☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
March 31, 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 | ☐ |
| |||||||
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 | ||||||
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24 |
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| June 30, |
|
| December 31, |
| ||
|
| 2021 |
|
| 2020 |
| ||
Assets |
|
|
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
| $ | 19,274 |
|
| $ | 28,575 |
|
Restricted cash |
|
| 151 |
|
|
| 181 |
|
Accounts receivable, net |
|
| 75 |
|
|
| 57 |
|
Inventories |
|
| 1,221 |
|
|
| 855 |
|
Prepaid expenses and other current assets |
|
| 2,185 |
|
|
| 2,670 |
|
Total current assets |
|
| 22,906 |
|
|
| 32,338 |
|
Property, plant and equipment, net |
|
| 1,361 |
|
|
| 1,351 |
|
Right-of-use assets |
|
| 650 |
|
|
| 946 |
|
Total assets |
| $ | 24,917 |
|
| $ | 34,635 |
|
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders' Equity |
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
|
|
Accounts payable |
| $ | 1,224 |
|
| $ | 1,774 |
|
Accrued expenses |
|
| 3,621 |
|
|
| 5,241 |
|
Deferred revenue, current |
|
| 509 |
|
|
| 525 |
|
Lease liabilities, current |
|
| 387 |
|
|
| 495 |
|
Convertible notes payable, current |
|
| — |
|
|
| 2,000 |
|
Total current liabilities |
|
| 5,741 |
|
|
| 10,035 |
|
Deferred revenue, non-current |
|
| 1,754 |
|
|
| 2,072 |
|
Lease liabilities, non-current |
|
| 263 |
|
|
| 450 |
|
Convertible notes payable, non-current |
|
| 2,000 |
|
|
| — |
|
Total liabilities |
|
| 9,758 |
|
|
| 12,557 |
|
|
|
|
|
|
|
|
|
|
Commitments and contingencies (Note 11) |
|
| — |
|
|
| — |
|
|
|
|
|
|
|
|
|
|
Stockholders' equity |
|
|
|
|
|
|
|
|
Preferred stock, $.01 par value; 10,000,000 shares authorized; 11,707 and 20,631 shares issued and outstanding at June 30, 2021, and December 31, 2020, respectively |
|
| — |
|
|
| — |
|
Common stock, $.01 par value; 40,000,000 shares authorized; 7,349,777 and 5,996,101 shares issued and outstanding at June 30, 2021, and December 31, 2020, respectively |
|
| 74 |
|
|
| 60 |
|
Additional paid-in capital |
|
| 423,660 |
|
|
| 417,449 |
|
Accumulated deficit |
|
| (408,504 | ) |
|
| (395,327 | ) |
Accumulated other comprehensive loss |
|
| (71 | ) |
|
| (104 | ) |
Total stockholders' equity |
|
| 15,159 |
|
|
| 22,078 |
|
Total liabilities and stockholders' equity |
| $ | 24,917 |
|
| $ | 34,635 |
|
|
|
|
|
|
|
|
|
|
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 June 30, |
|
| Six months ended June 30, |
| ||||||||||
| 2021 |
|
| 2020 |
|
| 2021 |
|
| 2020 |
| ||||
Product revenue | $ | 398 |
|
| $ | 262 |
|
| $ | 659 |
|
| $ | 437 |
|
Other revenue |
| 138 |
|
|
| 117 |
|
|
| 265 |
|
|
| 235 |
|
Cost of goods sold |
| (202 | ) |
|
| (168 | ) |
|
| (314 | ) |
|
| (246 | ) |
Gross profit |
| 334 |
|
|
| 211 |
|
|
| 610 |
|
|
| 426 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development expenses |
| 3,497 |
|
|
| 2,223 |
|
|
| 7,204 |
|
|
| 5,197 |
|
Selling, general and administrative expenses |
| 3,288 |
|
|
| 2,257 |
|
|
| 6,584 |
|
|
| 4,573 |
|
Total operating expenses |
| 6,785 |
|
|
| 4,480 |
|
|
| 13,788 |
|
|
| 9,770 |
|
Operating loss |
| (6,451 | ) |
|
| (4,269 | ) |
|
| (13,178 | ) |
|
| (9,344 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in fair value of the warrant liability, net |
| — |
|
|
| — |
|
|
| — |
|
|
| (2,832 | ) |
Interest expense, net |
| (40 | ) |
|
| (52 | ) |
|
| (81 | ) |
|
| (88 | ) |
Other income |
| 61 |
|
|
| 46 |
|
|
| 82 |
|
|
| 128 |
|
Net loss |
| (6,430 | ) |
|
| (4,275 | ) |
|
| (13,177 | ) |
|
| (12,136 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deemed dividend for triggering of warrant down round feature |
| — |
|
|
| (55 | ) |
|
| — |
|
|
| (55 | ) |
Net loss attributable to common stockholders | $ | (6,430 | ) |
