☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
2022
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|
| |
Delaware | 06-1245881 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
Common stock, $0.01 par value per share | DCTH | The NASDAQ Capital Market |
Large accelerated filer | ☐ | Accelerated filer | ☐ | |||
Non-accelerated filer | ☒ | Smaller reporting company | ☒ | |||
Emerging growth company | ☐ |
SYSTEMS, INC.
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Page | |||||||
PART I—FINANCIAL INFORMATION | |||||||
Item 1. | Financial Statements | ||||||
3 | |||||||
4 | |||||||
5 | |||||||
6 | |||||||
7 | |||||||
Item 2. |
| 18 | |||||
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Item 4. |
| 20 | |||||
Item 1. |
| 22 | |||||
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Item 6. |
| 23 | |||||
| 24 |
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| March 31, |
|
| December 31, |
| ||
|
| 2021 |
|
| 2020 |
| ||
Assets |
|
|
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
| $ | 26,600 |
|
| $ | 28,575 |
|
Restricted cash |
|
| 50 |
|
|
| 181 |
|
Accounts receivable, net |
|
| 75 |
|
|
| 57 |
|
Inventories |
|
| 1,109 |
|
|
| 855 |
|
Prepaid expenses and other current assets |
|
| 2,369 |
|
|
| 2,670 |
|
Total current assets |
|
| 30,203 |
|
|
| 32,338 |
|
Property, plant and equipment, net |
|
| 1,321 |
|
|
| 1,351 |
|
Right-of-use assets |
|
| 791 |
|
|
| 946 |
|
Total assets |
| $ | 32,315 |
|
| $ | 34,635 |
|
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders' Equity |
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
|
|
Accounts payable |
| $ | 1,234 |
|
| $ | 1,774 |
|
Accrued expenses |
|
| 5,927 |
|
|
| 5,241 |
|
Deferred revenue, current |
|
| 502 |
|
|
| 525 |
|
Lease liabilities, current |
|
| 433 |
|
|
| 495 |
|
Convertible notes payable, current |
|
| 2,000 |
|
|
| 2,000 |
|
Total current liabilities |
|
| 10,096 |
|
|
| 10,035 |
|
Deferred revenue, non-current |
|
| 1,856 |
|
|
| 2,072 |
|
Lease liabilities, non-current |
|
| 357 |
|
|
| 450 |
|
Total liabilities |
|
| 12,309 |
|
|
| 12,557 |
|
|
|
|
|
|
|
|
|
|
Commitments and contingencies (Note 13) |
|
| — |
|
|
| — |
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|
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|
Stockholders' equity |
|
|
|
|
|
|
|
|
Preferred stock, $.01 par value; 10,000,000 shares authorized; 20,480 and 20,631 shares issued and outstanding at March 31, 2021 and December 31, 2020, respectively |
|
| — |
|
|
| — |
|
Common stock, $.01 par value; 40,000,000 shares authorized; 6,251,257 and 5,996,101 shares issued and outstanding at March 31, 2021 and December 31, 2020, respectively |
|
| 63 |
|
|
| 60 |
|
Additional paid-in capital |
|
| 422,027 |
|
|
| 417,449 |
|
Accumulated deficit |
|
| (402,074 | ) |
|
| (395,327 | ) |
Accumulated other comprehensive income |
|
| (10 | ) |
|
| (104 | ) |
Total stockholders' equity |
|
| 20,006 |
|
|
| 22,078 |
|
Total liabilities and stockholders' equity |
| $ | 32,315 |
|
| $ | 34,635 |
|
|
|
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|
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|
|
|
|
March 31, 2022 | December 31, 2021 | |||||||
Assets | ||||||||
Current assets | ||||||||
Cash and cash equivalents | $ | 16,340 | $ | 22,802 | ||||
Restricted cash | 4,151 | 4,151 | ||||||
Accounts receivable, net | 178 | 44 | ||||||
Inventories | 2,011 | 1,412 | ||||||
Prepaid expenses and other current assets | 2,704 | 2,743 | ||||||
Total current assets | 25,384 | 31,152 | ||||||
Property, plant and equipment, net | 1,406 | 1,348 | ||||||
Right-of-use | 527 | 624 | ||||||
Total assets | $ | 27,317 | $ | 33,124 | ||||
Liabilities and Stockholders’ Equity | ||||||||
Current liabilities | ||||||||
Accounts payable | $ | 1,243 | $ | 638 | ||||
Accrued expenses | 4,495 | 4,109 | ||||||
Deferred revenue, current | 0 | 170 | ||||||
Lease liabilities, current | 404 | 416 | ||||||
Loan payable, current | 2,520 | 621 | ||||||
Total current liabilities | 8,662 | 5,954 | ||||||
Lease liabilities, non-current | 122 | 207 | ||||||
Loan payable, non-current | 8,633 | 10,372 | ||||||
Convertible notes payable, non-current | 4,675 | 4,639 | ||||||
Total liabilities | 22,092 | 21,172 | ||||||
Commitments and contingencies (Note 13) | 0— | 0— | ||||||
Stockholders’ equity | ||||||||
Preferred stock, $.01 par value; 10,000,000 shares authorized; 11,357 shares issued and outstanding at March 31, 2022 and December 31, 2021 | 0— | 0— | ||||||
Common stock, $.01 par value; 40,000,000 shares authorized; 7,906,728 shares issued and outstanding at March 31, 2022 and December 31, 2021 | 79 | 79 | ||||||
Additional paid-in capital | 434,305 | 432,831 | ||||||
Accumulated deficit | (429,179 | ) | (420,976 | ) | ||||
Accumulated other comprehensive income | 20 | 18 | ||||||
Total stockholders’ equity | 5,225 | 11,952 | ||||||
Total liabilities and stockholders’ equity | $ | 27,317 | $ | 33,124 | ||||
(in thousands, except share and per share data) |
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|
| Three months ended March 31, |
| |||||
| 2021 |
|
| 2020 |
| ||
Product revenue | $ | 261 |
|
| $ | 176 |
|
Other revenue |
| 127 |
|
|
| 118 |
|
Cost of goods sold |
| (112 | ) |
|
| (78 | ) |
Gross profit |
| 276 |
|
|
| 216 |
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
Research and development expenses |
| 3,707 |
|
|
| 2,974 |
|
Selling, general and administrative expenses |
| 3,296 |
|
|
| 2,316 |
|
Total operating expenses |
| 7,003 |
|
|
| 5,290 |
|
Operating loss |
| (6,727 | ) |
|
| (5,074 | ) |
|
|
|
|
|
|
|
|
Change in fair value of the warrant liability, net |
| — |
|
|
| (2,832 | ) |
Interest expense, net |
| (41 | ) |
|
| (36 | ) |
Other income |
| 21 |
|
|
| 81 |
|
Net loss |
| (6,747 | ) |
|
| (7,861 | ) |
|
|
|
|
|
|
|
|
Other comprehensive (loss) income: |
|
|
|
|
|
|
|
Foreign currency translation adjustments |
| 94 |
|
|
| 65 |
|
Total other comprehensive loss | $ | (6,653 | ) |
| $ | (7,796 | ) |
|
|
|
|
|
|
|
|
Common share data: |
|
|
|
|
|
|
|
Basic loss per common share | $ | (1.04 | ) |
| $ | (108.07 | ) |
Diluted loss per common share | $ | (1.04 | ) |
| $ | (108.07 | ) |
|
|
|
|
|
|
|
|
Weighted average number of basic shares outstanding |
| 6,496,922 |
|
|
| 72,740 |
|
Weighted average number of diluted shares outstanding |
| 6,496,922 |
|
|
| 72,740 |
|
|
|
|
|
|
|
|
|
|
|
|
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|
See accompanying Notes to Condensed Consolidated Financial Statements. |
|
DELCATH SYSTEMS, INC.
