Q2 2026 Delcath Systems Inc Earnings Call

August 6, 2026

Speaker #1: Good morning, ladies and gentlemen, and welcome to the DELCATH SYSTEMS Q2 2026 earnings conference call. At this time, all lines in listen-only mode. Following the presentation, we will conduct a question-and-answer session.

Operator 2: Good morning, ladies and gentlemen, and welcome to the Delcath Systems Q2 2026 Earnings Conference Call. At this time, all lines are in listen-only mode. Following the presentation, we will conduct a question-and-answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded on Thursday, 6 August 2026. I would now like to turn the conference over to Mr. David Hoffman, Delcath General Counsel. Please go ahead, sir.

Speaker #1: If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded on Thursday, August 6, 2026.

Speaker #1: I would like to conference over to Mr. David Hoffman, DELCATH General Counsel. Please go ahead, sir.

Speaker #2: Thank you. And welcome to DELCATH SYSTEMS Q2 2026 earnings call. With me on the call are Gerard Michel, Chief Executive Officer; Sandra Pennell, Chief Financial Officer; Kevin Muir, Chief Commercial Officer; Boyo Vukovic, Chief Medical Officer; and Martha Rook, Chief Operating Officer.

David Hoffman: Thank you, and welcome to Delcath Systems Q2 2026 earnings call. With me on the call are Gerard Michel, Chief Executive Officer, Sandra Pennell, Chief Financial Officer, Kevin Muir, Chief Commercial Officer, Bojo Vukovic, Chief Medical Officer, and Martha Rook, Chief Operating Officer. This statement is made pursuant to the safe harbor for forward-looking statements described in the Private Securities Litigation Reform Act of 1995. Statements made on this call, with the exception of historical facts, may be considered forward-looking statements within the meaning 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 forward-looking statements are reasonable, it makes no assurance that such expectations will prove to have been correct.

Speaker #2: This statement is made pursuant to the Safe Harbor for Forward Looking Statements described in the Private Securities Litigation Reform Act of 1995. All statements made on this call with the exception of historical facts may be considered forward-looking statements within the meaning of Section 27A of the Securities Act, 1933, and Section 21E of the Securities Exchange Act of 1934.

David Hoffman: This statement is made pursuant to the safe harbor for forward-looking statements described in the Private Securities Litigation Reform Act of 1995. Statements made on this call, with the exception of historical facts, may be considered forward-looking statements within the meaning 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 forward-looking statements are reasonable, it makes no assurance that such expectations will prove to have been correct.

Speaker #2: Although the company believes that expectations and assumptions reflected in these forward-looking statements are reasonable, it makes no assurance that such expectations will prove to have been correct.

David Hoffman: Actual results may differ in a material manner from those expressed or implied in forward-looking statements due to various risks and uncertainties. For a 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 risk factors detailed in the company's annual report on Form 10-K, those contained in 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. Press release with our Q2 2026 results is available on our website under the Investors section and includes additional details.

Speaker #2: Actual results may differ in a material manner from those expressed or implied in forward-looking statements due to various risk and uncertainties. For a discussion of such risk and uncertainties, which could cause actual results to differ from those expressed or implied in the forward-looking statements, please see Risk Factors detailed in the company's Annual Report on Form 10-K.

Speaker #2: Those contained in filed quarterly reports on Form 10-Q, as well as in other reports that the company filed from time to time with the Securities and Exchange Commission.

Speaker #2: 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.

David Hoffman: 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. Press release with our Q2 2026 results is available on our website under the Investors section and includes additional details.

Speaker #2: Press release with our second quarter 2026 results is available on our website under the Investors section and includes additional details. Our website also has our latest SEC filings, which we encourage you to review.

David Hoffman: Our website also has our latest SEC filings, which we encourage you to review. A recording of today's call will be available on our website. Now, I would like to turn the call over to Gerard Michel. Gerard, please proceed.

Speaker #2: Recording of today's call will be available on our website. Now, I would like to turn the call over to Gerard Michel. Gerard, please proceed.

Speaker #3: Thank you for joining us today. Now, well into our third year of commercial launch, I continue to deliver revenue growth and operate as a profitable business, supported by a platform with the potential to address larger patient populations well beyond metastatic uveal melanoma.

Gerard Michel: Thank you for joining us today. Now well into our third year of commercial launch, we continued to deliver revenue growth and operate as a profitable business, supported by a platform with the potential to address larger patient populations well beyond metastatic uveal melanoma. We delivered a strong Q2, driven by $27.2 million in HEPZATO KIT revenue, up 21% over Q2 2025. A significant achievement given the introduction of 340B pricing in July 2025. We activated 2 new treatment centers, bringing our total to 31, and sustained a healthy flow of new patients into our existing sites. Our commercial execution in metastatic uveal melanoma is now self-funding the investment needed to extend our liver-directed platform into other cancers where the liver is a dominant site of disease.

Speaker #3: We delivered a strong second quarter, driven by $27.2 million in Hepzato Kit revenue, up 21% over the second quarter of 2025—a significant achievement given the introduction of 340B pricing in July of 2025.

Gerard Michel: A significant achievement given the introduction of 340B pricing in July 2025. We activated two new treatment centers, bringing our total to 31, and sustained a healthy flow of new patients into our existing sites. Our commercial execution in metastatic uveal melanoma is now self-funding the investment needed to extend our liver-directed platform into other cancers where the liver is a dominant site of disease.

Speaker #3: We activated two new treatment centers, bringing our total to 31, and sustained a healthy flow of new patients into our existing sites. Our commercial execution and metastatic uveal melanoma is now self-funding the investment needed to extend our liver-directed platform into other cancers with a liver as a dominant site of disease.

Speaker #3: We remain on track to activate approximately six additional centers by year-end, which brings us to 37 active centers. We are not simply opening more centers; we are opening the right centers.