| $ | (4,330 | ) |
| $ | (13,177 | ) |
| $ | (12,191 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss | $ | (6,430 | ) |
| $ | (4,275 | ) |
| $ | (13,177 | ) |
| $ | (12,136 | ) |
Other comprehensive (loss) income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustments |
| (61 | ) |
|
| (1 | ) |
|
| 33 |
|
|
| 65 |
|
Total other comprehensive loss | $ | (6,491 | ) |
| $ | (4,276 | ) |
| $ | (13,144 | ) |
| $ | (12,071 | ) |
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
Common share data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic loss per common share | $ | (0.96 | ) |
| $ | (1.90 | ) |
| $ | (2.00 | ) |
| $ | (10.40 | ) |
Diluted loss per common share | $ | (0.96 | ) |
| $ | (1.90 | ) |
| $ | (2.00 | ) |
| $ | (10.40 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of basic shares outstanding |
| 6,681,369 |
|
|
| 2,273,187 |
|
|
| 6,589,655 |
|
|
| 1,171,994 |
|
Weighted average number of diluted shares outstanding |
| 6,681,369 |
|
|
| 2,273,187 |
|
|
| 6,589,655 |
|
|
| 1,171,994 |
|
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See accompanying Notes to Condensed Consolidated Financial Statements. |
|
DELCATH SYSTEMS, INC.
Condensed Consolidated Statements of Stockholders’ Equity (Deficit)
(Unaudited)
|
| Three and six months ended June 30, 2021 |
| |||||||||||||||||||||||||||||
|
| 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 |
|
Compensation expense for issuance of stock options |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 1,626 |
|
|
| — |
|
|
| — |
|
|
| 1,626 |
|
Conversion of Preferred stock into common stock |
|
| (8,774 | ) |
|
| — |
|
|
| 877,379 |
|
|
| 9 |
|
|
| (8 | ) |
|
| — |
|
|
| — |
|
|
| 1 |
|
Exercise of warrants into common stock |
|
| — |
|
|
| — |
|
|
| 221,141 |
|
|
| 2 |
|
|
| 15 |
|
|
| — |
|
|
| — |
|
|
| 17 |
|
Net loss |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (6,430 | ) |
|
| — |
|
|
| (6,430 | ) |
Total comprehensive loss |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (61 | ) |
|
| (61 | ) |
Balance at June 30, 2021 |
|
| 11,707 |
|
| $ | — |
|
|
| 7,349,777 |
|
| $ | 74 |
|
| $ | 423,660 |
|
| $ | (408,504 | ) |
| $ | (71 | ) |
| $ | 15,159 |
|
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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 | ||||||
DELCATH SYSTEMS, INC. |
| |||||||||||||||||||||||||||||||
Condensed Consolidated Statement of Stockholders' Equity (Deficit), continued |
| |||||||||||||||||||||||||||||||
(Unaudited) |
| |||||||||||||||||||||||||||||||
(in thousands, except share and per share data) |
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| Three and six months ended June 30, 2020 |
| |||||||||||||||||||||||||||||
|
| 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 | ) |
Shares settled for services |
|
| — |
|
|
| — |
|
|
| 70,259 |
|
|
| 1 |
|
|
| 605 |
|
|
| — |
|
|
| — |
|
|
| 606 |
|
Conversion of Preferred stock into common stock |
|
| (15,497 | ) |
|
| — |
|
|
| 1,549,609 |
|
|
| 15 |
|
|
| (16 | ) |
|
| — |
|
|
| — |
|
|
| (1 | ) |
Conversion of Pre-funded Series F Warrants |
|
| — |
|
|
| — |
|
|
| 6,000 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
Public Offering - issuance of common stock and warrants |
|
| — |
|
|
| — |
|
|
| 1,823,000 |
|
|
| 18 |
|
|
| 19,360 |
|
|
| — |
|
|
| — |
|
|
| 19,378 |
|
Net loss |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (4,275 | ) |
|
| — |
|
|
| (4,275 | ) |
Total comprehensive loss |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (1 | ) |
|
| (1 | ) |
Balance at June 30, 2020 |
|
| 25,950 |
|
| $ | — |
|
|
| 3,521,641 |
|
| $ | 35 |
|
| $ | 390,882 |
|
| $ | (383,307 | ) |
| $ | 92 |
|
| $ | 7,702 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying Notes to Condensed Consolidated Financial Statements.