Condensed Consolidated Statements of Stockholders’ Equity (Deficit)
(Unaudited)
|
| Preferred Stock |
|
| Common Stock |
|
|
|
|
|
|
|
|
|
|
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| ||||||||||
|
| $0.01 Par Value |
|
| $0.01 Par Value |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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| ||||||||||
|
| No. of Shares |
|
| Amount |
|
| No. of Shares |
|
| Amount |
|
| Additional Paid in Capital |
|
| Accumulated Deficit |
|
| Accumulated Other Comprehensive Income |
|
| Total |
| ||||||||
Balance at January 1, 2021 |
|
| 20,631 |
|
| $ | — |
|
|
| 5,996,101 |
|
| $ | 60 |
|
| $ | 417,449 |
|
| $ | (395,327 | ) |
| $ | (104 | ) |
| $ | 22,078 |
|
Compensation expense for issuance of stock options |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 2,148 |
|
|
| — |
|
|
| — |
|
|
| 2,148 |
|
Shares settled for services |
|
| — |
|
|
| — |
|
|
| 2,636 |
|
|
| — |
|
|
| 57 |
|
|
| — |
|
|
| — |
|
|
| 57 |
|
Conversion of Preferred stock into common stock |
|
| (150 | ) |
|
| — |
|
|
| 15,000 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
Exercise of warrants into common stock |
|
| — |
|
|
| — |
|
|
| 237,520 |
|
|
| 3 |
|
|
| 2,373 |
|
|
| — |
|
|
| — |
|
|
| 2,376 |
|
Net loss |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (6,747 | ) |
|
| — |
|
|
| (6,747 | ) |
Total comprehensive loss |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 94 |
|
|
| 94 |
|
Balance at March 31, 2021 |
|
| 20,481 |
|
| $ | - |
|
|
| 6,251,257 |
|
| $ | 63 |
|
| $ | 422,027 |
|
| $ | (402,074 | ) |
| $ | (10 | ) |
| $ | 20,006 |
|
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Three months ended March 31, | ||||||||
2022 | �� | 2021 | ||||||
Product revenue | $ | 207 | $ | 261 | ||||
Other revenue | 171 | 127 | ||||||
Cost of goods sold | (33 | ) | (112 | ) | ||||
Gross profit | 345 | 276 | ||||||
Operating expenses: | ||||||||
Research and development expenses | 4,240 | 3,707 | ||||||
Selling, general and administrative expenses | 3,648 | 3,296 | ||||||
Total operating expenses | 7,888 | 7,003 | ||||||
Operating loss | (7,543 | ) | (6,727 | ) | ||||
Interest expense, net | (645 | ) | (41 | ) | ||||
Other income (expense), net | (15 | ) | 21 | |||||
Net loss | (8,203 | ) | (6,747 | ) | ||||
Other comprehensive income: | ||||||||
Foreign currency translation adjustments | 2 | 94 | ||||||
Total other comprehensive loss | $ | (8,201 | ) | $ | (6,653 | ) | ||
Common share data: | ||||||||
Basic and diluted loss per common share | $ | (1.00 | ) | $ | (1.04 | ) | ||
Weighted average number of basic and diluted shares outstanding | 8,190,483 | 6,496,922 | ||||||
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| Preferred Stock |
|
| Common Stock Issued |
|
|
|
|
|
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| ||||||||||
|
| $0.01 Par Value |
|
| $0.01 Par Value |
|
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|
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| ||||||||||
|
| No. of Shares |
|
| Amount |
|
| No. of Shares |
|
| Amount |
|
| Additional Paid in Capital |
|
| Accumulated Deficit |
|
| Accumulated Other Comprehensive Income |
|
| Total |
| ||||||||
Balance at January 1, 2020 |
|
| 41,517 |
|
| $ | — |
|
|
| 67,091 |
|
| $ | 1 |
|
| $ | 364,785 |
|
| $ | (371,171 | ) |
| $ | 28 |
|
| $ | (6,357 | ) |
Compensation expense for issuance of stock options |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 25 |
|
|
| — |
|
|
| — |
|
|
| 25 |
|
Shares settled for services |
|
| — |
|
|
| — |
|
|
| 2,717 |
|
|
| — |
|
|
| 30 |
|
|
| — |
|
|
| — |
|
|
| 30 |
|
Conversion of Preferred stock into common stock |
|
| (70 | ) |
|
| — |
|
|
| 2,915 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
Fractional rounding related to Reverse Stock Split |
|
| — |
|
|
| — |
|
|
| 50 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
Registration costs |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (106 | ) |
|
| — |
|
|
| — |
|
|
| (106 | ) |
Fair value of warrants reclassified from liability to equity |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 6,199 |
|
|
| — |
|
|
| — |
|
|
| 6,199 |
|
Net loss |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (7,861 | ) |
|
| — |
|
|
| (7,861 | ) |
Total comprehensive loss |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 65 |
|
|
| 65 |
|
Balance at March 31, 2020 |
|
| 41,447 |
|
| $ | — |
|
|
| 72,773 |
|
| $ | 1 |
|
| $ | 370,933 |
|
| $ | (379,032 | ) |
| $ | 93 |
|
| $ | (8,005 | ) |
Stockholders’ Equity
(in thousands)
|
| Three months ended March 31, |
| |||||
| 2021 |
|
| 2020 |
| |||
Cash flows from operating activities: |
|
|
|
|
|
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Net loss |
| $ | (6,747 | ) |
| $ | (7,861 | ) |
Adjustments to reconcile net loss to net cash used in operating activities: |
|
|
|
|
|
|
|
|
Stock option compensation expense |
|
| 2,148 |
|
|
| 25 |
|
Restricted stock compensation expense |
|
| — |
|
|
| 30 |
|
Depreciation expense |
|
| 39 |
|
|
| 48 |
|
Amortization of right of use assets |
|
| — |
|
|
| 11 |
|
Warrant liability fair value adjustment |
|
| — |
|
|
| 2,832 |
|
Non-cash interest income |
|
| (1 | ) |
|
| (3 | ) |
Interest expense accrued related to convertible notes |
|
| 39 |
|
|
| 40 |
|
Changes in assets and liabilities: |
|
|
|
|
|
|
|
|
(Increase) decrease in prepaid expenses and other assets |
|
| 302 |
|
|
| (880 | ) |
Increase in accounts receivable |
|
| (18 | ) |
|
| (48 | ) |
Increase in inventories |
|
| (254 | ) |