Gerard Michel: We remain on track to activate approximately six additional centers by year-end, which would bring us to 37 active centers. We are not simply opening more centers, we are opening the right centers. Most of our targets are part of one of two overlapping groups of institutions. The first is National Comprehensive Cancer Network member institutions, or NCCN, an alliance of 34 leading cancer centers that help define oncology standards of care. The second is the National Cancer Institute's Comprehensive Care Centers, 58 institutions federally designated for excellence in cancer research, clinical trials, and multidisciplinary patient care. Today, approximately 80% of our active treatment centers hold NCI comprehensive designation. Nationally, we are now represented at 41% of the 58 NCI comprehensive care centers and approximately half of the 34 NCCN member institutions. Our 2026 activations continued that pattern.

Speaker #3: Most of our targets are part of one of two overlapping groups of institutions. The first is National Comprehensive Cancer Network Member Institutions, or NCCN, an alliance of 34 leading cancer centers that help define oncology standards of care.

Speaker #3: The second is the National Cancer Institute's Comprehensive Care Centers, 58 institutions federally designated for excellence in cancer research, clinical trials, and multidisciplinary patient care.

Gerard Michel: The second is the National Cancer Institute's Comprehensive Care Centers, 58 institutions federally designated for excellence in cancer research, clinical trials, and multidisciplinary patient care. Today, approximately 80% of our active treatment centers hold NCI comprehensive designation. Nationally, we are now represented at 41% of the 58 NCI comprehensive care centers and approximately half of the 34 NCCN member institutions. Our 2026 activations continued that pattern.

Speaker #3: Today, approximately 80% of our active treatment centers hold NCI Comprehensive designation, nationally we are now represented at 41% of the 58 NCI Comprehensive Care Centers, and approximately half of the 34 NCCN Member Institutions.

Speaker #3: Our 2026 activations continue that pattern. This year, we added MD Anderson, UT Southwestern, Mayo Clinic Scottsdale, the Knight Cancer Institute at OHSU, and the Herbert Irving Comprehensive Care Center at Columbia, all NCI Comprehensive Cancer Centers.

Gerard Michel: This year, we added MD Anderson, UT Southwestern, Mayo Clinic Scottsdale, the Knight Cancer Institute at OHSU, and the Herbert Irving Comprehensive Cancer Center at Columbia. All NCI comprehensive cancer centers. With MD Anderson, UT Southwestern, and Mayo Clinic, also NCCN member institutions. These are among the nation's leading referral destinations for complex oncology care and liver-directed therapy. By adding institutions with this level of academic influence and referral reach, we are building a network that supports both near-term growth and long-term leadership in metastatic uveal melanoma and in the additional indications we intend to pursue. Beyond activating new centers, we are focused on increasing physician awareness and consideration of PHP for appropriate patients through targeted medical education, peer-to-peer engagement, and continued evidence generation. New patients starts remained solid in Q2, averaging approximately 0.5 new patients per site per month.

Speaker #3: With MD Anderson, UT Southwestern, and Mayo Clinic also NCCN Member Institutions. These are among the nation's leading referral destinations for complex oncology care, and liver-directed therapy.

Speaker #3: By adding institutions with this level of academic influence and referral reach, we are building a network that supports both near-term growth and long-term leadership in metastatic uveal melanoma and in the additional indications we intend to pursue.

Speaker #3: Beyond activating new centers, we are focused on increasing physician awareness and consideration of PHP for appropriate patients through targeted medical education, peer-to-peer engagement, and continued evidence generation.

Speaker #3: New patients start or remain solid in the second quarter, averaging approximately 0.5 new patients per site per month. Because patients typically receive a series of hepatocare treatments over up to three quarters, second quarter starts to generate volume that blows into the back half of the year, and support our full-year revenue outlook.

Gerard Michel: Because patients typically receive a series of HEPZATO treatments over up to three quarters, Q2 starts generate volume that flows into the back half of the year and support our full year revenue outlook. The data from the CHOPAN trial, a randomized phase II study published in The Lancet Oncology earlier this year, continues to accelerate broader adoption of combination approaches at leading centers. At ASCO this year, investigators from Moffitt Cancer Center presented a trials in progress abstract describing an ongoing phase II study of HEPZATO followed by tebentafusp in HLA-A2 positive patients with metastatic uveal melanoma. We believe this and future planned combination therapy trials will be critical to moving HEPZATO more consistently to a co-first-line setting.

Speaker #3: The data from the Chopin trial, a randomized phase two study published in The Lancet Oncology earlier this year, continues to accelerate broader adoption of combination approaches at leading centers.

Speaker #3: And at ASCO this year, investigators from Moffitt Cancer Center presented a trials-in-progress abstract describing an ongoing phase two study of hepatocare, followed by TeventFUST and HLA-A2 positive patients with metastatic uveal melanoma.

Speaker #3: We believe this and future plan combination therapy trials will be critical to moving hepatocare more consistently to a co-first-line setting. Turning to clinical development beyond metastatic uveal melanoma, we remain confident in hepatocare's potential in other liver-dominant cancers and we continue to work with investigators to generate supporting data.

Gerard Michel: Turning to clinical development beyond metastatic uveal melanoma, we remain confident in HEPZATO KIT's potential in other liver-dominant cancers, and we continue to work with investigators to generate supporting data. At ESMO Breast Cancer in May 2026, independent investigators presented a retrospective analysis of 15 heavily pretreated patients with liver-dominant metastatic breast cancer treated with percutaneous hepatic perfusion. Nine of the 15 patients showed a hepatic partial response, supporting further evaluation of this approach in that setting. Turning to our sponsored trials. In our sponsored phase II trial in metastatic colorectal cancer, we now have 13 centers actively screening. Consistent with the acceleration we anticipated on our last call, recruitment has improved as we have added sites and applied specialized training and streamlined onboarding. We estimate that approximately 6,000 to 10,000 US patients annually have liver-dominant disease in the third-line setting.

