Company Overview - Delcath Systems, Inc. (DCTH) offers a liver-directed chemotherapy system primarily used for treating metastatic uveal melanoma patients [1] Market Challenges - The business has faced negative impacts from pricing pressure and seasonality in recent quarters [1] Investment Strategy - Narweena, an asset manager led by Richard Durant, focuses on identifying market dislocations due to poor understanding of long-term business prospects [1] - The firm aims for excess risk-adjusted returns by targeting businesses with secular growth opportunities in markets with barriers to entry [1] - Narweena's research emphasizes company and industry fundamentals to uncover unique insights [1] Economic Context - An aging population with low growth and stagnating productivity is expected to create new investment opportunities distinct from past trends [1] - Many industries may experience stagnation or secular decline, potentially improving business performance as competition decreases [1] - Conversely, some businesses may face rising costs and diseconomies of scale [1] Investment Environment - The economy is increasingly dominated by asset-light businesses, leading to a declining need for infrastructure investments [1] - A large pool of capital is pursuing a limited set of investment opportunities, resulting in rising asset prices and compressed risk premia over time [1] Leadership Background - Richard Durant holds undergraduate degrees in engineering and finance from the University of Adelaide and an MBA from Nanyang Technological University [1]

Delcath Systems (NasdaqCM:DCTH) Q4 2025 Earnings call February 26, 2026 08:30 AM ET Company ParticipantsBill Maughan - Managing DirectorCharles Wallace - Managing DirectorDavid Hoffman - General Counsel, Corporate Secretary and CCOGerard Michel - CEOJohn Newman - Managing DirectorSandra Pennell - CFOSudan Loganathan - Managing DirectorConference Call ParticipantsChase Knickerbocker - Senior Research AnalystMarie Thibault - Managing Director and Medical Technology and Digital Health AnalystYale Jen - Senior ...

Delcath Systems (NasdaqCM:DCTH) Q4 2025 Earnings call February 26, 2026 08:30 AM ET Company ParticipantsBill Maughan - Managing DirectorCharles Wallace - Managing DirectorDavid Hoffman - General Counsel, Corporate Secretary and CCOGerard Michel - CEOJohn Newman - Managing DirectorSandra Pennell - CFOSudan Loganathan - Managing DirectorConference Call ParticipantsChase Knickerbocker - Senior Research AnalystMarie Thibault - Managing Director and Medical Technology and Digital Health AnalystYale Jen - Senior ...

Financial Data and Key Metrics Changes - In 2025, the company achieved record revenue of $85.2 million, representing over 40% volume growth compared to the previous year [6][19] - The fourth quarter revenue was $20.7 million, with HEPZATO sales at $19 million and CHEMOSAT at $1.7 million, compared to $13.7 million and $1.4 million respectively in Q4 2025 [19] - Gross margins were 85% in Q4 and 86% for the full year, compared to 86% and 83% in the prior year [19] - The net loss for Q4 2025 was $1.9 million, an improvement from a $3.4 million loss in Q4 2024, while the full year net income was $2.7 million compared to a loss of $26.4 million in 2024 [21] Business Line Data and Key Metrics Changes - Revenue from HEPZATO increased significantly from $32.3 million in 2024 to $78.8 million in 2025, while CHEMOSAT revenue rose from $4.9 million to $6.4 million [19] - The average number of treatments per patient has remained consistent at approximately four cycles since launch [7] Market Data and Key Metrics Changes - The company operates 28 active treatment centers and aims to expand to 40 by the end of 2026 [9] - The average rate of new patient starts per site per month was approximately 0.75 for the first two months of 2026, compared to an average of 0.5 for the full year of 2025 [11] Company Strategy and Development Direction - The company’s commercial strategy focuses on three priorities: expanding site capacity, changing prescribing patterns, and building referral networks [7][15] - The CHOPIN data publication is anticipated to drive revenue acceleration and enhance the company’s market position [6][12] - The company is actively engaging key opinion leaders to support updates to the NCCN guidelines for metastatic uveal melanoma [14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in continued revenue growth driven by site activations and the anticipated impact of the CHOPIN results [6][15] - The company expects to guide total revenue of at least $100 million for 2026, reflecting a greater than 20% increase in HEPZATO procedure volume [22][23] Other Important Information - Research and development expenses for 2025 were $29.2 million, up from $13.9 million in 2024, with expectations for a nearly 90% increase in 2026 [20] - The company ended 2025 with approximately $91 million in cash and investments, and no outstanding debt obligations [22] Q&A Session Summary Question: Clarification on guidance assumptions and seasonality - Management confirmed that seasonality is expected in the third quarter, with modest growth anticipated from Q2 to Q3 [26][28] Question: Difference between HEPZATO KIT REMS sites and clinical trial sites - Management clarified that HEPZATO KIT REMS sites must be compliant and cannot accept referrals until they have treated their first patient [31][33] Question: Timing of CHOPIN study publication and its impact - Management indicated that the CHOPIN study publication is imminent, expected within a month, and will be used to educate treating physicians [39] Question: Average treatments per patient and new patient starts - The average treatments per patient remain around 4.1, with intervals stretching closer to 8 weeks [45][48] Question: Potential for NCCN guideline updates - Management noted that updates to the NCCN guidelines are driven by key opinion leaders and are hopeful for changes based on new data [82]