|
| (136 | ) |
Increase in accounts payable and accrued expenses |
|
| 164 |
|
|
| 901 |
|
Decrease in deferred revenue |
|
| (239 | ) |
|
| (188 | ) |
Net cash used in operating activities |
|
| (4,567 | ) |
|
| (5,229 | ) |
|
|
|
|
|
|
|
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|
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
Purchase of property, plant and equipment |
|
| (9 | ) |
|
| (180 | ) |
Net cash used in investing activities |
|
| (9 | ) |
|
| (180 | ) |
|
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Cash flows from financing activities: |
|
|
|
|
|
|
|
|
Principal payments on financing leases |
|
| — |
|
|
| (11 | ) |
Net payments related to registration costs |
|
| — |
|
|
| (106 | ) |
Net proceeds from the exercise of warrants |
|
| 2,376 |
|
|
| — |
|
Net cash provided by/(used in) financing activities |
|
| 2,376 |
|
|
| (117 | ) |
Foreign currency effects on cash |
|
| 94 |
|
|
| 64 |
|
Net decrease in total cash |
|
| (2,106 | ) |
|
| (5,462 | ) |
|
|
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Total Cash: |
|
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|
|
|
|
|
|
Beginning of period |
|
| 28,756 |
|
|
| 10,183 |
|
End of period |
| $ | 26,650 |
|
| $ | 4,721 |
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| Three months ended March 31, |
| |||||
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| 2021 |
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| 2020 |
| ||
Supplemental Disclosure of Cash Flow Information: |
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Cash paid during the periods for: |
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Interest expense |
| $ | 3 |
|
| $ | 4 |
|
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Supplemental Disclosure of Non-Cash Investing and Financing Activities: |
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Reclassification of 2019 warrants from liability to equity |
| $ | — |
|
| $ | 6,199 |
|
Issuance of restricted stock for accrued fees due to a former board member |
| $ | 57 |
|
| $ | — |
|
See accompanying Notes to Condensed Consolidated Financial Statements.
DELCATH SYSTEMS, INC.
Notes to the Condensed Consolidated Financial Statements
Preferred Stock $0.01 Par Value | Common Stock $0.01 Par Value | |||||||||||||||||||||||||||||||
No. of Shares | Amount | No. of Shares | Amount | Additional Paid in Capital | Accumulated Deficit | Accumulated Other Comprehensive Income | Total | |||||||||||||||||||||||||
Balance at January 1, 2022 | 11,357 | $ | — | 7,906,728 | $ | 79 | $ | 432,831 | $ | (420,976 | ) | $ | 18 | $ | 11,952 | |||||||||||||||||
Compensation expense for issuance of stock options | — | — | — | — | 1,474 | — | — | 1,474 | ||||||||||||||||||||||||
Net loss | — | — | — | — | — | (8,203 | ) | — | (8,203 | ) | ||||||||||||||||||||||
Total comprehensive income | — | — | — | — | — | — | 2 | 2 | ||||||||||||||||||||||||
Balance at March 31, 2022 | 11,357 | $ | — | 7,906,728 | $ | 79 | $ | 434,305 | $ | (429,179 | ) | $ | 20 | $ | 5,225 | |||||||||||||||||
|
|
Preferred Stock $0.01 Par Value | Common Stock Issued $0.01 Par Value | |||||||||||||||||||||||||||||||
No. of Shares | Amount | No. of Shares | Amount | Additional Paid in Capital | Accumulated Deficit | Accumulated Other Comprehensive (Loss) | Total | |||||||||||||||||||||||||
Balance at January 1, 2021 | 20,631 | $ | — | 5,996,101 | $ | 60 | $ | 417,449 | $ | (395,327 | ) | $ | (104 | ) | $ | 22,078 | ||||||||||||||||
Compensation expense for issuance of stock options | — | — | — | — | 2,148 | — | — | 2,148 | ||||||||||||||||||||||||
Shares settled for services | — | — | 2,636 | — | 57 | — | — | 57 | ||||||||||||||||||||||||
Conversion of Preferred stock into common stock | (150 | ) | — | 15,000 | — | — | — | — | — | |||||||||||||||||||||||
Exercise of warrants into common stock | — | — | 237,520 | 3 | 2,373 | — | — | 2,376 | ||||||||||||||||||||||||
Net loss | — | — | — | — | — | (6,747 | ) | — | (6,747 | ) | ||||||||||||||||||||||
Total comprehensive income | — | — | — | — | — | — | 94 | 94 | ||||||||||||||||||||||||
Balance at March 31, 2021 | 20,481 | $ | — | 6,251,257 | $ | 63 | $ | 422,027 | $ | (402,074 | ) | $ | (10 | ) | $ | 20,006 | ||||||||||||||||
Three months ended March 31, | ||||||||
2022 | 2021 | |||||||
Cash flows from operating activities: | ||||||||
Net loss | $ | (8,203 | ) | $ | (6,747 | ) | ||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
Stock option compensation expense | 1,474 | 2,148 | ||||||
Depreciation expense | 31 | 39 | ||||||
Non-cash lease expense | 97 | 155 | ||||||
Amortization of debt discount | 194 | — | ||||||
Interest expense accrued related to convertible notes | 40 | 39 | ||||||
Changes in assets and liabilities: | ||||||||
Decrease in prepaid expenses and other assets | 39 | 301 | ||||||
Increase in accounts receivable | (134 | ) | (18 | ) | ||||
Increase in inventories | �� | (599 | ) | (254 | ) | |||
Increase in accounts payable and accrued expenses | 953 | 164 | ||||||
Decrease in lease liabilities | (97 | ) | (155 | ) | ||||
Decrease in deferred revenue | (170 | ) | (239 | ) | ||||
Net cash used in operating activities | (6,375 | ) | (4,567 | ) | ||||
Cash flows from investing activities: | ||||||||
Purchase of property, plant and equipment | (89 | ) | (9 | ) | ||||
Net cash used in investing activities | (89 | ) | (9 | ) | ||||
Cash flows from financing activities: | ||||||||
Net proceeds from the exercise of warrants | — | 2,376 | ||||||
Net cash provided by financing activities | — | 2,376 | ||||||