Speaker #3: At ESMO Breast Cancer in May 2026, independent investigators presented a retrospective analysis of 15 heavily pre-treated patients with liver-dominant metastatic breast cancer treated with percutaneous hepatic perfusion.

Speaker #3: Nine of the 15 patients showed hepatic partial response, supporting further evaluation of this approach in that setting. Turning to our sponsored trials and our sponsored phase two trial in metastatic colorectal cancer, we now have 13 centers actively screening.

Speaker #3: Consistent with the acceleration we anticipated on our last call, recruitment has improved as we have added sites and applied specialized training and streamlined onboarding.

Speaker #3: We estimate that approximately 6,000 to 10,000 U.S. patients annually have liver-dominant disease in the third-line setting. In HER2-negative metastatic breast cancer, we recently dosed the first patient at the European Institute of Oncology in Milan, 6 sites are activated in screening with additional sites in the activation process.

Gerard Michel: In HER2 negative metastatic breast cancer, we recently dosed the first patient at the European Institute of Oncology in Milan. Six sites are activated in screening with additional sites in the activation process. We estimate a similar size addressable population in this indication. We are preparing for pre-IND meetings with the FDA later this year to discuss new potential indications. Based on our H1 results and trends early in Q3, we are raising our full year revenue guidance. Sandra will take you through the numbers and our updated outlook. Sandra?

Speaker #3: We estimate a similar size addressable population in this indication. Beyond these two programs, we continue to evaluate additional liver-dominant indications through our scientific advisory board and physician feedback.

Speaker #3: And we are preparing for pre-IND meetings with the FDA later this year to discuss new potential indications. Based on our first half of results and trends early in the third quarter, we are raising our full-year revenue guidance.

Speaker #3: Sandra will take you through the numbers and our updated outlook. Sandra?

Speaker #2: Thank you, Gerard. Total revenue in the second quarter of 2026 was $29.1 million, compared with $24.2 million in the second quarter of 2025. This includes $27.1 million of hepatocare revenue and $2 million of chemo set revenue.

Sandra Pennell: Thank you, Gerard. Total revenue in Q2 2026 was $29.1 million, compared with $24.2 million in Q2 2025. This includes $27.1 million of HEPZATO KIT revenue and $2 million of CHEMOSAT revenue. This represents 17% sequential HEPZATO volume growth over Q1 and 30% volume growth versus the same period in 2025. Now turning to 2026 guidance. We are increasing our full-year revenue guidance to range from $104 million to $108 million, which reflects at least a 28% growth in HEPZATO KIT volume over 2025. Our decision to raise guidance is driven primarily by H1 performance, particularly the pace of new patient starts. We have also modestly reduced the seasonal step-down we had assumed for Q3 and Q4.

Speaker #2: This represents 17% sequential hepatocare volume growth over the first quarter and 30% volume growth versus the same period in 2025. Now, turning to 2026 guidance, we are increasing our full-year revenue guidance to range from $104 million to $108 million, which reflects at least a 28% growth in hepatocare volume over 2025.

Speaker #2: Our decision to raise guidance is driven primarily by first-half performance, particularly the pace of new patient starts. We've also modestly reduced the seasonal step-down we had assumed for the third and fourth quarters.

Speaker #2: A part of last year's seasonality came from centers operating with a single REM-certified treatment team where staff absences translated directly into lost treatment capacity.

Sandra Pennell: A part of last year's seasonality came from centers operating with a single REMS certified treatment team, where staff absences translated directly into lost treatment capacity. We have since worked with centers to train backup teams, including some of our highest volume sites, which should ease that constraint. In addition, enrollment in ongoing clinical trials during 2025 reduced the number of patients available for our treatment. Gross margin for the quarter was 90%, compared to 86% in Q2 2025. We are guiding to full year 2026 gross margin between 86% to 89%, and we also expect to report +adjusted EBITDA for the full year. Research and development expense in Q2 was $10.4 million, compared to $6.9 million in the prior year quarter, driven primarily by continued investment in our clinical organization and ongoing phase II trials.

Speaker #2: We have since worked with centers to train backup teams, including some of our highest volume sites, which should ease that constraint. In addition, enrollment in ongoing clinical trials during 2025 reduced the number of patients available for our treatment.

Speaker #2: Growth margin for the quarter was 90% compared to 86% in the second quarter of 2025. We are guiding to full-year 2026 growth margin between 86% to 89%, and we also expect to report positive adjusted EBITDA for the full year.

Speaker #2: Research and development expense in the second quarter was $10.4 million compared to $6.9 million in the prior quarter. In the prior quarter. Driven primarily by continued investment in our clinical organization and ongoing phase two trials.

Speaker #2: Spelling General and Administrative Expense in the second quarter was $13.4 million compared to $11.4 million in the prior year quarter, reflecting our investment into continued commercial expansion and increasing marketing activities.

Sandra Pennell: Selling, general and administrative expense in Q2 was $13.4 million, compared to $11.4 million in the prior year quarter, reflecting our investment into continued commercial expansion and increasing marketing activities. Net income for Q2 in both 2026 and 2025 was $2.7 million. On a non-GAAP basis, adjusted EBITDA for the quarter was $7.6 million, compared to $9.8 million in Q2 2025. We ended the quarter with cash and investments of $95.9 million. Cash provided by operations was $5.7 million in the quarter, and we purchased a small amount of common shares in Q2 under the company's approved $25 million share buyback program. To date, we have purchased approximately $9 million worth of common shares. I want to thank you all for participating today, and I'll ask the operator to open the lines for Q&A. Thank you.

Speaker #2: Net income for the second quarter in both 2026 and 2025 was $2.7 million. On a non-GAAP basis, adjusted EBITDA for the quarter was $7.6 million compared to $9.8 million in the second quarter of 2025.

