 12,741 20,569 Stockholders' equity (deficit) Preferred stock, $.01 par value; 10,000,000shares authorized; 25,950 and 41,517 shares ? ? issued and outstanding at June 30, 2020 andDecember 31, 2019, respectivelyCommon stock, $.01 par value; 1,000,000,000shares authorized; 3,521,641 and 67,091 shares 35 1 issued and outstanding at June 30, 2020 andDecember 31, 2019, respectivelyAdditional paid-in capital 390,882 364,785 Accumulated deficit (383,307 ) (371,171 )Accumulated other comprehensive income 92 28 Total stockholders' equity (deficit) 7,702 (6,357 )Total liabilities and stockholders' equity $ 20,443 $ 14,212 (deficit)

About Delcath Systems, Inc.

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 minimizing systemic exposure and associated side effects. In addition to the FOCUS Trial, we have initiated a global Phase 3 clinical trial for intrahepatic cholangiocarcinoma (ICC) called The ALIGN Trial. Melphalan/HDS has not been approved by the U.S. Food & Drug Administration (FDA) for sale in the U.S. In Europe, our system is marketed under the trade name Delcath CHEMOSAT Hepatic Delivery System for Melphalan (CHEMOSAT) and has been CE Marked and used at major medical centers to treat a wide range of cancers of the liver. CHEMOSAT is being marketed under an exclusive licensing agreement with medac GmbH, a privately held multi-national pharmaceutical company headquartered in Germany that specializes in the treatment and diagnosis of oncological, urological and autoimmune diseases.

Safe Harbor / Forward-Looking Statements

The 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 Companys clinical trials, including without limitation the OM and ICC clinical trial programs, and timely enrollment and treatment of patients in the global Phase 3 OM and ICC clinical trials and the impact of the COVID-19 pandemic on the enrollment and completion of our clinical trials; 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 Companys 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 foreign regulatory agencies; the Companys 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 the Companys 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:

Delcath Investor Relations

Email: investorrelations@delcath.com

Hayden IR

James Carbonara(646)-755-7412james@haydenir.com

Brett Maas(646) 536-7331brett@haydenir.com