Foreign currency effects on cash | 2 | 94 | ||||||
Net decrease in total cash | (6,462 | ) | (2,106 | ) | ||||
Total Cash: | ||||||||
Beginning of period | 26,953 | 28,756 | ||||||
End of period | $ | 20,491 | $ | 26,650 | ||||
Cash, Cash Equivalents and Restricted Cash consisted of the following: | ||||||||
Cash | $ | 16,340 | $ | 26,600 | ||||
Restricted Cash | 4,151 | 50 | ||||||
Total | $ | 20,491 | $ | 26,650 | ||||
Three months ended March 31, | ||||||||
2022 | 2021 | |||||||
Supplemental Disclosure of Cash Flow Information: | ||||||||
Cash paid during the periods for: | ||||||||
Interest expense | $ | 411 | $ | 3 | ||||
Supplemental Disclosure of Non-Cash Investing and Financing Activities: | ||||||||
Issuance of restricted stock for accrued fees due to a former board member | $ | — | $ | 57 | ||||
(1) | General |
We are
Our
Risks
Duedevice product regulated by the Food and Drug Administration (“FDA”). Primary jurisdiction for regulation of HEPZATO has been assigned to the global outbreak of SARS-CoV-2, a novel strain of coronavirus that causes Coronavirus disease (COVID-19),FDA’s Center for Drug Evaluation and Research. The FDA has granted the Company experienced an impact on certain areas of its business. These effects included a slowing of patient recruitmentsix orphan drug designations (five for melphalan in ocular melanoma, cutaneous melanoma, cholangiocarcinoma, hepatocellular carcinoma, and neuroendocrine tumor indications and one for doxorubicin in the FOCUS trial and a reduction inhepatocellular carcinoma indication).
time, the Company is not aware of any direct impacts, the increase in COVID cases and associated restrictions, which could adversely impact the Company’s ability to obtain components and/or significantly increase the cost of obtaining such components for the Company’s products from its third-party suppliers in a timely manner or at all.
personnel.
Reclassifications. Certain prior period balances have been reclassified in order to conform to current period presentation. These reclassifications have no effect on previously reported results of operations or loss per share.
2021.
(2) | Cash, Cash Equivalents and Restricted Cash |
|
| March 31, |
|
| December 31, |
| ||
|
|
| 2021 |
|
|
| 2020 |
|
Cash and cash equivalents |
| $ | 26,600 |
|
| $ | 28,575 |
|
Letters of credit |
|
| — |
|
|
| 131 |
|
Security for credit cards |
|
| 50 |
|
|
| 50 |
|
Total cash, cash equivalents and restricted cash shown in the statements of cash flows |
| $ | 26,650 |
|
| $ | 28,756 |
|
March 31, 2022 | December 31, 2021 | |||||||
Cash and cash equivalents | $ | 16,340 | $ | 22,802 | ||||
Restricted balance for loan agreement | 4,000 | $ | 4,000 | |||||
Letters of credit | 101 | 101 | ||||||
Security for credit cards | 50 | 50 | ||||||
Total cash, cash equivalents and restricted cash shown in the statements of cash flows | $ | 20,491 | $ | 26,953 | ||||
(3) | Inventories |
| March 31, |
|
| December 31, |
| |||
|
| 2021 |
|
| 2020 |
| ||
Raw materials |
| $ | 486 |
|
| $ | 435 |
|
Work-in-process |
|
| 623 |
|
|
| 420 |
|
Total inventories |
| $ | 1,109 |
|
| $ | 855 |
|
March 31, 2022 | December 31, 2021 | |||||||
Raw materials | $ | 841 | $ | 767 | ||||
Work-in-process | 881 | 645 | ||||||
Finished goods | 289 | 0 | ||||||
Total inventories | $ | 2,011 | $ | 1,412 | ||||
(4) | Prepaid Expenses and Other Current Assets |
| March 31, |
|
| December 31, |
| |||
|
| 2021 |
|
| 2020 |
| ||
Clinical trial expenses |
| $ | 1,497 |
|
| $ | 1,497 |
|
Insurance premiums |
|
| 498 |
|
|
| 845 |
|
Professional services |
|
| 125 |
|
|
| 66 |
|
Other |
|
| 249 |
|
|
| 262 |
|
Total prepaid expenses and other current assets |
| $ | 2,369 |
|
| $ | 2,670 |
|
March 31, 2022 | December 31, 2021 | |||||||
Clinical trial expenses | $ | 1,630 | $ | 1,630 | ||||
Insurance premiums | 645 | 890 | ||||||
Other | 429 | 223 | ||||||
Total prepaid expenses and other current assets | $ | 2,704 | $ | 2,743 | ||||
(5) | Property, Plant, and Equipment |
|
| March 31, |
|
| December 31, |
|
| Estimated | ||
| 2021 |
|
| 2020 |
|
| Useful Life | |||
Buildings and land |
| $ | 1,120 |
|
| $ | 1,109 |
|
| 30 years - Buildings |
Enterprise hardware and software |
|
| 1,861 |
|
|
| 1,862 |
|
| 3 years |
Leaseholds |
|
| 1,809 |
|
|
| 1,826 |
|
| Lesser of lease term or estimated useful life |
Equipment |
|
| 1,061 |
|
|
| 1,063 |
|
| 7 years |
Furniture |
|
| 203 |
|
|
| 204 |
|
| 5 years |
Property, plant and equipment, gross |
|
| 6,054 |
|
|
| 6,064 |
|
|
|
Accumulated depreciation |
|
| (4,733 | ) |
|
| (4,713 | ) |
|
|
Property, plant and equipment, net |
| $ | 1,321 |
|
| $ | 1,351 |
|
|
|
March 31, 2022 | December 31, 2021 | Estimated Useful Life | ||||||||||
Buildings and land | $ | 1,222 | $ | 1,222 | 30 years- Buildings | |||||||
Enterprise hardware and software | 1,858 | 1,858 | 3 years | |||||||||
Leaseholds | 1,788 | 1,796 | Lesser of lease term or estimated useful life | |||||||||
Equipment | 1,184 | 1,094 | 7 years | |||||||||
Furniture | 202 | 203 | 5 years | |||||||||
Property, plant and equipment, gross | 6,254 | 6,173 | ||||||||||
Accumulated depreciation | (4,848 | ) | (4,825 | ) | ||||||||
Property, plant and equipment, net | $ | 1,406 | $ | 1,348 | ||||||||
On July 31, 2020, the Company exercised its option to purchase its 95-97 Park Road office location in Queensbury, NY for $460.3, pursuant to the terms of the lease agreement dated September 17, 2018, as amended on January 29, 2019, and further amended on July 31, 2020.