FDA Approval and Market Introduction - The HEPZATO KIT was approved by the FDA on August 14, 2023, for liver-directed treatment of adult patients with uveal melanoma with unresectable hepatic metastases affecting less than 50% of the liver[25]. - HEPZATO KIT received FDA approval in August 2023 for adult uveal melanoma patients with unresectable liver metastases, allowing for up to ten treatments in commercial settings[51]. - The first commercial use of HEPZATO for treating metastatic hepatic dominant uveal melanoma occurred in January 2024[25]. - HEPZATO KIT became commercially available in January 2024, with 32 sites accepting referrals and 25 active sites as of December 31, 2025[66][68]. Market Opportunity and Addressable Market - The total addressable market for liver cancer (primary and metastatic) in the United States is estimated to be approximately 200,000 cases per year, with a market value exceeding $1.0 billion[31]. - An estimated 800 patients with uveal melanoma liver metastases in the United States and 1,200 in Europe may be eligible for treatment with HEPZATO or CHEMOSAT annually, representing a market of approximately $600 million per year[34]. - Approximately 98,000 colorectal cancer patients in the United States, the United Kingdom, and the European Union could be candidates for treatment with HEPZATO and CHEMOSAT[36]. - The annual addressable market for breast cancer patients with hepatic involvement in the United States and the European Union is estimated to be around 6,000 patients, with an additional 10,000 patients potentially benefiting from treatment in the palliative setting[39]. - Approximately 65,000 hepatocellular carcinoma patients annually in the United States and Europe could be candidates for treatments with HEPZATO and CHEMOSAT, representing the largest segment of the primary liver cancer market[45]. - The estimated number of neuroendocrine tumor patients in the United States, the United Kingdom, and the European Union who could be candidates for treatment with HEPZATO and CHEMOSAT is approximately 7,500 annually[41]. - The estimated total addressable market (TAM) for liver-dominant metastatic colorectal cancer (mCRC) is between 6,000 and 10,000 patients annually in the United States[62]. Clinical Trials and Efficacy - The FOCUS Trial reported an overall response rate (ORR) of 36.3%, significantly higher than the historical control group's ORR of 5.5%, with 7.7% of patients achieving a complete response[52]. - The CHOPIN trial demonstrated an objective response rate of 85.7% and a disease control rate of 100% in patients treated with CHEMOSAT combined with immune checkpoint inhibitors[54]. - In the Phase 2 trial of the CHOPIN study, the combination group achieved a one-year progression-free survival rate of 54.7% compared to 15.8% in the PHP group[56]. - The Phase 2 trial for liver-dominant metastatic breast cancer (mBC) is expected to enroll approximately 90 patients, with results anticipated by 2029[64][65]. Regulatory and Compliance - The Centers for Medicare and Medicaid Services established a permanent J-Code for HEPZATO effective April 1, 2024, and granted New Technology Add-on Payment status effective October 1, 2024[71]. - The Company entered into a National Drug Rebate Agreement (NDRA) with CMS on October 23, 2025, which mandates rebates for Medicaid usage and requires pricing submissions to the government[72]. - The company is subject to extensive drug price reporting and payment obligations under the Medicaid Drug Rebate Program (MDRP), which includes submitting Average Manufacturer Price (AMP) and best price data[194]. - The company must also participate in the 340B program, requiring it to charge covered entities no more than the 340B ceiling price for outpatient drugs, calculated based on AMP and rebate amounts[195]. - The company