Speaker #2: We ended the quarter with cash investments of $95.9 million. Cash provided by operations was $5.7 million in the quarter, and we purchased a small amount of common shares in the second quarter under the company's approved $25 million share buyback program.

Speaker #2: To date, we have purchased approximately $9 million worth of common shares. I want to thank you all for participating today, and I'll ask the operator to open the lines for Q&A.

Speaker #2: Thank you.

Speaker #1: Thank you. Ladies and gentlemen, we now begin the question-and-answer session. If you'd like to ask a question, please press star followed by number 1 on your telephone keypad.

Operator 2: Thank you. Ladies and gentlemen, we now begin the question and answer session. If you'd like to ask a question, please press star followed by number one on your telephone keypad. If your question has been answered and you'd like to withdraw from the queue, please press star followed by the number two. If you're using a speakerphone, please lift your hand before pressing any keys. One moment please while we compile the roster. The first question comes from Marie Thibault with Bancorp BTIG. Please go ahead.

Speaker #1: If your question has been answered, you would like to withdraw from the queue, please press star followed by the number 2. And if you're using a speakerphone, please lift your hand so we can press any keys.

Speaker #1: One moment, please, while we compile the roster. Your first question comes from Marie Thibault with Bancorp BTIC. Please go ahead.

Speaker #4: Hi. Thank you for taking the questions. I wanted to ask a question here, just sort of on the referral pathway and some of the efforts.

Marie Thibault: Hi. Thank you for taking the questions. I wanted to ask a question here, just sort of on the referral pathway, and some of the efforts I know that you've been making on the commercial side. Wanted to understand how the referral network efforts have been progressing. I know you've been working on for a few quarters. Are there ways to sort of describe the outreach that you've been making to the medical oncologists that is translating into incremental new patient starts? Then second, I'll just ask my follow-up here. I wanted to follow up. I think there was an effort to try to mitigate summer seasonality, get second treatment teams trained at various centers. Just an update on how that has been progressing as well. Thanks for taking the questions.

Speaker #4: I know that you've been making progress on the commercial side. So, you know, I wanted to understand how the referral network efforts have been progressing.

Speaker #4: I know you've been working on for a few quarters. You know, are there ways to sort of describe, you know, the outreach that you've been making to the medical oncologists that is translating into incremental new patient starts?

Speaker #4: And then second, I'll just ask my follow-up here. I wanted to follow up. I think there was an effort to try to mitigate summer seasonality, get, you know, second treatment teams trained at various centers just an update on how that has been progressing as well.

Speaker #4: Thanks for taking the questions.

Speaker #3: Sure, Marie. Good to hear from you. The in terms of the referral network, I would say about a third of the referral network is a static network, and that is within the institutions we are currently part of.

Sandra Pennell: Sure, Marie. Good to hear from you. In terms of the referral network, I would say about a third of the referral network is a static network, and that is within the institutions we are currently part of. Any oncology networks that are part of that. There, we know who the oncologists are. They have a meaningful number of patients. Meaningful could be two, three, four, but on a relatively consistent basis. The other part of the referral network, and probably should be kind of called a just-in-time referral, are the many, many doctors who just get one patient. Now, many of those patients eventually make their way to one of our treating sites or one of our targeted sites that will open in the next one month to two years as we continue to expand. Many of those are not.

Gerard Michel: Sure, Marie. Good to hear from you. In terms of the referral network, I would say about a third of the referral network is a static network, and that is within the institutions we are currently part of. Any oncology networks that are part of that. There, we know who the oncologists are. They have a meaningful number of patients. Meaningful could be two, three, four, but on a relatively consistent basis. The other part of the referral network, and probably should be kind of called a just-in-time referral, are the many, many doctors who just get one patient. Now, many of those patients eventually make their way to one of our treating sites or one of our targeted sites that will open in the next one month to two years as we continue to expand. Many of those are not.

Speaker #3: Any oncology networks that are, you know, are part of that. So there, you know, we know the oncologists are. They have, you know, a meaningful number of patients, meaningful could be 2, 3, 4, but on a relatively consistent basis.

Speaker #3: The other part of the referral network, and probably should be kind of a called a just-in-time referral, are the many, many doctors who just get one patient.

Speaker #3: Now, most of the many of those patients eventually make their way to one of our treating sites or one of our targeted sites that will open.

Speaker #3: In the next of, you know, one month to two years, as we continue to expand. But many of those are not. And what we have to do is find them in real time if we want to get them first line.

Gerard Michel: What we have to do is find them, in real time, if we want to get them first line, if we don't want to lose patients who progress too quickly. Our efforts there right now are multifaceted. Can everyone hear me?

Speaker #3: If we don't want to lose patients who progress too quickly, our efforts there right now are multifaceted. Jeremy, can everyone hear me?

Speaker #4: We lost you for a while, Gerard. We lost you for a minute.

Marie Thibault: We lost you for a while, Gerard. We lost you for a minute.

Speaker #3: Okay. All right. So where did I where did you lose me? phones.

Gerard Michel: Okay. All right. Where did you lose me? The perils of cell phones.

Speaker #4: We were just past kind of talking about those folks that only see one patient. We got a little bit past that.

Marie Thibault: We were just past kind of talking about those folks that only see one patient. We got a little bit past that.

Speaker #3: Yeah. Right. So what we need to do is get a just-in-time network, because we've kind of determined I'm using internally with the team. Now, right now, we're using claims data.

Gerard Michel: Yeah. Right. What we need to do is get a just-in-time network is the kind of the term I'm using internally with the team. Now, right now, we're using claims data that lags, but we generally know patients who've been recently diagnosed. Recently could be anywhere from a month to six months, given claims lags.

Speaker #3: That lags. But we generally know patients who've been recently diagnosed—recently could be anywhere from a month to six months, given claims lags. And we try to get in front of those doctors a number of different ways.