(6) | Accrued Expenses |
|
| March 31, |
|
| December 31, |
| ||
| 2021 |
|
| 2020 |
| |||
Clinical expenses |
| $ | 3,511 |
|
| $ | 2,698 |
|
Compensation, excluding taxes |
|
| 1,514 |
|
|
| 1,598 |
|
Professional fees |
|
| 335 |
|
|
| 225 |
|
Interest on convertible note |
|
| 274 |
|
|
| 234 |
|
Other |
|
| 293 |
|
|
| 486 |
|
Total accrued expenses |
| $ | 5,927 |
|
| $ | 5,241 |
|
March 31, 2022 | December 31, 2021 | |||||||
Clinical expenses | $ | 1,578 | $ | 1,517 | ||||
Compensation, excluding taxes | 796 | 893 | ||||||
Short term financing | 315 | 551 | ||||||
Professional fees | 1,298 | 603 | ||||||
Interest on convertible note | 433 | 393 | ||||||
Other | 75 | 152 | ||||||
Total accrued expenses | $ | 4,495 | $ | 4,109 | ||||
(7) | Leases |
| US |
|
| Ireland |
|
| Total |
| ||||
Lease cost |
|
|
|
|
|
|
|
|
|
|
|
|
Operating lease cost |
| $ | 112 |
|
| $ | 57 |
|
| $ | 169 |
|
Sublease income |
|
| — |
|
|
| (44 | ) |
|
| (44 | ) |
Total |
| $ | 112 |
|
| $ | 13 |
|
| $ | 125 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other information |
|
|
|
|
|
|
|
|
|
|
|
|
Operating cash flows out from operating leases |
|
| (112 | ) |
|
| (57 | ) |
|
| (169 | ) |
Operating cash flows in from operating leases |
|
| - |
|
|
| 44 |
|
|
| 44 |
|
Weighted average remaining lease term |
|
| 1.9 |
|
|
| 0.3 |
|
|
|
|
|
Weighted average discount rate - operating leases |
|
| 8 | % |
|
| 8 | % |
|
|
|
|
U.S. | Ireland | Total | ||||||||||
Lease cost: | ||||||||||||
Operating lease cost | $ | 101 | $ | 8 | $ | 109 | ||||||
Other information: | ||||||||||||
Operating cash flows out from operating leases | $ | (101 | ) | $ | (8 | ) | $ | (109 | ) | |||
Weighted average remaining lease term | 0.9 | 4.4 | ||||||||||
Weighted average discount rate - operating leases | 8 | % | 8 | % |
|
| US |
|
| Ireland |
|
| Total |
| |||
| $ | 304 |
|
| $ | 73 |
|
| $ | 377 |
| |
Year ended December 31, 2022 |
|
| 406 |
|
|
| - |
|
|
| 406 |
|
Year ended December 31, 2023 |
|
| 67 |
|
|
| - |
|
|
| 67 |
|
Total |
|
| 777 |
|
|
| 73 |
|
|
| 850 |
|
Less present value discount |
|
| (59 | ) |
|
| (1 | ) |
|
| (60 | ) |
Operating lease liabilities included in the condensed consolidated balance sheet at March 31, 2021 |
| $ | 718 |
|
| $ | 72 |
|
| $ | 790 |
|
U.S. | Ireland | Total | ||||||||||
Year ended December 31, 2022 | $ | 304 | $ | 35 | $ | 339 | ||||||
Year ended December 31, 2023 | 67 | 46 | 113 | |||||||||
Year ended December 31, 2024 | — | 46 | 46 | |||||||||
Year ended December 31, 2025 | — | 46 | 46 | |||||||||
Year ended December 31, 2026 | — | 26 | 26 | |||||||||
Total | 371 | 199 | 570 | |||||||||
Less present value discount | (14 | ) | (30 | ) | (44 | ) | ||||||
Operating lease liabilities included in the | $ | 357 | $ | 169 | $ | 526 | ||||||
(8) |
| Loans and Convertible |
|
| Conversion price |
|
| Current interest rate |
|
| Principal |
| |||
Current convertible notes payable |
|
|
|
|
|
|
|
|
|
|
|
|
8.0% July 2019 Notes (maturity date - July 16, 2021) |
| $ | 1,500 |
|
|
| 8 | % |
| $ | 2,000 |
|
The note payable is convertible into Preferred Stock.
|
| |||||||||||||||||||||||
(in thousands): |
Preferred Stock
Series E
March 31, 2022 | December 31, 2021 | |||||||||||||||||||||||
Gross | Discount | Net | Gross | Discount | Net | |||||||||||||||||||
Loan - Avenue [1] | 12,638 | (1,485 | ) | 11,153 | 12,638 | (1,645 | ) | 10,993 | ||||||||||||||||
Loan - Avenue [1] - Less Current Portion | (2,856 | ) | 336 | (2,520 | ) | (714 | ) | 93 | (621 | ) | ||||||||||||||
Total - Loans Payable, Non-Current | $ | 9,782 | $ | (1,149 | ) | $ | 8,633 | $ | 11,924 | $ | (1,552 | ) | $ | 10,372 | ||||||||||
Convertible Note Payable - Rosalind | 2,000 | — | 2,000 | 2,000 | — | 2,000 | ||||||||||||||||||
Convertible Portion of Loan Payable - Avenue | 3,000 | (325 | ) | 2,675 | 3,000 | (361 | ) | 2,639 | ||||||||||||||||
Total - Convertible Notes Payable - Non-Current | $ | 5,000 | $ | (325 | ) | $ | 4,675 | $ | 5,000 | $ | (361 | ) | $ | 4,639 | ||||||||||
[1] | The gross amount includes the 4.25% final payment of $638,000. |
Duringconvertible note payables are as follows (in thousands):
Loans | Convertible Notes | Total | ||||||||||
Year ended December 31, 2022 | $ | 714 | $ | — | $ | 714 | ||||||
Year ended December 31, 2023 | 8,571 | — | 8,571 | |||||||||
Year ended December 31, 2024 | 3,353 | 5,000 | 8,353 | |||||||||
Total | $ | 12,638 | $ | 5,000 | $ | 17,638 | ||||||
Interest expense incurred was $0.4 million for the three months ended March 31, 2022.