Stockholders’ Equity
(in thousands)
|
| Six months ended June 30, |
| |||||
|
| 2021 |
|
| 2020 |
| ||
Cash flows from operating activities: |
|
|
|
|
|
|
|
|
Net loss |
| $ | (13,177 | ) |
| $ | (12,136 | ) |
Adjustments to reconcile net loss to net cash used in operating activities: |
|
|
|
|
|
|
|
|
Stock option compensation expense |
|
| 3,774 |
|
|
| 25 |
|
Restricted stock compensation expense |
|
| — |
|
|
| 635 |
|
Depreciation expense |
|
| 78 |
|
|
| 92 |
|
Amortization of right of use assets |
|
| — |
|
|
| 22 |
|
Warrant liability fair value adjustment |
|
| — |
|
|
| 2,832 |
|
Interest expense accrued related to convertible notes |
|
| 79 |
|
|
| 80 |
|
Changes in assets and liabilities: |
|
|
|
|
|
|
|
|
Decrease (increase) in prepaid expenses and other assets |
|
| 485 |
|
|
| (232 | ) |
Increase in accounts receivable |
|
| (17 | ) |
|
| (125 | ) |
Increase in inventories |
|
| (366 | ) |
|
| (70 | ) |
Decrease in accounts payable |
|
| (550 | ) |
|
| (2,359 | ) |
Decrease in accrued expenses |
|
| (1,641 | ) |
|
| (1,598 | ) |
Decrease in deferred revenue |
|
| (334 | ) |
|
| (248 | ) |
Net cash used in operating activities |
|
| (11,669 | ) |
|
| (13,082 | ) |
|
|
|
|
|
|
|
|
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
Purchase of property, plant and equipment |
|
| (88 | ) |
|
| (221 | ) |
Net cash used in investing activities |
|
| (88 | ) |
|
| (221 | ) |
|
|
|
|
|
|
|
|
|
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
Principal payments on financing leases |
|
| — |
|
|
| (23 | ) |
Net payments related to registration costs |
|
| — |
|
|
| (106 | ) |
Net proceeds from Public Offering |
|
| — |
|
|
| 19,378 |
|
Net proceeds from the exercise of warrants |
|
| 2,393 |
|
|
| — |
|
Net cash provided by financing activities |
|
| 2,393 |
|
|
| 19,249 |
|
Foreign currency effects on cash |
|
| 33 |
|
|
| 63 |
|
Net (decrease) / increase in total cash |
|
| (9,331 | ) |
|
| 6,009 |
|
|
|
|
|
|
|
|
|
|
Total Cash: |
|
|
|
|
|
|
|
|
Beginning of period |
|
| 28,756 |
|
|
| 10,183 |
|
End of period |
| $ | 19,425 |
|
| $ | 16,192 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Six months ended June 30, |
| |||||
|
| 2021 |
|
| 2020 |
| ||
Supplemental Disclosure of Cash Flow Information: |
|
|
|
|
|
|
|
|
Cash paid during the periods for: |
|
|
|
|
|
|
|
|
Interest expense |
| $ | 4 |
|
| $ | 7 |
|
|
|
|
|
|
|
|
|
|
Supplemental Disclosure of Non-Cash Investing and Financing Activities: |
|
|
|
|
|
|
|
|
Reclassification of 2019 warrants from liability to equity |
| $ | — |
|
| $ | 6,199 |
|
Conversions of preferred stock into common stock |
| $ | 9 |
|
| $ | 15 |
|
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.
