Release Date: November 08, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Delcath Systems Inc (NASDAQ:DCTH) reported strong revenue growth with $11.2 million in total revenue for Q3 2024, including $10 million from the U.S. market.
• The company successfully activated 12 treatment centers by the end of the third quarter, with plans to reach 20 centers by early 2025.
• Delcath Systems Inc (NASDAQ:DCTH) achieved a significant milestone by triggering a $25 million financing from warrant exercises.
• The company has no outstanding debt obligations, having fully matured and paid off loans with Avenue and Rosalind.
• Delcath Systems Inc (NASDAQ:DCTH) is in a strong financial position, with a cash flow break-even point on the horizon and adequate resources to fund further expansion.

Negative Points

• The company anticipates a slowdown in treatment rates during the fourth quarter due to the holiday season, potentially affecting short-term revenue.
• Research and development expenses are expected to increase significantly in 2025, ranging from $35 to $40 million, due to new clinical trials.
• The activation process for new treatment centers is complex and time-consuming, with an average timeframe of 6 to 9 months.
• Revenue from European operations remains modest, with the company managing the EU market on a breakeven basis.
• There is uncertainty regarding the exact impact of seasonality on treatment rates and revenue, as the company navigates its first holiday season post-launch.

Q & A Highlights

• Warning! GuruFocus has detected 4 Warning Signs with DCTH.

Q: Given the dynamics of the holiday season, do you expect a seasonal impact on treatment days moving forward? A: Gerard Michel, CEO: We anticipate some seasonality due to the holidays, with patients possibly delaying treatments to spend time with family. This might result in 1.5 to 2 weeks fewer treatment days in Q4, but it's not lost businessjust shifted to the following year.

Q: How should we think about the increase in R&D spending with the upcoming phase two trials in colorectal and breast cancer? A: Sandra Pennell, SVP of Finance: R&D expenses should remain flat in Q4, but for 2025, we expect full-year R&D to range from $35 to $40 million, covering both base R&D and new indications.

Q: Are the funds from the upcoming warrant exercises expected to support the launch of new trials next year? A: Sandra Pennell, SVP of Finance: We are not including the additional $36 million from warrants in our cash forecast. Our current cash on hand, along with revenue and operations, should fund the new indications.

Q: How does the real-world experience of treatment intervals compare to the focus trial? A: Gerard Michel, CEO: Most treatments occur between 6 to 8 weeks, similar to the focus trial. However, some patients might extend this due to personal preferences, like spending holidays with family.

Q: Regarding the Chopin and Scandium trials, are these studies enough for FDA indication expansion, or will further studies be needed? A: Gerard Michel, CEO: There's no need for indication expansion as physicians can already sequence these products. The trials may open opportunities for broader trials across different cancer types for patients failing on IO therapies.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.