August 6, 2021 | ||||
Contractual term (years) | 5.07 | |||
Expected volatility | 187.0 | % | ||
Risk-free interest rate | 0.77 | % | ||
Expected dividends | 0.00 | % |
(9) | Stockholders’ Equity |
Other Common Stock Issuances
During
Issuance of Unregistered Securities
In February 2021, the Company issued 2,636 shares of unregistered common stock in lieu of a cash payment of deferred accrued director fees to a former director.
Stock Incentive Plans
Company’s 2020 Omnibus Equity Incentive Plan
(the “2020 Plan”) was adopted by the Company’s Board of Directors. On November 23, 2020, the Company’s stockholders approved the 2020 Plan. The 2020 Plan will continue in effect until the tenth anniversary of the date of its adoption by the Board or until earlier terminated by the Board. The 2020 Plan is administered by the Board of Directors or a committee designated by the Board of Directors. The 2020 Plan provides for the grant of incentive stock options,
Three months ended March 31, | ||||||
2022 | 2021 | |||||
Expected terms (years) | 5.46 - 6.46 | N/A | ||||
Expected volatility | 174.81% - 177.09 | % | N/A | |||
Risk-free interest rate | 1.75% - 1.90 | % | N/A | |||
Expected dividends | 0.00 | % | N/A |
Share-Based Compensation
the stock options granted during the three months ended March 31, 2022 was approximately $6.86 per share.
|
| Number of Option |
|
| Weighted Average Exercise Price Per Share |
|
| Weighted Average Remaining Contractual Term (in years) |
| Aggregate Intrinsic Value |
| |||
|
| 1,078,499 |
|
| $ | 12.68 |
|
|
|
|
|
|
| |
Granted |
|
| — |
|
|
| — |
|
|
|
|
|
|
|
Exercised |
|
| — |
|
|
| — |
|
|
|
|
|
|
|
Cancelled/Forfeited |
|
| — |
|
|
| — |
|
|
|
|
|
|
|
Outstanding at March 31, 2021 |
|
| 1,078,499 |
|
| $ | 12.68 |
|
| 9.5 |
| $ | 710 |
|
Exercisable at March 31, 2021 |
|
| 175,164 |
|
| $ | 13.05 |
|
| 9.5 |
| $ | 131 |
|
Number of Option | Weighted Average Exercise Price Per Share | Weighted Average Remaining Contractual Term (in years) | Aggregate Intrinsic Value | |||||||||||||
Outstanding at January 1, 2022 | 1,732,460 | $ | 11.69 | |||||||||||||
Granted | 549,333 | 7.10 | ||||||||||||||
Expired | (6,650 | ) | 10.88 | |||||||||||||
Cancelled/Forfeited | (37,040 | ) | 10.42 | |||||||||||||
Outstanding at March 31, 2022 | 2,238,103 | $ | 10.60 | 9.2 | $ | 0 | ||||||||||
Exercisable at March 31, 2022 | 766,619 | $ | 11.83 | 8.7 | $ | 0 | ||||||||||
|
|
|
|
| Options Exercisable |
| ||||
Range of Exercise Prices |
| Outstanding Number of Options |
|
| Weighted Average Remaining Option Term (in years) |
| Number of Options |
| ||
$10 - $15 |
|
| 946,000 |
|
| 9.5 |
|
| 157,665 |
|
$15 - $20 |
|
| 81,000 |
|
| 9.5 |
|
| 8,500 |
|
$20 - $25 |
|
| 51,000 |
|
| 9.5 |
|
| 8,500 |
|
$25+ |
|
| 499 |
|
| 7.8 |
|
| 499 |
|
|
|
| 1,078,499 |
|
| 9.5 |
|
| 175,164 |
|
Options Exercisable | ||||||||||||
Range of Exercise Prices | Outstanding Number of Options | Weighted Average Remaining Option Term (in years) | Number of Options | |||||||||
$6.61 - $9.99 | 825,256 | 9.2 | 110,389 | |||||||||
$10.00 - $14.99 | 1,280,348 | 8.7 | 592,317 | |||||||||
$15.00 - $24.99 | 132,000 | 8.5 | 63,414 | |||||||||
$25 + | 499 | 6.8 | 499 | |||||||||
2,238,103 | 8.7 | 766,619 | ||||||||||
| Three months ended March 31, |
| ||||||
|
| 2021 |
|
| 2020 |
| ||
Selling, general and administrative |
| $ | 1,466 |
|
| $ | 49 |
|
Research and development |
|
| 630 |
|
|
| 5 |
|
Cost of goods sold |
|
| 52 |
|
|
| — |
|
Total |
| $ | 2,148 |
|
| $ | 55 |
|
Three months ended March 31, | ||||||||
2022 | 2021 | |||||||
Selling, general and administrative | $ | 919 | $ | 1,466 | ||||
Research and development | 503 | 630 | ||||||
Cost of goods sold | 52 | 52 | ||||||
Total | $ | 1,474 | $ | 2,148 | ||||
a weighted average period of 3 years.
| Warrants |
|
| Weighted Average Exercise Price |
|
| Weighted Average Remaining Life (in years) |
|
| Aggregate Intrinsic Value |
| |||||
Outstanding at January 1, 2021 |
|
| 4,236,687 |
|
| $ | 9.13 |
|
|
|
|
|
|
|
|
|
Warrants issued |
|
| — |
|
|
| — |
|
|
|
|
|
|
|
|
|
Warrants exercised |
|
| (242,580 | ) |
|
| 10.00 |
|
|
|
|
|
|
|
|
|
Warrants expired |
|
| — |
|
|
| — |
|
|
|
|
|
|
|
|
|
Outstanding at March 31, 2021 |
|
| 3,994,107 |
|
| $ | 9.07 |
|
|
| 3.9 |
|
| $ | 13,372 |
|
Exercisable at March 31, 2021 |
|
| 3,994,107 |
|
| $ | 9.07 |
|
|
| 3.9 |
|
| $ | 13,372 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrants | Weighted Average Exercise Price | Weighted Average Remaining Life (in years) | ||||||||||
Outstanding at January 1, 2022 | 3,894,498 | $ | 9.27 | |||||||||
Warrants issued | 0 | 0 | ||||||||||
Warrants exercised | 0 | 0 | ||||||||||
Warrants expired | 0 | 0 | ||||||||||
Outstanding at March 31, 2022 | 3,894,498 | $ | 9.27 | 3.0 | ||||||||
Exercisable at March 31, 2022 | 3,894,498 | $ | 9.27 | 3.0 | ||||||||
|
|
|
|
|
|
| Warrants Exercisable |
| ||||
Range of Exercise Prices |
|
| Outstanding Number of Warrants |
|
| Weighted Average Remaining Warrant Term (in years) |
| Number of Warrants |
| |||
$ | 0.01 |
|
|
| 371,000 |
|
| 4.1 |
|
| 371,000 |
|
$ | 10.00 |
|
|
| 3,623,107 |
|
| 3.9 |
|
| 3,623,107 |
|
|
|
|
|
| 3,994,107 |
|
| 3.9 |
|
| 3,994,107 |
|
As of March 31, 2021, warrants to purchase 371,000 shares of the Company’s common stock were pre-funded, and the exercise price was $0.01 per share. The remaining warrants were exercisable at $10.00 per share.