statements.
periods within those fiscal years. Issuers should apply the new standard prospectively to modifications or exchanges occurring after the effective date of the new standard. Early adoption is permitted, including adoption in an interim period. If an issuer elects to early adopt the new standard in an interim period, the guidance should be applied as of the beginning of the fiscal year that includes that interim period. The Company is evaluatingadopted this new standard.
| Cash, Cash Equivalents and Restricted Cash |
|
| June 30, |
|
| December 31, |
| ||
|
|
| 2021 |
|
|
| 2020 |
|
Cash and cash equivalents |
| $ | 19,274 |
|
| $ | 28,575 |
|
Letters of credit |
|
| 101 |
|
|
| 131 |
|
Security for credit cards |
|
| 50 |
|
|
| 50 |
|
Total cash, cash equivalents and restricted cash shown in the statements of cash flows |
| $ | 19,425 |
|
| $ | 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 | ||||
| Inventories |
|
| June 30, |
|
| December 31, |
| ||
|
| 2021 |
|
| 2020 |
| ||
Raw materials |
| $ | 517 |
|
| $ | 435 |
|
Work-in-process |
|
| 704 |
|
|
| 420 |
|
Total inventories |
| $ | 1,221 |
|
| $ | 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 | ||||
| Prepaid Expenses and Other Current Assets |
|
| June 30, |
|
| December 31, |
| ||
|
| 2021 |
|
| 2020 |
| ||
Clinical trial expenses |
| $ | 1,497 |
|
| $ | 1,497 |
|
Insurance premiums |
|
| 290 |
|
|
| 845 |
|
Other |
|
| 398 |
|
|
| 328 |
|
Total prepaid expenses and other current assets |
| $ | 2,185 |
|
| $ | 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 | ||||
| Property, Plant, and Equipment |
|
| June 30, |
|
| December 31, |
|
| Estimated | ||
|
| 2021 |
|
| 2020 |
|
| Useful Life | ||
Buildings and land |
| $ | 1,191 |
|
| $ | 1,109 |
|
| 30 years - Buildings |
Enterprise hardware and software |
|
| 1,862 |
|
|
| 1,862 |
|
| 3 years |
Leaseholds |
|
| 1,814 |
|
|
| 1,826 |
|
| Lesser of lease term or estimated useful life |
Equipment |
|
| 1,068 |
|
|
| 1,063 |
|
| 7 years |
Furniture |
|
| 204 |
|
|
| 204 |
|
| 5 years |
Property, plant and equipment, gross |
|
| 6,139 |
|
|
| 6,064 |
|
|
|
Accumulated depreciation |
|
| (4,778 | ) |
|
| (4,713 | ) |
|
|
Property, plant and equipment, net |
| $ | 1,361 |
|
| $ | 1,351 |
|
|
|
2022
2021 Buildings and land $ 1,222 $ 1,222
Buildings Enterprise hardware and software 1,858 1,858 Leaseholds 1,788 1,796
lease
term or
estimated
useful
life Equipment 1,184 1,094 Furniture 202 203 Property, plant and equipment, gross 6,254 6,173 Accumulated depreciation (4,848 ) (4,825 ) Property, plant and equipment, net $ 1,406 $ 1,348
| Accrued Expenses |
|
| June 30, |
|
| December 31, |
| ||
|
| 2021 |
|
| 2020 |
| ||
Clinical expenses |
| $ | 2,216 |
|
| $ | 2,698 |
|
Compensation, excluding taxes |
|
| 747 |
|
|
| 1,598 |
|
Professional fees |
|
| 188 |
|
|
| 225 |
|
Interest on convertible note |
|
| 313 |
|
|
| 234 |
|
Other |
|
| 157 |
|
|
| 486 |
|
Total accrued expenses |
| $ | 3,621 |
|
| $ | 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 | ||||
| Leases |
|
| US |
|
| Ireland |
|
| Total |
| |||
Lease cost |
|
|
|
|
|
|
|
|
|
|
|
|
Operating lease cost |
| $ | 214 |
|
| $ | 110 |
|
| $ | 324 |
|
Sublease income |
|
| — |
|
|
| (109 | ) |
|
| (109 | ) |
Total |
| $ | 214 |
|
| $ | 1 |
|
