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Delcath Systems, Inc. (DCTH): Stock for 2013?

Delcath (NASDAQ: DCTH) is a development-stage, specialty pharmaceutical and medical device company focused on oncology. Company is researching breakthroughs in regional chemotherapies with the goal of improving clinical outcomes and potentially reducing drug-related adverse events.

At glance:

  • Commercial stage company focused on oncology
  • Proprietary CHEMOSAT delivery systems allow unique whole organ therapy for the liver
  • CHEMOSAT system has demonstrated extension of progression free survival
  • Addressing large unmet market need for cancer patients who usually die of liver failure
  • 2013 estimated addressable market opportunity of $2.3 billion
  • Expanding clinical data expected to broaden clinical use and indication On the cusp of realizing the potential:
  • EU commercial launch underway
  • Reimbursement in additional key EU markets expected in Q1
  • U.S. NDA under review – PDUFA date June 15, 2013
  • Attractive financial model, $80 million in available resources and experienced management team to execute plan

Clinical Results

  • Phase 1, 2 and 3 trials produced positive results in multiple histologies
  • Melanoma Liver Mets

Positive Phase 3 results in hepatic metastatic melanoma
n=93 (90% ocular melanoma, 10% cutaneous melanoma)

  • Neuroendocrine Tumor (NET) Liver Mets – mNET cohort in Phase 2 trial showed encouraging 42% objective response rate; (ORR) vs ~10% for approved targeted therapy – median overall survival of ~32 months on ITT basis Hepatocellular Carcinoma (HCC)
  • Positive signal with high-dose melphalan in HCC cohort of Phase 2 trial (5/8 patients) is encouraging when approved systemic therapies have modest efficacy and challenges with tolerability
  • Colorectal Cancer (CRC) Liver Mets
  • Data from surgical Isolated Hepatic Perfusion (IHP) with melphalan indicates strong potential in well-defined patient population with earlier stage CRC yielding ~50-60% median response rate and median OS of 17.4-24.8 mos
  • Safety profiles consistent with pivotal US Phase 3 melanoma trial

Planned 2013 studies, pending discussion with the FDA:

  • Hepatocellular carcinoma (HCC) – Global Phase 3 Randomized CHEMOSAT Melphalan vs. BSC for Sorafenib Failure
  • Advanced colorectal cancer (CRC) with liver dominant metastasis – Global Phase 3 Randomized CHEMOSAT Melphalan vs. Available Alternatives
  • Neuroendocrine tumor (NET) with liver dominant disease – Global Phase 3 Randomized CHEMOSAT Melphalan vs. Available Alternatives
  • Phase 2 studies in multiple indications: HCC, NET, CRC, melanoma
  • Global Investigator-initiated trials (IITs) – opportunity-driven

U.S. Commercialization Strategy

  • Launch in Q4 2013 assuming approval on PDUFA date of June 15, 2013
  • Initial commercial focus on centers that are active in the EAP or participated in the Phase 3 clinical trial
  • Utilize active EAP hospitals as Centers of Excellence for training and support of new centers
  • Intend to seek chemosaturation specific CPT reimbursement code, based upon value proposition relative to other cancer therapies
  • Educate Medical Oncologists via Medical Science Liaison (MSL)
  • Direct strategy to sell to hospital based Interventional Radiologists and Surgeons

2013 Anticipated Milestones

  • First patient enrolled in EAP – Q1 2013
  • Secure interim reimbursement in Germany and UK – Q1 2013
  • Submission for publications of Phase 3 data and mNET arm of Phase 2 data in Q1 2013
  • Initiate EU Registry – Q1 2013
  • First commercial sale in APLA – Q2 2013
  • ODAC Panel Meeting May 2013
  • Receive NDA approval of Delcath’s chemosaturation system by PDUFA date of June 15, 2013
  • Commence Company’s first investigator initiated trial (IIT) – Q2 2013
  • First patient enrolled in Company sponsored trial (CST) to expand indications – Q4 2013
  • US commercial launch of Delcath’s chemosaturation system – Q4 2013
  • First patient enrolled in Taiwan HCC pivotal trial – Q4 2013
  • Execute strategic partnership for China