Warrants Exercisable | ||||||||||||
Range of Exercise Prices | Outstanding Number of Warrants | Weighted Average Remaining Warrant Term (in years) | Number of Warrants | |||||||||
$0.01 | 283,755 | 3.7 | 283,755 | |||||||||
$10.00 | 3,610,743 | 2.9 | 3,610,743 | |||||||||
3,894,498 | 3.0 | 3,894,498 | ||||||||||
(10) |
|
As a result of the expiration of certain provisions in the 2019 Warrants, the $6,199 fair value of the 2019 Warrants was reclassified from liability to equity on February 19, 2020.
The fair value of the outstanding warrants at February 19, 2020, the date the 2019 Warrants were no longer classified as a liability, was determined by using option pricing models with the following assumptions:
| Net Loss per Common Share |
| March 31, |
| ||||||
|
| 2021 |
|
| 2020 |
| ||
Stock options |
|
| 1,078,499 |
|
|
| 1,640 |
|
Common stock warrants - equity |
|
| 3,994,107 |
|
|
| 1,826,599 |
|
Common stock reserved for conversion of preferred shares |
|
| 2,048,101 |
|
|
| 1,799,093 |
|
Assumed conversion of convertible notes |
|
| 146,288 |
|
|
| 63,493 |
|
Total |
|
| 7,266,995 |
|
|
| 3,690,825 |
|
March 31, | ||||||||
2022 | 2021 | |||||||
Stock options | 2,238,103 | 1,078,499 | ||||||
Common stock warrants - equity | 3,894,498 | 3,994,107 | ||||||
Assumed conversion of Series E and Series E-1 Preferred Stock | 1,135,721 | 2,048,101 | ||||||
Assumed conversion of convertible notes | 488,031 | 146,288 | ||||||
Total | 7,756,353 | 7,266,995 | ||||||
Three months ended March 31, |
| ||||||
| 2021 |
|
| 2020 |
| ||
Weighted average shares issued |
| 6,125,922 |
|
|
| 72,740 |
|
Weighted average pre-funded warrants |
| 371,000 |
|
|
| - |
|
Weighted average shares outstanding |
| 6,496,922 |
|
|
| 72,740 |
|
Three months ended March 31, | ||||||||
2022 | 2021 | |||||||
Weighted average shares issued | 7,906,728 | 6,125,922 | ||||||
Weighted average pre-funded warrants | 283,755 | 371,000 | ||||||
Weighted average shares outstanding | 8,190,483 | 6,496,922 | ||||||
(11) | Income Taxes |
( 1 2 ) | Commitments and Contingencies |
Following the May 18, 2020 resignation (effective June 1, 2020) of Jennifer Simpson, the Company’s former President and Chief Executive Officer, and Barbra Keck, the Company’s former Chief Financial Officer (the “Claimants”), it became evident that there was a dispute regarding the Company’s compensation obligations to the Claimants. In a letter dated June 29, 2020, an attorney representing the Claimants made certain claims and threatened litigation against the Company. On or about July 27, 2020, the Claimants filed a statement of claim with the American Arbitration Association against the Company. The Claimants seek payment of certain purported unpaid compensation amounts claimed to be due to them, in an approximate amount of $1,140 in the aggregate, as well as unspecified statutory damages under New York Labor Law, attorneys’ fees and costs, and statutory interest. The Company intends to defend the claims vigorously. The arbitrator had scheduled hearings to take place during the week of May 17, 2021. However, the Claimants and the Company recently agreed to participate in non-binding mediation of their dispute before a neutral mediator, which resulted in the arbitration proceedings being placed in abeyance pending the outcome of the mediation process. At this time, the mediation process between the Claimants and the Company is ongoing. As of March 31, 2021, the Company has accrued for the full purported unpaid compensation amounts.
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|
Stock Warrant Exercises
Subsequent to March 31, 2021, warrants to purchase 6,141 shares of the Company’s common stock with an exercise price of $10.00 per share were exercised for proceeds of $61.4. In addition, pre-funded warrants to purchase 215,000 shares of the Company’s common stock with an exercise price of $0.01 per share were exercised for proceeds of $2.2.
Other Transactions
Delcath Hepatic Delivery system;
our expectations about the COVID-19 pandemic and any potential disruption or impact to our operations;
submission and timing of applications for regulatory approval and approval thereof;
CHEMOSTATCHEMOSAT and HEPZATO and enter into supplier contracts;
.
Overview
The following section should be read in conjunction with Part I, Item 1: Condensed Consolidated Financial Statements of this Quarterly Report on Form 10-Q as well as Part I, Item 1: Business; and Part II, Item 8: Financial Statements and Supplementary Data of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020.
We have paused a global Phase 3 clinical trial of HEPZATO in patients with intrahepatic cholangiocarcinoma, (the ALIGN Trial) due to difficulties in enrollment. In addition to the FOCUS Trial and the ALIGN Trial, our commercial development plan also includes a registry for CHEMOSAT cases performed in Europe and support of select investigator-initiated trials, or IITs.
cancer. We are currently reviewing the incidence, unmet need, available efficacy data and development requirements for a broad set of liver cancers in order to select a portfolio of indications which will maximize the value of the HEPZATO platform. This may result in a restart of the ALIGN Trial. We believe that the disease states we are investigating and intend to investigate are unmet medical needs that represent significant market opportunities.
Recent Developments
FOCUS Trial Preliminary Analysis
On March 31,
were not yet evaluable. Since not all patients were evaluable for all time points, these preliminary analyses may change as data matures.
In the HEPZATO safety population of 94 patients, 38 patients (40.4%) experienced a treatment-emergent serious adverse event. The most commonly reported treatment-emergent serious adverse events were thrombocytopenia (14.9% of patients), neutropenia (10.6% of patients), and leukopenia (4.2% of patients), which were well-manageable. 5% of patients experienced treatment-emergent serious cardiac adverse events. In all cases the events resolved with no ongoing complications. There were no treatment-related deaths in the trial.