Gerard Michel: We try to get in front of those doctors a number of different ways. We'd like to do better than that. We're investigating the use of other forms of data that are refreshed more frequently. That's not in place yet, we will get it in place. We recognize that we have a higher hill to climb in terms of execution than something like an Immunocore, in that community oncologists can't use our product. We have a definitive plan. We are definitely working that right now, we are actively finding patients who've had a recent biopsy and stuff. We're working to improve that over time. It is, and will be a core part of our strategy. Now, your second question was about training additional docs at centers.

Speaker #3: We'd like to do better than that. We're investigating the use of other forms of data that are refreshed more frequently. That's not in place yet.

Speaker #3: But we will get it in place. We recognize that we have, you know, a higher held decline in terms of execution in something like an immunocore in that, you know, community oncologists can't use our product.

Speaker #3: But we have definitive plan. We are definitely working that right now. So we are actively finding patients that are recent biopsy and stuff. And we're working to improve that over time.

Speaker #3: It will be a it is and will be a core part of our strategy. Now, your second question, was about training additional docs. At centers.

Speaker #3: We've had several centers that I think our efforts led to backup teams. And, you know, at least one or more of those are very high-volume centers that it was critical to do that in.

Marie Thibault: Yeah. About the training.

Gerard Michel: We've had several centers that I think our efforts led to backup teams. At least one or more of those are very high-volume centers that it was critical to do that in. I wouldn't say that we have backup teams everywhere we would like to. A meaningful percentage of our volume now is covered by centers with backup teams.

Speaker #3: I wouldn't say that we have backup teams everywhere we would like to. But a meaningful percentage of our volume now is covered by centers of backup teams.

Speaker #4: Thank you so much.

Marie Thibault: Thank you so much.

Operator 2: Thank you. Your next question comes from John Newman with Canaccord Genuity. Please go ahead.

Speaker #1: Thank you. Your next question comes from John Newman with Kind of Cardinality. Please go ahead.

Speaker #5: Hey, guys. Thanks for taking my question. Really nice execution. On the quarter, I had a couple questions here. So I'm curious as to how much of the increased guidance for the year could be related to better uptake excuse me, due to the Chopin data?

John Newman: Hey, guys. Thanks for taking my question. Really nice execution on the quarter. I have a couple questions here. I'm curious as to how much of the increased guidance for the year could be related to better uptake, excuse me, due to the CHOPAN data. I am also wondering if you can discuss your enrollment expectations for both colorectal and the breast cancer studies. I am wondering with those two studies, if you are able to utilize overlap between existing centers that are already using HEPZATO for liver mets due to uveal melanoma. Thank you.

Speaker #5: Also, wondering if you can discuss your enrollment expectations for both colorectal and the breast cancer studies. And I'm wondering, with those two studies, if you're able to utilize overlap between existing centers that are already using Hep Sato for liver mets due to UVL melanoma.

Speaker #5: Thank you.

Speaker #3: All right. So first part of your question, in terms of how much of the increase is from Chopin, you know, it's all anecdotal. The data, the claims data is rather thin for some reason.

Gerard Michel: All right. First part of your question, in terms of how much of the increase is from CHOPAN. It's all anecdotal. The claims data's rather thin. For some reason, our claims data comes in very slow relative to other treatments. Our anecdotal experience is that more and more of these patients are getting combination therapy, and that's undoubtedly a result of the CHOPAN data. In terms of site recruitment, which I think was your third question, we're not gonna give guidance on that. I think the only guidance we're gonna give is that we expect an interim readout for colorectal, sometime late next year, and we're not providing guidance on breast. We are encouraged by both an uptick in both trials in terms of site activation enrollment. There was a second question there, I'm embarrassed to say I lost it.

Speaker #3: Our claims data comes in very slowly, relative to other treatments. But our anecdotal experience is that more and more of these patients are getting combination therapy.

Speaker #3: And that's undoubtedly a result of the Chopin data. In terms of site recruitment, which I think was your third question, we're not going to give guidance on that.

Speaker #3: I think the only guidance we're going to give is that we expect an interim readout for colorectal sometime late next year. And we're not providing guidance on breast.

Speaker #3: But we are encouraged by an uptick in both trials in terms of site activation and enrollment. And there was a second question there—embarrassed to say, I lost it.

Speaker #3: Could you remind me, John, what it was?

Gerard Michel: Could you remind me, John, what it was?

Speaker #5: Sure. Just curious if you were able to utilize existing centers that are using Hepzato in terms of also signing them up for enrollment with breast and colorectal cancer.

John Newman: Sure. Just curious if you're able to utilize existing centers that are using HEPZATO in terms of also signing them up for enrollment with breast and colorectal cancer.

Speaker #3: Yeah, I would say the majority of centers in the U.S. were already, you know, REMS-activated for MUM. In Europe, it's a lower percentage.

Gerard Michel: Yeah, I would say the majority of centers in the US already REMS activated for MUM. In Europe, it's a lower percentage. We're actually activating some new centers. Can you guys hear me? I got another message that audio dropped.

Speaker #3: We're actually activating some new centers can you guys hear me? I got another message that audio dropped.

Speaker #4: We can hear you.

Marie Thibault: We can hear you.

Speaker #3: Okay. All right. We also have a number of in Europe, it's a smaller number of percentage that percentage of centers that were MUM centers.

Operator 2: Yes, we can hear you.

John Newman: Yes, we can hear you.

Gerard Michel: Okay. All right. We also have a number of, in Europe, it's a smaller number of percentage of centers that were MUM centers. I'd say, maybe 60/40 existing centers and new centers in the trial.

Speaker #3: I'd say, you know, maybe 60/40. Existing centers and new centers in the trial.

Speaker #5: Okay. Great. Thank you.

John Newman: Okay, great. Thank you.

Speaker #1: Thank you. Your next question comes from Chase Nickerbucker with Craig Holland. Please go ahead.

