DELCATH SYSTEMS INC

Previous wording

•our ability to successfully commercialize CHEMOSAT, HEPZATO, and future products, if any, generate revenue and successfully obtain reimbursement for the products and/or the associated procedures;

Current wording

•our ability to successfully commercialize CHEMOSAT, HEPZATO KIT, and future products, if any, generate revenue and successfully obtain reimbursement for the products and/or the associated procedures;

Previous wording

•our sales, marketing and distribution capabilities and strategies, including for the commercialization and manufacturing of CHEMOSAT, HEPZATO, and future products, if any;

Current wording

•our sales, marketing and distribution capabilities and strategies, including for the commercialization and manufacturing of CHEMOSAT, HEPZATO KIT, and future products, if any;

Previous wording

•the rate and degree of market acceptance and clinical utility of CHEMOSAT, HEPZATO, and future products, if any;

Current wording

•the rate and degree of market acceptance and clinical utility of CHEMOSAT, HEPZATO KIT, and future products, if any;

Previous wording

•our ability to successfully source components of CHEMOSAT, HEPZATO, and future products, if any, and enter into supplier contracts;

Current wording

•our ability to successfully source components of CHEMOSAT, HEPZATO KIT, and future products, if any, and enter into supplier contracts;

Previous wording

•our ability to source melphalan and other critical components necessary to manufacture HEPZATO;

Current wording

•our ability to source melphalan and other critical components necessary to manufacture HEPZATO KIT;

Previous wording

•our ability to successfully manufacture CHEMOSAT and HEPZATO;

Current wording

•our ability to successfully manufacture CHEMOSAT and HEPZATO KIT;

Previous wording

We are an interventional oncology company focused on the treatment of primary cancers metastatic to the liver. Our lead product, the HEPZATO KIT (melphalan for Injection/Hepatic Delivery System), a drug/device combination product, was approved by the US Food and Drug Administration (the “FDA”) on August 14, 2023, indicated as a liver-directed treatment for adult patients with uveal melanoma with unresectable hepatic metastases affecting less than 50% of the liver and no extrahepatic disease, or extrahepatic disease limited to the bone, lymph nodes, subcutaneous tissues, or lung that is amenable to resection, or radiation. The first commercial use of HEPZATO for the treatment of metastatic hepatic dominant uveal melanoma (“mUM”) took place in January 2024.

Current wording

We are an interventional oncology company focused on the treatment of primary cancers metastatic to the liver. Our lead product, the HEPZATO KIT (melphalan for Injection/Hepatic Delivery System), a drug/device combination product, was approved by the US Food and Drug Administration (the “FDA”) on August 14, 2023, indicated as a liver-directed treatment for adult patients with uveal melanoma with unresectable hepatic metastases affecting less than 50% of the liver and no extrahepatic disease, or extrahepatic disease limited to the bone, lymph nodes, subcutaneous tissues, or lung that is amenable to resection, or radiation. The first commercial use of the HEPZATO KIT for the treatment of metastatic hepatic dominant uveal melanoma (“mUM”) took place in January 2024.

Previous wording

We have sufficient raw material and component constituent parts of HEPZATO KIT to meet anticipated demand and we intend to manage supply chain risk through stockpiled inventory and contracting with multiple suppliers for critical components. As of July 31, 2024, eight facilities have treated at least one patient with the HEPZATO KIT.

Current wording

We have sufficient raw material and component constituent parts of the HEPZATO KIT to meet anticipated demand and we intend to manage supply chain risk through stockpiled inventory and contracting with multiple suppliers for critical components. As of October 31, 2024, 12 facilities have treated at least one patient with the HEPZATO KIT.

Previous wording

In addition to HEPZATO’s use to treat mUM, the Company believes that HEPZATO has the potential to treat other cancers in the liver, such as metastatic colorectal cancer, metastatic neuroendocrine tumors, metastatic breast cancer and intrahepatic cholangiocarcinoma, and plans to begin one or more studies of HEPZATO KIT to treat such conditions in late 2024 or early 2025. We believe that those and similar disease states are areas of unmet medical needs that represent significant market opportunities.

