Q3 2025 Delcath Systems Inc Earnings Call
Ladies and gentlemen.
Good morning and welcome to the delat systems. Third quarter 2025 earnings conference call.
At this time, all participants are in listen. Only mode.
A brief question and answer session will follow the formal presentation.
If anyone requires operator assistance during the conference, please signal the operator by pressing star and zero on your telephone keypad.
As a reminder, this conference is being recorded.
It is now my pleasure to introduce your host, Mr. David Hoffman, dlats general counsel, please go ahead.
Thank you and welcome to delcast systems. Third quarter 2025 earnings call. With me on the call are Jared and Michelle. Chief executive officer, Sandra panel Chief Financial Officer. Kevin Muer general manager Interventional oncology boyo vukovic chief medical officer and Martha Rukh Chief Operating Officer. I'd like to begin the call by reading the Safe Harbor statement.
1995.
All statements made on this call. With the exception of historical facts. May be considered forward-looking statements within the meeting of section, 27A of the Securities Act of 1933 and section 21e of the Securities, Exchange Act of 1934, although the company believes that expectations and assumptions reflected, in these 4 looking statements are reasonable, it makes no assurance that such expectations will prove to have been correct.
Axle results May differ in a material manner from those expressed or implied in forward-looking statements, due to the various risks and uncertainties.
For any discussion of such risks and uncertainties which could cause actual results to differ from those expressed or implied in the forward-looking statements, please see the risk factors detailed in the company's annual report on Form 10-K, those contained in subsequently filed quarterly reports on Form 10-Q, as well as in other reports that the company files from time to time with the Securities and Exchange Commission.
Any forward-looking statements included in this call are made only as of the date of this call. We do not undertake any obligation to update or supplement, any forward-looking statements to reflect subsequent, knowledge, events or circumstances.
Our press release with our third quarter, 2025 results is available on our website under the investor section and includes additional details about our financial results.
Our website also has our latest s SEC filings which we encourage you to review.
Recording of today's call will be available on our website. Now, I would like to turn the call over to Gerard. Michelle Gerard, please proceed.
Thank you for joining us today to review our third quarter Financial results and business updates.
Many of you joined our October 20th business update call where we reported the compelling results from the investigator sponsored shop, pan trial. And you may have also seen our announcement about the first patient dose in our CRC trial. I'm immensely proud of our clinical and medical Affairs team as they work to bring our technology to an Ever growing set of patients with unresectable liver metastases.
I'm at commercial front. The third quarter was impacted by a number of factors, including the 340b pricing related to ndra participation, which resulted in an approximate 13% reduction, in average, revenue per kit, sold versus the prior quarter. We expect a similar average price level in the fourth quarter.
While there was a Slowdown in the pace of sight activation from June to August, we have returned to a set of your pace activating 4 new sites. The past 2 months. There are currently 25. Rim certified treatments sites, major Cancer Centers continue to show interest in joining. And based on our current conversations, we are planning to begin the 26th to 28th active treating centers, by the end of 2025 and 40 centers where they end up next year.
It is important to note that the 40 centered Target, excludes clinical sites, which will appear on our website as required by Rems regulated related regulations.
We aim to build referral that works to these locations, as many of our targeted clinical sites, have few metastatic melanoma patients.
On our quarterly calls. We will distinguish sites with minimal commercial activity that are clinical sites to give investors a clear understanding of our site activation progress.
Currently 1 site City of Hope is active in the color trial and has not yet treated any media melanoma patients although they anticipate doing so.
To support both the expansion of sites and actively treating expansion of sites. Um, and actively treating sites as we outlined in previous calls. We grew our Us sales force in 2025, from 4 to 6 regions, each staff of the liver, director therapy manager, uh, College manager, and clinical specialist.
By the second quarter of 2026, we plan to expand even further to 9 regions enabling the commercial team to both prioritize building referral Networks.
And maintain a steady pace of site activation.
As previously reported in late summer, we experienced a Slowdown in new patients starts partially due to Summer seasonality.
Each episode of treatment necessitates, the collaboration of a trained profusion anesthesiologist and then eventual radiologist after the assessment, period.
During holiday periods. Scheduling capacity, challenges are difficult to overcome and new patients. May start alternative Therapies.
My college was consistently indicated. Subsided continues to address a significant. Unmet needs. For patients with liver. Mats resulting from UVM melanoma.
Importantly, we believe the chopan protocol, which starts with systemic therapy, May provide increased schedule flexibility in terms of practice since some physicians may just decide to extend systemic therapy duration, while waiting for hepat, treatment team availability.
Aside from seasonality, we believe that competition clinical trials, increased in the middle of the year.