Operator 2: Thank you. Your next question comes from Chase Knickerbocker with Craig-Hallum. Please go ahead.

Speaker #6: Good morning. Congrats on a really nice quarter. And thanks for taking the questions. I just just wanted to dig in a little bit more on kind of the implied kind of second half.

Chase Knickerbocker: Good morning. Congrats on a really nice quarter, and thanks for taking the questions. Just wanted to dig in a little bit more on kind of the implied H2 in your guidance. If we look at that, it assumes a pretty meaningful kind of slowdown still. With that in mind, can you just maybe talk through exactly when you started seeing that softness in new patient starts last year, then what you've seen so far through July, early August? Have you seen any green shoots from some of the programs that you've put in place to try to train additional treatment teams, et cetera?

Speaker #6: In your guidance. And so if we kind of look at that, you know, it assumes a pretty meaningful kind of slowdown still. You know, with that in mind, can you just maybe kind of talk through exactly when you started seeing that softness in kind of new patient starts last year?

Speaker #6: And then kind of what you've seen so far, you know, through July early August, you know, have you seen any green shoots? From some of the programs that you put in place to try to train additional treatment teams, et cetera?

Speaker #3: Without going into specific numbers, I will say, Chase, that the bulk of our increase in guidance is due to an impressive first half of the year.

Gerard Michel: Without going into specific numbers, I will say, Chase, that the bulk of our increase in guidance is due to an impressive H1. We have tempered the downturn we expect in the H2, partly due to frankly, less demand from clinical trials. The second part is really just a 2-week lead. We only have a 2 to 3-week vision idea of what's gonna happen going forward. It looks reasonably strong, so we've tempered the overall seasonality as well. I would say the bulk of our increase in guidance is based on our performance in the H1. As you well know, new patient starts drive business over 2 to 3 more quarters.

Speaker #3: We have tempered the downturn we expect in the second half. Partly due to, frankly, less demand from clinical trials. And the second part is really just a two-week lead we only have a two to three-week, you know, vision, idea of what's going to happen going forward.

Speaker #3: And it looks reasonably strong. So we've tempered, you know, the overall seasonality as well. But I would say the bulk of our increase in guidance is based on our performance in the first half of the year.

Speaker #3: And as you well know, new patient starts drive business, you know, over two to three more quarters.

Speaker #6: And so fair to say that we haven't seen, you know, to date, you know, the same kind of, you know, softness in new patient starts you know, at least yet.

Chase Knickerbocker: Fair to say that we haven't seen, to date, the same kind of softness in new patient starts, at least yet. Just kind of second follow-up would just be the visibility that you have to center adds in the H2 here, and how you're thinking about that year-end target.

Speaker #6: And then just kind of second follow-up would just be kind of the visibility that you have to kind of center ads in the back half of the year here.

Speaker #6: You know, kind of in how you're thinking about that year-end target.

Speaker #3: Yeah. I'll ask Kevin in a moment to comment on how we feel about the additional six centers. In terms of it's fair to say we haven't seen the softness yet.

Gerard Michel: Yes. I'll ask Kevin in a moment to comment on how we feel about the additional 6 centers. In terms of it's fair to say we haven't seen the softness yet, this is about when we saw it last year, kind of a 2-week look forward at this point, it dropped dramatically. No, we haven't seen that yet. Again, I think I want to caution listeners that we don't have a very long forward-looking visibility into these things. It's about 2 to 3 weeks. This time last year, we saw some softness in that 2- to 3-week period. We're not seeing that quite yet. That's only 2 to 3 weeks. Kevin?

Speaker #3: This is about when we saw it last year, kind of two-week look forward at this point. It dropped dramatically. No, we haven't seen that yet.

Speaker #3: But again, I think it's I want to caution listeners that we don't have a very long, you know, forward-looking visibility into these things. It's about two to three weeks.

Speaker #3: This time last year, we saw some softness in that two to three-week period. We're not seeing that quite yet. But, you know, that's only two to three weeks.

Speaker #3: Kevin?

Speaker #2: Yes. Thanks, Gerard. And thanks for the question, Chase. We are looking looking kind of strong for the number of new sites that we're bringing on.

Kevin Muir: Yes, thanks, Gerard, and thanks for the question, Chase. We are looking kind of strong for the number of new sites that we're bringing on. We kind of get them in fits and starts when training is completed. We have a number of sites that are in the queue to get our preceptorship and proctorship, and it's just a matter of time until they open for the remainder of the year. I feel very strong that we can attain Gerard's goal of 37.

Speaker #2: It's a we kind of get them in fits and starts when training is completed. So we have a number of sites that are in the queue to get our preceptorship and proctorship.

Speaker #2: And it's just a matter of time until they open for the remainder of the year. So I feel very strongly that we can obtain—or Gerard's goal is 37.

Speaker #3: Yeah. Our goal of 37, my friend. The I've also to say, I think we have at least one patient scheduled, maybe two, right now.

Gerard Michel: Yeah, our goal of 37, my friend. I also would say I think we have at least one patient scheduled, maybe two right now, and then one more looking for patients. Now, patients can get scheduled, that one I mentioned. These are on the cusp, and what we've found is the on-the-cusp ones can go in weeks, they can go in months. There's a healthy on-deck circle here. The 37 is well within our reach. Fingers crossed a bit as we know it's episodic, but it's not a soft pipeline.

Speaker #3: And then one more looking for patients. Now, these can, you know, patients can get scheduled. That one I mentioned. But these are on the cusp.

Speaker #3: And what we found is the on-the-cusp ones can go in weeks. They can go in months. But there's a healthy on-deck circle here. It's not the 37 is well within our reach.

Speaker #3: You know, fingers crossed a bit as we know it's episodic. But it's not a soft pipe coin.

Speaker #6: Helpful color, guys. Thank you.

Chase Knickerbocker: Helpful color, guys. Thank you.