| $ | 215 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other information |
|
|
|
|
|
|
|
|
|
|
|
|
Operating cash flows out from operating leases |
|
| (214 | ) |
|
| (110 | ) |
|
| (324 | ) |
Operating cash flows in from operating leases |
|
| - |
|
|
| 109 |
|
|
| 109 |
|
Weighted average remaining lease term |
|
| 1.7 |
|
|
| - |
|
|
|
|
|
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 |
| |||
Year ended December 31, 2021 |
| $ | 203 |
|
| $ | 18 |
|
| $ | 221 |
|
Year ended December 31, 2022 |
|
| 406 |
|
|
| - |
|
|
| 406 |
|
Year ended December 31, 2023 |
|
| 67 |
|
|
| - |
|
|
| 67 |
|
Total |
|
| 676 |
|
|
| 18 |
|
|
| 694 |
|
Less present value discount |
|
| (44 | ) |
|
| - |
|
|
| (44 | ) |
Operating lease liabilities included in the condensed consolidated balance sheet at June 30, 2021 |
| $ | 632 |
|
| $ | 18 |
|
| $ | 650 |
|
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 Notes Payable |
|
| Conversion price |
|
| Current interest rate |
|
| Principal |
| |||
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.
See Note 12 Subsequent Events for information related to an amendment which reduced the conversion price and extended the maturity
(in thousands): |
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. |
|
|
Preferred Stock
Series E
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 | ||||||
During Security Agreement (the “Avenue Loan Agreement”) with Avenue Venture Opportunities Fund, L.P. (the “Lender,” or “Avenue”) for a term loan in an aggregate principal amount of up to $20
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 the six months ended June 30, 2021, the Company issued 458,661 shares of common stock associated with the exercise of warrants, including 215,000 prefunded warrants at an exercise price of $0.01 per share.
Stock Incentive Plan
2020
As of June
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 |
| |||
Outstanding at January 1, 2021 |
|
| 1,078,499 |
|
| $ | 12.68 |
|
|
|
|
|
|
|
Granted |
|
| 15,000 |
|
|
| 9.87 |
|
|
|
|
|
|
|
Exercised |
|
| — |
|
|
| — |
|
|
|
|
|
|
|
Cancelled/Forfeited |
|
| (1,611 | ) |
|
| 11.67 |
|
|
|
|
|
|
|
Outstanding at June 30, 2021 |
|
| 1,091,888 |
|
| $ | 12.65 |
|
| 9.3 |
| $ | 929 |
|
Exercisable at June 30, 2021 |
|
| 262,388 |
|
| $ | 12.87 |
|
| 9.2 |
| $ | 246 |
|
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 |
| ||
$9 - $15 |
|
| 959,389 |
|
| 9.2 |
|
| 236,389 |
|
$15 - $20 |
|
| 81,000 |
|
| 9.3 |
|
| 12,750 |
|
$20 - $25 |
|
| 51,000 |
|
| 9.3 |
|
| 12,750 |
|
$25+ |
|
| 499 |
|
| 7.6 |
|
| 499 |
|
|
|
| 1,091,888 |
|
| 9.2 |
|
| 262,388 |
|
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 June 30, |
|
| Six months ended June 30, |
| |||||||||||
|
| 2021 |
|
| 2020 |
|
| 2021 |
|
| 2020 |
| ||||
Cost of goods sold |
|
| 39 |
|
|
| — |
|
|
| 91 |
|
|
| — |
|
Research and development |
|
| 463 |
|
|
| 117 |
|
|
| 1,093 |
|
|
| 122 |
|
Selling, general and administrative |
| $ | 1,124 |
|
| $ | 488 |
|
| $ | 2,590 |
|
| $ | 537 |
|
Total |
| $ | 1,626 |
|
| $ | 605 |
|
| $ | 3,774 |
|
| $ | 660 |
|
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 | ||||
|
| Warrants |
|
| Weighted Average Exercise Price |
|
| Weighted Average Remaining Life (in years) |
| |||
Outstanding at January 1, 2021 |
|
| 4,236,687 |
|
| $ | 9.13 |
|
|
|
|
|
Warrants issued |