Specifically the replimune sponsored trial for rp2 expanded. The number of clinical sites, 24 and Thomas Jefferson continues to initiate their own single Center trials. This competitive Dynamics, EBS and flows as new trials, start and others end.
We're confident that the compelling compelling results from the chopan trial, should lessen the competitive impact from trials as a chopan data is disseminated and Physicians. Experienced firsthand durable patient responses using the shop pan protocol.
As you know, as a result of the changes in the rate of new patients starts last month, we adjusted our 2025 annual guidance to 83 to 85 million.
On our October 20th business update, call we discuss in detail, the positive results of the trial that were presented asmo by Professor Ellen Capitan from live University in summary, the primary endpoint was met with 1 year PFS significantly higher at 54.7% in the combination group versus 158 18 15.8% in the profusion group.
The combination also significantly improved median, overall survival, 23.1 months versus 19.6 months and best overall response rate. 76.3% versus 39.5% all results were statistically significant
During the update, call Dr. Vukovich discussed. The significance of these findings with Dr. Vincent ma assistant, professor and medical oncologist at the University of Wisconsin, Dr. Ma an experienced user HEBs. Auto expressed that he was impressed by the high objective response. Rate observed, from the shop pan trial. He noted that the shop pan trial results are potentially practice changing and are consistent with the scientific rationale, underlying this combination therapy.
The presentation, asmo and a replay of our call with Dr. Ma is linked on our website.
The combination treatment evaluated, evaluated in Japan, achieved extraordinary efficacy and acceptable safety. Despite the treatment duration, being limited just 10 weeks with no maintenance therapy.
Importantly, no other prospective trial of vascular. Melanoma has shown a higher response, rate longer PF or Os in clinical practice after completing the 10 weeks chopan induction period physicians, may choose to add maintenance therapies. With the potential to extend the benefits achieved by a binding PHP and EPO as an induction strategy.
The option of this combination liver directed, systemic therapy regime. May accelerate uptake given some oncologists are uncomfortable postponing systemic treatment, and we do know this has caused some patients, considered appropriate, for Seattle therapy, to be, put on other treatments.
In addition to addressing barriers related to Physicians, not wanting to postpone systemic therapy.
And the episodic scheduling constraints the chopan trial should also alleviate the concerns of the subset of Physicians who are reluctant to use HEBs of to treat patients with extra hepatic disease. Despite the fact that the focus trial included patients with extra hepatic commits. And that hepatic failure is all. Usually the ultimate cause of death, some positions are reluctant to use, liver, directed therapy and patients with extra hepatic disease.
Since the chopan protocol, obviously includes systemic therapy, which can treat extra hepatic disease, we believe this specific objection will diminish as the chopan results. Are broadly disseminated
Delkap is actively engaging with Health Care Professionals currently using hex Auto as well as those planning to utilize it. Our team remains committed to meeting regularly with key opinion leaders, to Foster transition towards establishing this approach as a first line option for appropriate patients.
With a favorable results from chopan and ongoing positive patient outcomes. Our field teams will work with clinicians to better understand how combination therapy might be used to improve patient outcomes.
Beyond our current focus on UVM melanoma, we are committed to advancing research to develop a perhaps Auto. We are confident that have zado and its, and its proprietary hepatic delivery system platform offer substantial potential to improve outcomes for a broad spectrum of patients with liver metastasis.
with enrollment for better, static breast cancer, likely to follow in the first quarter of 2026,
For metastatic CRC. We expect the release of interim data as early as the second quarter of 2027 with an anticipated release of primary endpoint results, in mid 2028 and overall, survival date. Expected to follow in 2029 for our metastatic breast cancer trial, we anticipate inter interim data releases early as the fourth quarter of 2027 with anticipated release of primary endpoint results. In mid 2029 and overall survival data expected to follow in 2030.
And collaborates with experts and key opinion leaders. We continue to evaluate another number of other tumor types and indications Tripps Auto. They're a strong interest in scientific rationale to develop pasado and patients with inter hepatic, Sonoma, cutaneous metastatic melanoma and non small cell lung cancer. Immune checkpoint, Inhibitors are approved and widely used in these 3 cancers types and their clear areas of unmet need. In the subset of these patients with liver Mets, that provide an opportunity to develop Auto in combination with the checkpoint Inhibitors. It will take another 3 to 6 months to finalize development plans for future combination trials in other indications.
The team is executing effectively on the clinical front and we've prepared to pursue new opportunities in various cancer indications. I will now ask sander to briefly review our financial results
Thank you. Gerard revenue from our sales reps with 19.3 million and chemotherapy was 1.3 million for the third quarter of 2025 compared to 10 million per hepat, and 1.2 million for chemo set during the same period in 2024, we recognize gross margins of 87% in the third quarter compared to 85% for the same period in the prior year.