Speaker #1: Thank you. Your next question comes from Sam Pancula Ramakanth with HC Wayne Wright. Please go ahead.

Operator 2: Thank you. Your next question comes from Swayampakula Ramakanth with H.C. Wainwright. Please go ahead.

Speaker #7: Thank you. This is K from HC Wainwright. Good morning, Gerard and Sandra. A couple of quick questions here. You know, I'm trying to bridge the gap between the 30% volume growth and the 20-some percent revenue growth.

Swayampakula Ramakanth: Thank you. This is RK from H.C. Wainwright. Good morning, Gerard and Sandra.

Gerard Michel: Morning.

Swayampakula Ramakanth: Couple of quick questions here. I'm trying to bridge the gap between the 30% HEPZATO volume growth and the 20-some percent revenue growth. How much of that gap is from 340B or Medicaid or just the site mix? The second question is on the gross margin. You exited last quarter with 90%, but your guidance asked for a little bit lower than that for the full year. Is that basically coming from the top line, or is there something else that's going on?

Speaker #7: So how much of that gap is from 340B or Medicaid or just the site mix? And the second question is on the gross margin.

Speaker #7: You know, you have a you exited last quarter with 90%. But your guidance asks for a little bit lower than that. For the full year.

Speaker #7: So is that basically coming from the top line? Or is there something else that's going on?

Gerard Michel: Sandra?

Speaker #3: Sandra?

Sandra Pennell: Yes, I can answer both questions with regard to the Q2 volume as well as the revenue from prior years. Reminder that 340B pricing, which reduced our effective ASP from about $185,000 down to about $170,000, $173,000 per kit this year versus what we recognized last year. Even though revenue is only up 21%, it's actually representative of 30% volume. 100% of that difference between those two figures is due to 340B. With regards to gross margin, yes, we had a great quarter in Q2, recognizing 90%, which is up from 86% a year ago and is above our original guidance of 85% to 87% for the full year. Now, the Q2 improvement reflects better overhead absorption, favorable manufacturing performance, and obviously increased HEPZATO volume. As we go into the remainder of the year, we do have to be a bit conservative around additional manufacturing costs.

Speaker #8: Yes. I can answer both questions with regard to the Q2 volume, as well as the revenue from prior year. So reminder that 340B pricing, which reduced our effective ASP from about 185 or down to about 170, 173,000 per kit, this year, versus what we recognized last year.

Speaker #8: So even though revenue is only up 21%, it's actually representative of a 30% volume. So 100% of that difference between those two figures is due to 340B.

Speaker #8: With regards to gross margin, yes, we had a great quarter in Q2, recognizing 90%, which is up from 86% a year ago. And is above our original guidance of 85 to 87% for the full year.

Speaker #8: Now, the Q2 improvement reflects better overhead absorption, favorable manufacturing performance, and obviously increased heads-out volume. You know, as we go into the remainder of the year, we do have to be a bit conservative around additional manufacturing costs.

Speaker #8: So the full year is 86 to 89%. You know, we may see a quarter that dips a little bit below that 90%. And, you know, one that hits 90% again.

Sandra Pennell: The full year is 86% to 89%. We may see a quarter that dips a little bit below that 90% and one that hits 90% again. That's our current guide.

Speaker #8: But that's our current guide.

Speaker #7: Thank you. Thank you, Sandra, for taking the questions.

Swayampakula Ramakanth: Thank you. Thank you, Sandra, for taking the questions.

Speaker #8: Thank you.

Sandra Pennell: Thank you.

Speaker #1: Thank you. Your next question comes from Yale Jen with Layla and Company. Please go ahead.

Operator 2: Thank you. Your next question comes from Yale Jen with Laidlaw & Company. Please go ahead.

Speaker #7: Good morning. And thanks for taking questions and congrats on a good quarter performance. Just we have two here. The first one is that I noticed your recent deck in terms of the type of cancer that metastatic to liver, you have about eight of them.

Yale Jen: Good morning, and thanks for taking questions, and congrats on a good quarter performance. Just we have two here. The first one is that I noticed your recent deck in terms of the type of cancer that metastasized to the liver, you have a of them. Just curious initially why you choose the breast cancer and the CRC, given they are not necessarily the highest volume or other factors. Just any thoughts of that when you made that decision? Then I have a follow-up.

Speaker #7: And just curious initially, why you choose the breast cancer and the CRC, given they are not necessarily the highest volume or other factors? Any thoughts of that?

Speaker #7: When you made that decision? And then I'll follow up.

Gerard Michel: Yeah, Yale. That's a great question. We started the conversations as to those two trials probably a good two years ago. For CRC, there's a large amount of liver-dominant cancer. It's probably the largest outside of primary. The setting we chose, third line, is not the largest. It's actually quite a bit cut down from the overall population of patients with liver dominant cancer and CRC patients. The reason we chose that, frankly, was when oncologists and, to a lesser extent, IRs who are fairly unfamiliar with our therapy, when we were having conversations about where to start, that's where we got traction. So it was largely driven by docs' willingness to participate. Now, I don't want people to think, Well, that's a big negative. This is a very novel procedure. Oncologists generally prefer systemics.

Speaker #3: Yeah. That's a great question. And, you know, we started the conversations as to for those two trials, probably a good two years ago. And, you know, for CRC, there is a fair amount of there's a large amount of liver dominant cancer.

Speaker #3: It's one of the it's probably the largest outside of primary. The setting we chose, third line, is not the largest. It's actually quite a bit cut down from the overall population of patients with liver dominant cancer.

Speaker #3: The CRC patients. But the reason we chose that, frankly, was when oncologists and to a lesser extent IRs who are fairly unfamiliar with our therapy, when we were having conversations about where to start, that's where we got traction.

Speaker #3: And so it was largely driven by docs' willingness to participate. Now, I don't want people to think, oh, that's a big negative. It's a very novel procedure.