Current wording

In addition to HEPZATO’s use to treat mUM, the Company believes that HEPZATO has the potential to treat other cancers in the liver, such as metastatic colorectal cancer, metastatic neuroendocrine tumors, metastatic breast cancer and intrahepatic cholangiocarcinoma, and plans to begin one or more studies of the HEPZATO KIT to treat such conditions in late 2024 or early 2025. We believe that those and similar disease states are areas of unmet medical needs that represent significant market opportunities.

Previous wording

The increase in total revenue for the three and six months ended June 30, 2024 compared to the same periods in 2023 was due to the commercial launch of HEPZATO KIT in the U.S. along with an increase in demand for CHEMOSAT in Europe.

Current wording

The increase in total revenue for the three and nine months ended September 30, 2024 compared to the same periods in 2023 was due to the commercial launch of the HEPZATO KIT in the U.S. during the first quarter of 2024 and the commercial expansion since such time along with an increase in demand for CHEMOSAT in Europe.

Previous wording

The change in cost of goods sold for the three and six months ended June 30, 2024 compared to the same periods in 2023 is directly related to changes in demand for product revenue.

Current wording

The change in cost of goods sold for the three and nine months ended September 30, 2024 compared to the same periods in 2023 is directly related to changes in demand for product revenue.

Previous wording

Research and development expenses are incurred for the development of HEPZATO and consist primarily of payroll and payments to contract research and development companies. In 2023, these costs primarily related to generating pre-clinical data submission of the NDA and the cost of manufacturing HEPZATO for expanded access protocol sites utilizing HEPZATO KIT prior to FDA approval. The decrease for the three and six months ended June 30, 2024 compared to the same period in 2023 is due to lower costs associated with NDA submission offset by an increase in medical affairs and regulatory costs associated with an approved product.

Current wording

Research and development expenses are incurred for the development of HEPZATO and consist primarily of payroll and payments to contract research and development companies. In 2023, these costs primarily related to generating pre-clinical data submission of the NDA and the cost of manufacturing HEPZATO for expanded access program sites utilizing the HEPZATO KIT prior to FDA approval. The decrease for the three and nine months ended September 30, 2024 compared to the same period in 2023 is due to lower costs associated with NDA submission and expanded access program costs offset by an increase in medical affairs and regulatory costs associated with an approved product.

Previous wording

Selling, general and administrative expenses consist primarily of payroll, rent and professional services such as accounting, legal, marketing and commercial preparation services. For the three and six months ended June 30, 2024 compared to the same periods in 2023, selling, general and administrative expenses increased due to activities supporting the commercial launch of HEPZATO.

Current wording

Selling, general and administrative expenses consist primarily of payroll, rent and professional services such as accounting, legal, marketing and commercial preparation services. For the three and nine months ended September 30, 2024 compared to the same periods in 2023, selling, general and administrative expenses increased due to commercial launch activities including marketing-related expenses and additional personnel in the commercial team.

Previous wording

Interest and other income (expense) in 2024 is primarily related to the change in fair value of the Tranche B Warrants liability, interest income associated with marketable securities offset by interest expense related to our debt instruments. There was a decrease in interest expense for the three and six months ended June 30, 2024 compared to the same periods in 2023 related to the principal loan payments made during 2023 and 2024.

Current wording

Interest and other income (expense) in 2024 is primarily related to the change in fair value of the Tranche B Warrants liability, interest income associated with marketable securities which is then offset by interest expense related to our debt instruments. There was a decrease in interest expense for the three and nine months ended September 30, 2024 compared to the same periods in 2023 related to the principal loan payments made during 2023 and 2024. A decrease in warrant valuation occurred during the three months ended September 30, 2024 due to the decrease in expected term of the outstanding Tranche B Warrants.

Previous wording

At June 30, 2024, we had cash and cash equivalents totaling $14.8 million and short-term investments totaling $5.1 million, as compared to cash, cash equivalents and restricted cash totaling $12.7 million and short-term investments totaling $19.8 million at December 31, 2023. During the six months ended June 30, 2024, we used $14.0 million of cash for operating activities compared to $13.9 million during the six months ended June 30, 2023, and $6.1 million for principal payments during the six months ended June 30, 2024, compared to $6.3 million for principal payments during the six months ended June 30, 2023. At June 30, 2023, we had cash, cash equivalents and restricted cash totaling $14.6 million.