Research and development expenses for the quarter were $8.0 million, compared to $3.9 million for the same period in the prior year.
Selling General and administrative expenses for the third quarter worth 10.3 million compared to 7.0 million for the same period in the prior year. Our third quarter of 2025 net income was 0.8 million compared to 1.9 million, net income, and the third quarter last year.
Non-gaap a positive adjusted EPA for the second quarter was 5.3. Million compared to positive justice ebita of 1.0 million for the same period in 2024.
We ended the quarter with the approximately 89 million in cash and Investments and quarterly positive. Operating cash flow of 4.8 million compared to 7.3 million operating cash flow in the second quarter.
As of today, we have no outstanding debt obligations and no outstanding warrant.
Forecasts for 2025 gross margins are expected to be between 85% and 87%, with continued positive, non-GAAP adjusted EBITDA and positive cash flow for the rest of the year. The total HATOTreatment volume in 2025 is projected to increase by nearly 150% versus 2024.
We thank you all for participating today and this does conclude our prepared remarks. And I'd ask the operator to open the phone lines for Q&A.
Thank you.
Ladies and gentlemen, we will now begin the question-and-answer session.
If you would like to ask a question, please press star and 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue.
you may press star and 2 if you would like to remove your question from the queue,
For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.
Ladies and gentlemen, we will wait for a moment while we Poll for questions.
The first question comes from the line of Mari tibalt from btig. Please go ahead.
Good morning. Thanks for taking the questions. Um, I'll keep my my questions to just 1 here. I wanted to understand um glad to see that the uh pace of Center activation has picked up again. Wanted to understand what's built into your Q4 expectations in terms of some of that competitive, clinical trial activity. You called out in Q3 um some of the seasonality. It sounds like it's recovered. But are you expecting any seasonality from the winter holidays? Just a little more granularity on what we should expect for Q4. Thanks for taking the question.
Yeah, when we put together that guidance, we did assumed there'd be a modest amount of seasonality in the fourth quarter. Um, you know, keeping in mind that we haven't been out been through too many seasons to date. Um, it's hard to really know. Uh, we were surprised by the summer seasonality as you know. Uh, we assumed it's prudent to put some expectation there in terms of clinical trial uh competition. We kind of assumed the same level that we started seeing mid year. Um, so sure to answer is we factored both in
Thank you. We take the next question from the line of John Newman from canaccord genuity. Please go ahead.
Hello, thanks for taking my question. Um, I just wondered if you could comment on, um, how you expect these uh, site additions to roll out, um, going forward into 2026 and whether you think, um, you know, the current pace of additions, through the balance of 2025 is a good indicator there. Thank you. Yeah, I mean, right now, uh, I think it's probably prudent to assume that the site additions will accelerate in the back half of the year because we're going to have 9 regions at that point. Um, so I think, you know, if you want to do like a 40 60 split and terms of them coming on board, that that might be reasonable.
Okay, great. Thank you.
Thank you. We take the next question from the line of Chase Knickerbocker from Craig Hallum Capital Group. Please go ahead.
Good morning. Thanks for taking the questions. This is Jay con for Chase, as you get up to those 9 sales territories. Are there any steps that the team is taking to improve utilization?
On some of the lower volume accounts.
Yeah. Um,
Without a doubt. I mean, I think the probably the biggest lever to pull, um, for us, in terms of lower utilization, you lower utilization sites, um, or 2 biggest, levers are 1 for sites that aren't getting that many patients. Um, because some of the sites we initiated were big liver centers.
Um, but didn't have that many patients, um, but we're very interested in the product, you know, us building referral networks, to those sites. Um, again, that's part of the reason for the the expansion of the sales force as well as we've recently expanded that the medical Affairs team. Um, probably the second lever to pull quite frankly is changing position, prescribing behavior. Um, it's some of the lower utilization sites. We've heard things such as um, you know, the patient has extra hepatic Mets, you know, I'm not confident using liver directed in this patient up front. Um, clinical trials, at some of, um, some of the larger centers, um, you know, take a lot of patience. Uh, I think the shop pan data disseminating that data is going to be very important, uh, to try to
Um, you know, blunt that I guess the third thing is um where there are some of the higher using sites, which you haven't asked about that are capped out in terms of capacity. Um, I think the chopan now, you know, this isn't the protocol they use, but it's not a stretch to say, hey, um, docs might put patients on another few weeks of checkpoint Inhibitors, if they need to wait to get a slot for hsad and still put them on EPS Auto.