faces potential penalties and sanctions if it fails to comply with reporting obligations under the MDRP and other governmental pricing programs, which could adversely affect its financial condition[194]. - Compliance with FDA regulations includes ongoing recordkeeping, annual product quality reviews, and timely reporting of adverse events[96]. - The FDA may require product recalls or withdraw approvals if the company or its suppliers fail to comply with regulatory requirements[97]. - The company must adhere to strict marketing regulations, including limitations on off-label promotion and the need for FDA approval for product modifications[98]. Financial Performance and Funding - For the year ended December 31, 2025, the company reported a net gain of approximately $2.7 million, while in 2024, it incurred a net loss of $26.4 million[147]. - The company has a substantial accumulated deficit and recurring operating losses, which may exhaust its capital resources and hinder future product commercialization[147]. - The company may require significant additional funding to continue the commercialization of HEPZATO and complete product development projects[151]. - As of December 31, 2025, the company had $43.5 million in cash and cash equivalents and $47.6 million in short-term investments[147]. Supply Chain and Manufacturing - Delcath has sufficient raw materials and components for the HEPZATO KIT to meet anticipated demand and plans to manage supply chain risks through inventory and multiple supplier contracts[26]. - The company is currently reliant on one supplier for melphalan, which poses risks to the supply chain and commercialization efforts[162]. - The company is in discussions with several melphalan NDA holders to mitigate supply interruption risks[165]. - Manufacturing CHEMOSAT and HEPZATO is currently done at the facility in Queensbury, New York, with assembly and packaging operations also established in Galway, Ireland[168]. - The company faces potential delays in obtaining components from third-party suppliers, which could adversely affect the timely delivery of CHEMOSAT and HEPZATO[169]. - Delays in manufacturing may hinder the ability to obtain regulatory approval for other indications in the U.S. and abroad, impacting clinical trial timelines[170]. Competitive Landscape - The healthcare industry is characterized by significant competition, with numerous companies developing alternative treatment methods for liver cancer[131]. - Competition in the cancer treatment industry is intense, with competitors having greater resources and experience, which could impact revenue and profitability[184]. - The company may face challenges in establishing effective sales and marketing capabilities, which are crucial for the commercialization of HEPZATO and other product candidates[177]. Future Plans and Challenges - The company plans to begin studies of HEPZATO for other indications in the future, but delays or failures in clinical trials could negatively impact its business growth[206]. - The company may need to enter into collaborative arrangements for marketing and selling CHEMOSAT and HEPZATO, but success is not guaranteed[180]. - The potential market opportunity for CHEMOSAT and HEPZATO is difficult to estimate, and inaccuracies in assumptions could lead to smaller actual markets than expected[187]. - Legislative changes, such as the ACA and proposed healthcare reforms, could significantly impact drug pricing and market access for the company[110]. - Changes in healthcare laws and regulations, including government restrictions on pricing and reimbursement, may have a material adverse effect on the company's business[201]. - The current administration's policies aimed at reducing drug prices may significantly impact the company's global pricing strategies and profitability[202].