COVID-19
Due to the global outbreak of SARS-CoV-2, a novel strain of coronavirus that causes Coronavirus disease (COVID-19), the Company experienced an impact on certain areas of its business. These effects included a slowing of patient recruitment inannounced that the FOCUS Trial and a reduction infor HEPZATO met its pre-specified endpoint. Based on the pace at which we can monitor data at our clinical trial sites. The resulting delay in completing enrollment and additional time required to monitor data caused our announcement for the top-line data from our FOCUS Trial to shift to early 2021 and to be modified to a preliminary analysis. We intendresults, the Company is preparing to submit a New Drug Application (NDA)new drug application, or NDA, to the FDA for HEPZATO. The Company held a
Medical Device Directive Transition to Medical Device Regulation
The European Commission recently reviewed the Medical Device Directive legislative framework and promulgated REGULATION (EU) 2017/745 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 5 April 2017 on medical devices, amending Directive 2001/83/EC, Regulation EC) No 178/2002 and Regulation (EC) No 1223/2009 and repealing Council Directives 90/385/EEC and 93/42/EEC. This new Medical Device Regulation became effective on May 25, 2017, marking the start of a 3-year transition period for manufacturers selling medical devices in Europe to comply with the new medical device regulation, or MDR, which governs all facets of medical devices. The transition task is highly complex and touches every aspect of product development, manufacturing production, distribution, and post marketing evaluation. As a result of the worldwide COVID-19 pandemic, on April 17, 2020, the European Parliament adopted the European Commission’s proposal to postpone the implementation of the MDR (EU) 2017/745 by 12 months. This urgently drafted proposal to delay the MDR is in response to the exceptional circumstances associated with the COVID-19 pandemic and the potential impact it may have had on the MDR implementation. The new Date of Application (DoA) for the MDR will be May 26, 2021.
Effectively addressing these changes will require a complete review of our device operations to determine what is necessary to comply. We do not believe the MDR regulatory changes will impact our business at this time, though implementation of the medical device legislation may adversely affect our business, financial condition and results of operations or restrict our operations.
2021
Europe beginning in March 2022.
Europe beginning in March 2022.
development expenses increased to $3,707.4$4.2 million from $2,974.0$3.7 million in the prior year period. The increase of $0.5 million is primarily due to higher expenses in preparation of the
2022.
United States early next year.
Net Loss
Our net loss for the three months ended March 31, 2021 was $6,746.9, a decrease of $1,114.0 compared to net loss of $7,860.5 for the three months ended March 31, 2020. The decrease in net lossother expenses is primarily due to the $2,831 other income/interest expense related toand amortization expense for the change inoriginal issue discount on the fair value ofdebt financing transaction discussed below between the warrant liability booked in the three months ended March 31, 2020 which was offset by the recording of $2,148 stock option expense in the first quarter of 2021.
Company and its lender, Avenue Venture Opportunities Fund, L.P.
material changes to critical accounting estimates as reported in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021 (the “Annual Report”), which was filed with the Securities and Exchange Commission (the “SEC”) on March 31, 2022 and may also be found on the Company’s website (www.delcath.com).
We may be minimally exposed to market risk through changes in market interest rates that could affect the interest earned on our cash balances.
We measure all derivatives, including certain derivatives embedded in contracts, at fair value and recognize them on the balance sheet as an asset or a liability, depending on our rights and obligations under the applicable derivative contract.
Following the May 18, 2020 resignation (effective June 1, 2020) of Jennifer Simpson, the Company’s former President and CEO, and Barbra Keck, the Company’s former CFO (the “Claimants”), it became evident that there was a dispute regarding the Company’s compensation obligations.
The occurrence of an unfavorable outcome in any specific period could have a material adverse effect on our results of operations for that period or future periods.
On February 18,April 2021, the Company issued 2,636 shares of unregistered common stockan invoice for €1 million (which currently converts to approximately $1.2 million) to medac GmbH, a privately held, multi-national pharmaceutical company based in lieu of cashGermany (“medac”), the Company’s EU product distribution partner, for a milestone payment of deferred accrued director fees to former director, William Rueckert. The issuance to Mr. Rueckert was made in reliance on the exemption from registration in Section 4(a)(2)due under the Securities ActLicense, Supply and Marketing Agreement (the “License Agreement”) dated December 10, 2018, between the Company and medac. Pursuant to the License Agreement, a milestone is due upon achieving positive efficacy in the FOCUS Trial as defined by the FOCUS Trial protocol. Per the trial protocol and associated Statistical Analysis Plan, positive efficacy is based on whether the Objective Response Rate (ORR) exceeds a pre-specified threshold. A preliminary analysis of 1933.
the FOCUS Trial data based on 87% of enrolled patients was released on March 31, 2021, and subsequently presented at the American Society of Clinical Oncology (ASCO) Annual Meeting held virtually from the 4th through the 8th of June 2021. Per that analysis, the ORR exceeded the pre-specified threshold. While the final ORR is not yet known, given the magnitude by which the ORR exceeded the pre-specified endpoint and the small number of patients yet to be assessed, the final ORR will be greater than the pre-specified endpoint regardless of the responder status of the remaining patients. medac disagrees that the milestone is due and claims that a full clinical study report is required in addition to the existing ORR analysis. medac has not disputed the accuracy of the ORR analysis or underlying data, but simply asserts that a full clinical study report is required prior to payment. While the Company disagrees with this interpretation, since medac has stated they do not intend to pay the invoice at this time, under revenue recognition criteria set out in ASC 606, the Company did not recognize the revenue.
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Exhibit No. | Description | ||
3.1 | |||
3.2 | |||
3.3 | |||
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3.4 | |||
3.5 | |||
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3.6 | Amended and Restated By-Laws of the Company (incorporated by reference to Exhibit 3.2 to Amendment No. 1 to Company’s Registration Statement on Form SB-2). | ||
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31.1 | Certification by Chief Executive Officer Pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.* | ||
31.2 | |||
32.1 | |||
32.2 | |||
101.INS | |||
| XBRL Instance Document | ||
101.SCH | Inline XBRL Taxonomy Extension Schema Document | ||
101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | ||
101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | ||
101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | ||
101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | ||
104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
* | Filed herewith. |
** | This exhibit shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date hereof and irrespective of any general incorporation language in any filing, except to the extent the Company specifically incorporates it by reference. |
DELCATH SYSTEMS, INC. | ||||||
May 11, | /s/ Gerard Michel | |||||
Gerard Michel | ||||||
Chief Executive Officer (Principal Executive Officer) | ||||||
May 11, | /s/ | |||||
| Anthony Dias | |||||
| Principal Accounting Officer | |||||
22