Great. And then do you expect chopan to start impacting? Utilization sometime and 26, and 26.
26, yes. Um, you know I think it's a it would be, uh, a stretch to expect to see a step change in the fourth quarter. Um, but I think, you know, as the quarters roll on in 2026, um, there there's
Likely to be, you know, a meaningful publication that comes out of this.
Um, out of this trial, hopefully in December. But again, that's out of our hands. It's um, it's investigated initiated trial. Uh, but yeah, I think, you know, increasingly as 2026 moves on, that'll be more of an impact.
Thank you, that's helpful.
Thank you. We take the next question from the line of Sudan. Uh, Logan, Nathan from Chief and zinc. Please go ahead.
Good morning, dcat team. Uh, this is Kayvon for Sudan. Uh, thank you for taking my question, just got a quick 1 on my end. Uh, since neutropenia is common with uh, Thai Florida and Taipei. So and uh be be Au, how are investigators addressing this in the phase 2 hips, auto gate combo trial and is this through uh GCF usage or dosing adjustments. Thank you.
Probably both, but I'm going to ask voy of the comment.
Um, sure. Uh you you correctly pointed out that the uh standard of care regimen for colorectal patients in third line. Um, can cause some, um, some bone marrow toxicity. And we also know that, uh, PHP with mouth and can also have hematological toxicity. Um, patients will be managed using appropriate standards, supportive care and those adjustments and and Drug holidays. Will be also factored in. It's all defined in the protocol and gcsf as well as. Yeah. Yeah, of course, right. Standard care, right?
Ccsf, and you know if necessary um delays and dosing.
Okay, great. Thank you.
Thank you.
We take the next question from the line of Arkay.
From 8C winright, please go ahead.
Thank you. This is RK from head to end. Um, good morning folks. Um, quick question from me. Um, is How to Think Through um your um um, your participation in the ndrf program and how we should think about its influence on your profitability and revenue growth. Um, you know, not only in 2026 but beyond, um, and what are you, um, what is your long-term plan? In terms of trying to sustain growth against, uh, against the ND?
Sure. So um in terms of uh the ndra and implications for Revenue growth, you know, this is a 1-time.
uh, you know, step down due to the ndra and you know,
Oh obviously, we don't anticipate although we don't know. We don't anticipate there being a dramatic change in Avenue average revenue per kit. Um, you know, we have to see as we sign up new sites, how many of them actually participate? Um, you know, 90 some odd percent of uh major academic hospitals have an ndra uh legal entity. Um, what we're finding is only about half of them end up participating because because of where the site of care is, uh, for this product, assuming we continue to have the same rate of participation. Um, the average discount we are or or average reduction, I think it'll say the same um, in terms of you know, what will that do in terms of Revenue growth overall, does it have it, does it make a difference on volume? Um, impossible to know and I've said this on 1-on-1 calls unless we have kind of a parallel universe to run an experiment on. Um, I I expect that there are some sites that I can
Economics did play a role um, for such a severe disease, you would hope that wasn't the case. Um, but it might so net, net is probably some volume increase but we'll never know how much um in terms of profitability um talking about gross margins. I'll toss that to Sanders to sitting right here
Yeah. Hi arcade. You know? Overall we we've mentioned in the past, you know, as we build up the R&D program, you know, from a profitability standpoint and a cash flow, uh perspective. It might be a little bit bumpy over the next couple of years. Um, however, from a gross margin perspective, we are still expecting probably 85 to 80% into 2026. Um, depending on some cost efficiencies that we can gain and and Beyond 2026 pops potentially, you know, High 80%.
I think it's also important that with our with our healthy cash balance. Um you know, I just don't see any need to raise Capital, um, just to get to the, you know, the bottom line of of the issue.
Thank you. And 1 quick question, if I if I met um, as a follow up. So um in October, I think on October 20th, call your your uh your stating you had like 24 active centers. Now you're saying 25, active centers and you're giving a guidance of adding maybe 3 more for by the end of end of this year. You know, what's the chance that you know, you can overshoot that 28 number um any uh, any commentary? There will be helpful. No, I I did highly unlikely, we'd overshoot it, you know, are there 7 or so on decks? Yes. Um, do I think 4 of them are going to come out? No, I think it's, you know, 1 to 3.
Okay, thank you. Thanks for that.
Thank you.
We take the next question from the line of Yale Jen from late, law and Company. Please go ahead.