Current wording

At September 30, 2024, we had cash and cash equivalents totaling $8.3 million and short-term investments totaling $5.7 million, as compared to cash, cash equivalents and restricted cash totaling $12.7 million and short-term investments totaling $19.8 million at December 31, 2023. During the nine months ended September 30, 2024, we used $17.7 million of cash for operating activities compared to $23.1 million during the nine months ended September 30, 2023, and $8.6 million for principal payments during the nine months ended September 30, 2024, compared to $6.3 million for principal payments during the nine months ended September 30, 2023. At September 30, 2023, we had cash, cash equivalents and restricted cash totaling $40.5 million.

Previous wording

Our capital commitments over the next twelve months include (a) $7.8 million to satisfy accounts payable, accrued expenses, current lease liabilities and current medac settlement and (b) $4.5 million of loan and convertible note principal payments, if the holders do not elect to convert the notes into equity. Additional capital commitments beyond the next twelve months include (a) $1.4 million of lease liabilities and (b) $0.6 million for settlement of litigation with medac.

Current wording

Our capital commitments over the next twelve months include (a) $6.8 million to satisfy accounts payable, accrued expenses, current lease liabilities and current medac settlement and (b) $2.0 million of convertible note principal payments, if the holders do not elect to convert the notes into equity. Additional capital commitments beyond the next twelve months include (a) $1.3 million of lease liabilities and (b) $0.6 million for settlement of litigation with medac.

Previous wording

We previously entered into a Controlled Equity Offering SM Sales Agreement (“ATM Sales Agreement”), with Cantor Fitzgerald & Co. (the “Sales Agent”), pursuant to which we may offer and sell, at our sole discretion through the Sales Agent, shares of our common stock from time to time. Pursuant to a prospectus supplement (the “ATM Prospectus Supplement”), filed with the SEC on February 27, 2023, we could sell shares of common stock under the ATM Sales Agreement up to an aggregate of $17.0 million. To date, we have sold approximately $4.0 million of our common stock, prior to issuance costs, under the ATM Sales Agreement. No sales were made during the three and six months ended June 30, 2024.

Current wording

We previously entered into a Controlled Equity Offering SM Sales Agreement (“ATM Sales Agreement”), with Cantor Fitzgerald & Co. (the “Sales Agent”), pursuant to which we may offer and sell, at our sole discretion through the Sales Agent, shares of our common stock from time to time. Pursuant to a prospectus supplement (the “ATM Prospectus Supplement”), filed with the SEC on February 27, 2023, we could sell shares of common stock under the ATM Sales Agreement up to an aggregate of $17.0 million. To date, we have sold approximately $4.0 million of our common stock, prior to issuance costs, under the ATM Sales Agreement. No sales were made during the three and nine months ended September 30, 2024.

Previous wording

The registration statement of which the ATM Prospectus Supplement forms a part expired on July 1, 2024 and we can no longer make sales under the ATM Prospectus Supplement. We may file a new prospectus supplement with respect to the ATM Sales Agreement, or with respect to a similar arrangement, in the future.

Current wording

The registration statement the ATM Prospectus Supplement was a part of, expired on July 1, 2024 and we can no longer make sales under the ATM Prospectus Supplement.

Previous wording

On August 6, 2021, we entered into the Avenue Loan Agreement with Avenue Venture Opportunities Fund, L.P. (the “Lender,” or “Avenue”), as amended on March 31, 2023, for a term loan in an aggregate principal amount of up to $20 million (the “Avenue Loan”). The Avenue Loan bears interest at an annual rate equal to the greater of (a) the sum of 7.7% plus the prime rate as reported in The Wall Street Journal and (b) 10.95%. The interest rate at June 30, 2024 was 16.20%. The Avenue Loan is secured by all of our assets globally, including intellectual property. On March 15, 2023, we returned to Avenue $4.0 million held in the restricted cash to pay down a portion of the outstanding loan balance, principal payments of $2.1 million and an incremental 4.25% of the final payment of $0.2 million. On March 31, 2023, we reached an agreement to amend the existing loan agreement with Avenue to defer the interest only period to September 30, 2023, with an additional extension option upon the FDA approval for HEPZATO KIT and subsequent receipt of at least $10 million from the sale and issuance of equity securities. In exchange for this extension, we agreed to provide Avenue with 34,072 warrants to purchase shares of common stock at an exercise price of $0.01 per warrant share, all of which were exercised in April 2024. On August 14, 2023, we received the FDA approval for the HEPZATO KIT and subsequently received over $10 million from the exercise of warrants. At our option, we elected to extend the interest only period to December 31, 2023. Principal payments of approximately $1.0 million began in January 2024.