|
| — |
|
|
| — |
|
|
|
|
|
Warrants exercised |
|
| (463,421 | ) |
|
| 5.37 |
|
|
|
|
|
Warrants expired |
|
| — |
|
|
| — |
|
|
|
|
|
Outstanding at June 30, 2021 |
|
| 3,773,266 |
|
| $ | 9.59 |
|
|
| 3.7 |
|
Exercisable at June 30, 2021 |
|
| 3,773,266 |
|
| $ | 9.59 |
|
|
| 3.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 |
|
|
| 156,000 |
|
| 3.8 |
|
| 156,000 |
|
$ | 10.00 |
|
|
| 3,617,266 |
|
| 3.7 |
|
| 3,617,266 |
|
|
|
|
|
| 3,773,266 |
|
| 3.7 |
|
| 3,773,266 |
|
As of June 30, 2021, warrants to purchase 156,000 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 | ||||||||||
| Net Loss per Common Share |
|
| June 30, |
| |||||
|
| 2021 |
|
| 2020 |
| ||
Stock options |
|
| 1,091,888 |
|
|
| 1,640 |
|
Common stock warrants - equity |
|
| 3,773,266 |
|
|
| 4,051,499 |
|
Common stock reserved for conversion of preferred shares |
|
| 1,170,700 |
|
|
| 2,595,087 |
|
Assumed conversion of convertible notes |
|
| 154,222 |
|
|
| 146,288 |
|
Total |
|
| 6,190,076 |
|
|
| 6,794,514 |
|
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 June 30, |
|
| Six months ended June 30, |
| ||||||||||
| 2021 |
|
| 2020 |
|
| 2021 |
|
| 2020 |
| ||||
Weighted average shares issued |
| 6,511,194 |
|
|
| 2,038,297 |
|
|
| 6,319,622 |
|
|
| 1,054,549 |
|
Weighted average pre-funded warrants |
| 170,175 |
|
|
| 234,890 |
|
|
| 270,033 |
|
|
| 117,445 |
|
Weighted average shares outstanding |
| 6,681,369 |
|
|
| 2,273,187 |
|
|
| 6,589,655 |
|
|
| 1,171,994 |
|
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 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. 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 sought 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 the New York Labor Law, attorneys’ fees and costs, and statutory interest. The Company denied any liability or wrongdoing and was vigorously defending against the claims, with contested arbitration hearings initially scheduled to commence in the week of May 17, 2021. However, the Claimants and the Company 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. With the assistance of the neutral mediator and after careful consideration by the Company’s board of directors following several weeks of negotiations, the Claimants and the Company agreed in mid-May of 2021 to a confidential settlement of their dispute to avoid the expenses and distractions of further arbitration proceedings, with no admission of liability or wrongdoing on the part of the Company. While the Company had accrued for the full purported unpaid compensation amount of $1,140 as of December 31, 2020, the Company ultimately paid less in full and final settlement of its dispute with both of the Claimants. As a result of the confidential settlement, the AAA Arbitration was dismissed with prejudice on June 1, 2021.
Other Transactions
based on 87% of enrolled patients was released on March 31, 2021, and subsequently4th4th through the 8th8th of June 2021. Per that analysis, the ORR exceeded the prespecifiedpreprespecifiedpreprespecifiedpre they dowethe Company cannot recognize the revenue in the quarter ending June 30, 2021.
|
|
Warrant Exercises
Subsequent to June 30, 2021, warrants to purchase 6,512 shares of the Company’s common stock with an exercise price of $10.00 per share were exercised for proceeds of $65,120.