Speaker #3: Oncologists generally prefer systemics. But I think the data, as we generate it, will bear out. And oncologists will change their perception first in terms of trials they want to participate in, and then eventually obviously actual commercial clinical usage.

Gerard Michel: I think the data as we generate it will bear out, and the oncologists will change their perception, first in terms of trials they want to participate in, and then eventually, obviously, actual commercial clinical usage. In terms of breast cancer, that one is a bit less admittedly, there was real interest in oncologists in terms of participating in that trial. Yes, it's been slow to enroll and get started, but there were a couple of key KOLs who thought there was a real need here. Various types of breast cancer tumors generally react well to chemotherapy, that was one reason a number of docs were excited. These were the starting sets where we could get traction with oncologists being interested. Who knows? If we started now with the level of understanding we have out there, would it be a different set?

Speaker #3: In terms of breast cancer, that one is a bit less, admittedly. But there was real interest from oncologists in terms of participating in that trial.

Speaker #3: Yes, we have. It's been slow to enroll and get started, but there were a couple of key KOLs who thought there was a real need here.

Speaker #3: Breast cancer, there's types of breast cancer tumors generally react well to chemotherapy. So that was one reason. A number of docs were excited. But these were the starting sets where we could get traction with oncologists being interested.

Speaker #3: Who knows? If we started now with the level of understanding we have out there, would it be a different set? Yes, but we had to start somewhere.

Gerard Michel: Yes, we had to start somewhere. I think these are meaningful markets for us, and there's a real unmet need in these settings. We'll add more, some orphan-type indications and some much larger indications, going forward.

Speaker #3: I think these are meaningful markets for us. And there's a real unmet need in these settings. And we'll add more. Some orphan-type indications and some much larger indications going forward.

Speaker #7: Okay. Great. That's very helpful. Maybe just a tack on that one. Of the similar themes, which is the with the current patient enrollment of the those two trials, are they within your expectation or you have different sort of hope in terms of the pace and other factors?

Yale Jen: Okay, great. That's very helpful. Maybe just to tack on that from the similar themes, which is with the current patient enrollment of those two trials, are they within your expectation or you have different hope in terms of the pace and other factors? Thanks.

Speaker #7: And thanks.

Speaker #3: Definitely lower than our expectations. There are a number of reasons for that. I think one not-so-obvious reason is that just as we had to get sites REM certified and up and running, we had that issue with new centers.

Gerard Michel: Definitely lower than our expectations. There are a number of reasons for that. I think one not-so-obvious reason is that just as we had to get sites REMS certified and up and running, we had that issue with new centers. We also had to educate the clinical trial teams. We found that getting the IR teams, which are less set up for clinical trials, to work with the oncology teams, which are very familiar with trials, but they're not familiar with this type of therapy, getting those teams to work together with the new patient flow, the type of data we need to gather in the IR suite, it was very new to them. Quite frankly, a number of centers that we thought would quickly activate, enroll, we got the disparate teams together, it became an issue.

Speaker #3: We also had to educate the clinical trial teams. And we found that getting the IR teams, which are less set up for clinical trials, to work with the oncology teams, which are very familiar with trials, but they're not familiar with this type of therapy, getting those teams to work together with a new patient flow.

Speaker #3: The type of data we need to get gathered in the IR suite it was very new to them. Quite frankly, a number of centers that we thought would quickly activate and enroll, we got the disparate teams together.

Speaker #3: It became an issue. So with the dimension of change in training, we did not anticipate would be a problem in the clinical trial setting.

Gerard Michel: It's a dimension of change in training we did not anticipate would be a problem in the clinical trial setting. Just as in the commercial setting, there was a hill to climb that we kind of understood we'd have to do when we started. It was a bigger hill than we thought. Finally found the same thing in the clinical trial. Getting the clinical trial teams to work together in this type of trial was a problem. We lost some centers because of it, undoubtedly, and the bigger issue was just centers taking a while to get up and running. Again, interesting product, different type of product, but we're working through the issues just as we have commercially. We're going to work through the issues on the clinical side as well.

Speaker #3: So just as in the commercial setting, there was a hill decline that we kind of understood we'd have to do when we started. It was a bigger hill than we thought.

Speaker #3: But we found the same thing in the clinical trial. Getting the clinical trial teams to work together in this type of trial was a problem.

Speaker #3: We lost some centers because of it, undoubtedly. And the bigger issue was just centers taking a while to get up and running. So again, interesting product, different type of product.

Speaker #3: But we're working through the issues just as we have commercially. We're going to work through the issues on the clinical side as well.

Speaker #7: Okay. Great. This is very helpful. And certainly, congrats on all the progress. And best of luck to you guys.

Yale Jen: Okay, great. This is very helpful, certainly congrats on all the progress, best of luck to you guys.

Speaker #1: Thank you. Is there enough for the questions on the phone line? I will turn the call back to Mr. Mitchell for some closing remarks.

Operator 2: Thank you. There are no further questions on the phone line. I will turn the call back to Mr. Mitchell for some closing remarks.

Operator 2: Thank you. There are no further questions on the phone line. I will turn the call back to Mr. Michel for some closing remarks.

Speaker #3: Okay. Just want to thank everyone for their support. Both the investors as well as the internal team here at DELCATH. We're getting a lot done.

Gerard Michel: Okay. Just want to thank everyone for their support, both the investors as well as the internal team here at Delcath. We're getting a lot done, it wouldn't be if it wasn't for the employees of the company who are very dedicated to move things forward for patients to earn the trust of the investors. Thank you very much for your time, have a great day.

Speaker #3: And it wouldn't be if it wasn't for the employees of the company who are very dedicated to move things forward for patients. And to, you know, earn the trust of the investors.

Speaker #3: Thank you very much for your time, and have a great day.

Speaker #1: Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines. Have a great day.

Operator 2: Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines. Have a great day.

Q2 2026 Delcath Systems Inc Earnings Call

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