Current wording

On August 6, 2021, we entered into the Avenue Loan Agreement with Avenue Venture Opportunities Fund, L.P. (the “Lender,” or “Avenue”), as amended on March 31, 2023, for a term loan in an aggregate principal amount of up to $20 million (the “Avenue Loan”). The Avenue Loan bore interest at an annual rate equal to the greater of (a) the sum of 7.7% plus the prime rate as reported in The Wall Street Journal and (b) 10.95%. The interest rate at September 30, 2024 was 16.20%. The Avenue Loan was secured by all of our assets globally, including intellectual property. On March 15, 2023, we returned to Avenue $4.0 million held in the restricted cash to pay down a portion of the outstanding loan balance, principal payments of $2.1 million and an incremental 4.25% of the final payment of $0.2 million. On March 31, 2023, we reached an agreement to amend the existing loan agreement with Avenue to defer the interest only period to September 30, 2023, with an additional extension option upon the FDA approval for the HEPZATO KIT and subsequent receipt of at least $10 million from the sale and issuance of equity securities. In exchange for this extension, we agreed to provide Avenue with 34,072 warrants to purchase shares of common stock at an exercise price of $0.01 per warrant share, all of which were exercised in April 2024. On August 14, 2023, we received the FDA approval for the HEPZATO KIT and subsequently received over $10 million from the exercise of warrants. At our option, we elected to extend the interest only period to December 31, 2023. Principal payments of approximately $1.0 million began in January 2024.

Previous wording

Avenue did not exercise its option to convert the remaining principal amount of the Avenue Loan into shares of our common stock and on August 1, 2024, we made the final payment due on the Avenue Loan. We are anticipating the release from all obligations and Avenue to return all security interests back to us.

Current wording

Avenue did not exercise its option to convert the remaining principal amount of the Avenue Loan into shares of our common stock and on August 1, 2024, upon maturity of the Avenue loan, we made the final payment due there under. Avenue has released us from all obligations and returned all security interests back to us.

Previous wording

On June 12, 2023, the stockholders approved the Private Placements at the annual general meeting of stockholders and therefore, the Preferred Warrants and Common Warrants issued in the Private Placements are exercisable. The exercise of all such Preferred Warrants and Common Warrants would generate approximately $60.0 million in proceeds. There can be no guarantee that all such Warrants are ever exercised, and if so, there is no guarantee that we will ever receive the full $60.0 million in proceeds. As of June 30, 2024, all of the Preferred Tranche A Warrants were exercised for an aggregate exercise price of $34.9 million into 34,859 shares of Series F-3 Preferred Stock, 250 shares Preferred Tranche B Warrants were exercised for an aggregate exercise price of $0.3 million and all of the Common Tranche A Warrants were exercised for an aggregate exercise price of $0.1 million into 31,110 shares of common stock.

Current wording

On June 12, 2023, the stockholders approved the Private Placements at the annual general meeting of stockholders and therefore, the Preferred Warrants and Common Warrants issued in the Private Placements became exercisable. The exercise of all such Preferred Warrants and Common Warrants would generate approximately $60.0 million in proceeds to us. As of September 30, 2024, all of the Preferred Tranche A Warrants were exercised for an aggregate exercise price of $34.9 million into 34,859 shares of Series F-3 Preferred Stock, which were subsequently converted into shares of common stock in accordance with the terms of the Certificate of Designation and Rights relating to the Series F Preferred Offering, 250 shares Preferred Tranche B Warrants were exercised for an aggregate exercise price of $0.3 million into 250 shares of Series F-3 Preferred Stock, which were subsequently converted into shares of common stock in accordance with the terms of the Certificate of Designation and Rights relating to the Series F Preferred Offering, and all of the Common Tranche A Warrants were exercised for an aggregate exercise price of $0.1 million into 31,110 shares of common stock.