Good morning and thanks for taking the questions. Uh, we understand there's another, uh, European investor Curry their sponsor, the study ongoing in as a combo, with a check on Inhibitors. Uh, could you guys, uh, give us a little bit colors on the status, or, as well as, uh,
Uh, when they report a data, was there any impact in terms, in terms of the sort of practice of the sequels of the, the the the 2 treatments, or any comments on that? Yeah, so you're
They use um, uh, your chemotherapy first and then they move on to Ipoh. Um, that's recruiting rather slowly. Um, and, uh, I don't have a timeline at all as to when, when I'd love to have a timeline. But I don't have a timeline right now, uh, for when that might read out. So I think it's kind of in the 2 distinct for for, you know, projection purposes to, to think about
Okay, great. That's helpful. Maybe just 1 more here.
uh, given that you will have a similar, you know, constant growth in the top line, but at the same time, you will have increased uh,
expenses on the R&D side, especially when you start the second. Uh,
Breast cancer trial. So
uh could you give us a little bit of color in terms of how you uh how the capital allocation between those 2 events to? Those things will
We are planning. Yeah. In terms of that Capital, allocation, I think, you know, we're really taking this on a program by program basis. Um, it's actually how I work with the board. We have a fixed R&D budget every year, for either, ongoing trials, this case CRC and uh, and breast, as well as a fixed budget for iits. Um, we do our homework on, I'll pick 1 non small cell, lung cancer. We're, we're digging into now in combination with a checkpoint truck Inhibitors. You know, we're going to look at the protocol, the subset of page.
Um, I suspect, it will make a lot of sense to do it, um, but we have a lot of homework yet to do, and if it looks like a positive npv project, not to sound like a business in NBA student here, but basically, if it looks like it makes sense sand and its merits. Um, we've got plenty of capital on the balance sheet. Uh, I think we can afford fund it off of our own Topline, but as I've said before, if something looks really compelling and the cost of capital is adequate, we fund it, you know, other and other means. Um, but we'll pick up the programs 1 at a time. I'm not sitting here with a fixed R&D budget in mind. And so, again, we look at at a, on a program by program basis,
Okay, great. That's very helpful and uh,
it's just uh, congrats to continue chugging along.
Thank you.
Thank you.
We take the next question from the line of Bill, man from Clearfield. Please go ahead.
Uh, good morning and thanks, Bill from Clear, uh, Clear Street. Um, so after CHOPAN kind of broadly validated systemic, uh, treatment with HEP, uh, trying to read that through to breast and colorectal. Um, given that it's not a combination with IO, but it is a combination between HEP and systemic. Um, how much read-through do you, do you see from the success of CHOPAN into these new combinations? And do you see the potential or, you know, attraction for...
Adding in, maybe a, a checkpoint inhibitor to uh, to that treatment Paradigm in those specific indications.
Yeah. So in terms of, um,
Right now, those trials are both sequenced with systemic chemo um which has stacking toxicities, um, and that's 1 of the hassles we've had with um or objects. We've had with with trying to uh integrate this therapy. Um into existing treatment protocols and that's 1 of the beauties of uh working with checkpoint Inhibitors is that you don't fundamentally have stacked and toxicities now um you mentioned colorectal that is as well as um
Some subsets of breast, uh, don't use checkpoint Inhibitors. Um,
In colorectal. Um, the liver Mets are the most common thing. Uh, the portal vein which is goes right into the liver is exposed for almost immediately with either. Antigens from the tumor, or tumor cells themselves. Um, there is a theory out there that there isn't checkpoint Inhibitors. Don't work in much of CRC is because of the exposure of the liver, which has, you know. Reduces uh, increases systemic immune tolerance. Maybe we could turn make cold tumors hot to use an old phrase, um, and voyo has, who's sitting here with me, has talked to a variety of kales about that, we're still still kind of thinking through that 1 um,
but, you know, our first first areas to go after are places where io's are firmly established, have good efficacy and there are high rates of liver meds, for example, uh, non small cell, lung cancer, cutaneous melanoma ICC,
For patient. Enrollment. Uh, can you can you quantify that at all?
Um, I let me see voyeur, you know, how many patients TJ has in their single Center trials. And that's, that's why I pulled them. They they they probably more than anybody else has their own single Center trial. Um, going lots of Centers, do single Center trials, but Thomas Jefferson and UVM. Melanoma is probably
Top of the list. How much time patients, 109 patients for their single-center clinical trials? Yeah, that's the most current one. I just sent this on trials of 2030 patients in Thomas Jefferson's, the one that we are referencing accommodation of Louis directed at immunotherapy, is handed down patients under. Like, yeah, thanks.
Thank you.
Thank you.
ladies and gentlemen, if you wish to ask a question, please press star and 1
As there are no further questions with that, we conclude the conference of delat systems. Thank you for your participation. You may now disconnect your line.