Other Transactions
Growth Capital Term Loan
The initial trancheof termination of the Loan is $15,000, including $4,000 which has been funded intoLicense Agreement being April 12, 2022. medac disputed having an obligation to make a restricted accountmilestone payment under the Agreement and will be released upon achievementdemanded withdrawal of (a)(x) positive FOCUS trial efficacy per the trial’s predefined Statistical Analysis Plan (SAP) (specifically the Overall Response Rate exceeds the prespecified threshold for success defined in the SAP by a statistically significant amount); and (y) based on data contained within the FOCUS trial database and appropriate for use with the U.S. Food and Drug Administration, safety and tolerability among FOCUS trial participants is within the range of currently approved and commonly used cytotoxic chemotherapeutic agents; and (b) raising subsequent net equity proceeds of at least $20,000.termination notice. The Company may request an additional $5,000 of gross proceeds between October 1, 2022declined to withdraw the termination notice and, on December 31, 2022, with funding, subject to the approval of Avenue’s Investment Committee.
In connection with the Loan, the Company issued to the Lender warrants to purchase 127,755 shares of common stock at an exercise price per share equal to $0.01. The warrants are exercisable until August 31, 2026.
Up to $3,000 of the principal amount outstanding may be converted at the option of the Lender into shares of the Company’s common stock at a conversion price of $11.98 per share.
The Company will make monthly interest-only payments during the first fifteen months of the Loan, which could be increased to up to twenty-four months upon the achievement of specified performance milestones. Following the interest-only period, the Company will make equal monthly payments of principal until the maturity date, plus interest. If the Company prepays the Loan, it will be required to pay (a) a prepayment fee of 3% if the Loan is prepaid during the interest-only period; and (b) a prepayment fee of 1% if the Loan is prepaid after the interest-only period. The Company must make an incremental final payment equal to 4.25% of the aggregate funding.
The Company paid an aggregate commitment fee of $150 at closing. Upon a second tranche, the Lender will earn a 1.0% fee on the $5,000 of incremental committed capital, for a total commitment fee of $200.
The Loan requires the Company to make and maintain representations and warranties and other agreements that are customary in loan agreements of this type. The Loan also contains customary events of default, including non-payment of principal or interest, violations of covenants, bankruptcy and material judgments.
The Company intends to use any proceeds from the Loan for general corporate purposes.
Extension and Amendment of Convertible Note Payable
On August 6,16, 2021, the Company executedinitiated an agreementarbitration proceeding pursuant to amend an aggregate of $2,000 outstanding secured convertible notes payable to Rosalind Opportunities Fund I L.P. and Rosalind Master Fund L.P., respectively, which (a) reduces the conversion price to $1,198 per sharedispute resolution provisions of the Company’s Series E Convertible Preferred Stock; and (b) extendsLicense Agreement.
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.
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.
On March 31, 2021, Delcath released a preliminary analysis of the FOCUS trial data based on 87% of enrolled patients using prespecified analyses. An Independent Review Committee assessed an ORR of 29.2% [95% CI: 20.1, 39.8] in the ITT population, the lower bound of which exceeded the upper bound of the predefined success criterion (8.3%) for the primary ORR endpoint. Given the large difference between the predefined success criteria and the interim results, the ORR on the full ITT population will exceed the predefined success criterion regardless of the response status of the small number of patients still to be analyzed.
In the per protocol populations, evaluable patients in the HEPZATO arm had a statistically significant improvement over BAC in prespecified endpoints including: ORR of 32.9% [95% CI: 22.8, 44.4] versus 13.8% [CI: 3.9, 31.7] for the BAC arm (Chi-square P<0.05), Median PFS of 9.0 months [95% CI: 6.2, 11.8] versus 3.1 months [95% CI: 2.7, 5.7] for the BAC arm (HR=0.41 p<0.001), and DCR of 70.9% [95% CI: 59.6, 80.6] versus 37.9% [95% CI: 20.7, 57.7] for the BAC arm (p<0.002). In this preliminary analysis, DOR and OS 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.
We have paused a global Phase 3 clinical trial of HEPZATO investigating the treatment of 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.
COVID-19
Due to the global outbreak of SARS-CoV-2, a novel strain of coronavirus that causes Coronavirus disease (COVID-19),
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.
Due to COVID-related delays experienced by the medical device industry and Notified Bodies (NB) alike, as of June 30, 2021, Delcath has not yet achieved MDR certification. However, our current CE Mark under the Medical Device Directive remains effective until April 2024 and allows us to fully operate, in Europe, accordingly, as Delcath and our Notified Body work closely together through the certification process.
March 31, 2021
Europe beginning in March 2022.
submission by the third quarter of 2022.
United States early next year.
Net Loss
Our net loss for the three months ended June 30, 2021 was $6,430, a increase of $2,155 compared to net loss of $4,275 for the three months ended June 30, 2020. The increase is mainlyprimarily due to the second quarter stock optioninterest expense of $1,596 and the increase of the FOCUS trial site, monitoring and data analysis fees as well as the increase in professional service fees related to the preparation of the NDA submission.
Six months ended June 30, 2021 Compared with Six months ended June 30, 2020
Revenue
We recorded approximately $924 in revenueamortization expense for the six months ended June 30, 2021 compared to $672 fororiginal issue discount on the six months ended June 30, 2020. The increase of $252 in revenue is partly due to an increase in CHEMOSAT unit sales to medacdebt financing transaction discussed below between the Company and associated royalty income.
Cost of Goods Sold
For the six months ended June 30, 2021, we recorded cost of goods sold of approximately $314 compared to $246 for the six months ended June 30, 2020 This increase is primarily related to the increase in sales volume.
Research and Development Expenses
Research and development expenses are incurred for the development of HEPZATO and consist primarily of payroll and payments to contract research and development companies. To date, these costs are related to generating pre-clinical data and the cost of manufacturing HEPZATO for clinical trials and conducting clinical trials. For the six months ended June 30, 2021, research and development expenses increased to $7,204 from $5,197 in the prior year period. The increase is partially due to recording stock option expenses of $1,093 in 2021. The balance of the increase was due to additional compensation expense related to the hiring of five additional employees and an increase in costs related to the ongoing FOCUS trial and preparation for the NDA submission.
Selling, General and Administrative Expenses
Selling, general and administrative expenses consist primarily of payroll, rent and professional services such as accounting and legal services. For the six months ended June 30, 2021 and 2020, selling, general and administrative expenses were $6,584 and $4,573, respectively. The increase is primarily related to the recording of stock option expense of $2,681 during the six months ended June 30, 2021
Other Income/Expense
Other income/expense is primarily related to income or expense associated with financial instruments. For the six months ended June 30, 2021 and 2020, other (income)/expense were $1 and $2,792 of expense, respectively. The change is mostly related to the fair value adjustment recorded in the first quarter of 2020 related to the warrant liability.
Net Loss
Our net loss for the six months ended June 30, 2021 was $13,177, an increase of $1,041 compared to net loss of $12,136 for the six months ended June 30, 2020. The increase is mainly due to the year-to-date stock option expense of $3,774 offset by $2,832 related to the fair value adjustment recorded in the first quarter of 2020 related to the warrant liability.
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).
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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.
| Item 4. Controls and Procedures |
| Item 1. Legal Proceedings |
Following the May 18, 2020 resignation (effective June 1, 2020) of Jennifer Simpson,Germany (“medac”), the Company’s former PresidentEU product distribution partner, for a milestone payment due under the License, Supply and CEO,Marketing Agreement (the “License Agreement”) dated December 10, 2018, between the Company and Barbra Keck,medac. Pursuant to the Company’s former CFO (the “Claimants”),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 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 | Amended and Restated Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3.1 to the Company’s Registration Statement on Form S-1/A filed September 25, 2019). | ||
3.2 | |||
3.3 | |||
3.4 | |||
3.5 | |||
3.6 | |||
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31.2 | |||
32.1 | |||
32.2 | |||
101.INS | XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL | ||
101.SCH | Inline XBRL Taxonomy Extension Schema | ||
101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase | ||
101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase | ||
101.LAB | Inline XBRL Taxonomy Extension Label Linkbase | ||
101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase | ||
104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) | ||
* | Filed herewith. |
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| 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, 2022 | ||||||
| /s/ Gerard Michel | |||||
Gerard Michel | ||||||
Chief Executive Officer (Principal Executive Officer) | ||||||
|
| |||||
May 11, 2022 |
| /s/ Anthony Dias | ||||
| Anthony Dias | |||||
Principal Accounting Officer | ||||||
25