Company Overview - Delcath Systems, Inc. (NASDAQ:DCTH) was founded on August 5, 1988, and is headquartered in Queensbury, New York. The company specializes in developing interventional oncology therapies for primary and metastatic liver cancers, including the Hepzato and Chemosat Hepatic Delivery System [4]. Financial Performance - Delcath Systems reported preliminary, unaudited fourth-quarter revenue of approximately $20.7 million and full-year 2025 revenue of $85.2 million, driven primarily by Hepzato sales totaling about $19.0 million for the quarter and $78.8 million for the year [3]. - The company demonstrated strong operating cash flow and minimal leverage, which supports internal funding of clinical programs and a previously announced share repurchase plan [3]. Analyst Ratings - Clear Street raised its price target on Delcath Systems to $29 from $28 while maintaining a Buy rating, citing that Hepzato has become a steadier revenue contributor with improved predictability and sufficient cash generation to support expansion into additional indications [1][3].

Group 1 - Delcath Systems, Inc. is an interventional oncology company focused on treating primary and metastatic cancers of the liver [1] - The company will be attending the BTIG 13th Annual MedTech, Digital Health, Life Science & Diagnostic Tools Conference in Snowbird, Utah [1]

Core Viewpoint - The article emphasizes the importance of investing in quality companies at reasonable valuations, focusing on long-term fundamentals that drive share prices. Group 1: Investment Philosophy - The investor is inspired by renowned figures such as Warren Buffett, Peter Lynch, and Terry Smith, indicating a preference for value investing strategies [1]. - The belief is that predicting a business's earnings per share is crucial for investment decisions, highlighting a focus on fundamental analysis [1].

Core Viewpoint - The article emphasizes the importance of investing in quality companies at reasonable valuations, focusing on long-term fundamentals that drive share prices. Group 1: Investment Philosophy - The investment philosophy is inspired by renowned investors such as Warren Buffett, Peter Lynch, and Terry Smith, highlighting a preference for quality companies [1]. - The belief is that long-term fundamentals are the primary drivers of share price movements, with a focus on predicting future earnings per share [1].

Financial Performance - Preliminary total revenue for Q4 2025 is reported at $20.7 million, with full-year preliminary total revenue of $85.2 million[4]. - As of December 31, 2025, the company holds $91.0 million in cash and investments, with positive operating cash flow in Q4 2025[4]. - The company repurchased 629,000 shares for $6.0 million in 2025, indicating a strong financial position[4]. - The company has no outstanding debt obligations, further strengthening its financial stability[4]. - The company has a robust capital structure with a market capitalization including 34.7 million common shares and 1.8 million preferred shares as of December 31, 2025[47]. - The average daily trading volume was reported at 34 million shares, indicating strong market interest[46]. Product Development and Market Expansion - HEPZATO (drug/device) US launch for metastatic uveal melanoma (mUM) is scheduled for 1Q 2024, with a total addressable market (TAM) in the US estimated at approximately $500 million[4]. - The HEPZATO platform has received IND approval for metastatic colorectal cancer (mCRC) and metastatic breast cancer (mBC) trials, with patient enrollment expected to begin in Q3/Q4 2025 and Q1 2026 respectively[7]. - The company is focusing on a unique interventional oncology asset with strong efficacy signals across multiple tumor types, enhancing its market position[4]. - The company aims to leverage its HDS platform technology across a broad set of cancer types, indicating potential for future market expansion[4]. - The company is exploring market expansion opportunities through collaborations and partnerships in the oncology space[20]. - Future guidance indicates a strong pipeline with multiple upcoming product launches aimed at addressing unmet medical needs[20]. - The company anticipates a significant market expansion potential in the U.S. with an estimated upside of over $1 billion per year due to the incidence of primary/metastatic liver cancers[43]. - The company has received FDA IND clearance for a Phase 2 trial initiation planned for 2025, targeting a potential future opportunity of 30,000 patients[43]. - The company plans to address three line liver-dominant metastatic patient trials, enhancing its research and development pipeline[43]. Treatment Efficacy and Patient Outcomes - The company reported a 30% reduction in target lesion tumor burden, indicating significant treatment efficacy[17]. - The best overall response rate (BOR) in the pivotal trial was 200 patients, with a complete response rate of 91%[18]. - Approximately 800 patients are potentially eligible for treatment with the HEPAZATOKIT label, indicating a substantial market opportunity[20]. - The company reported a median Progression-Free Survival (PFS) of 12.8 months with a 1-year PFS rate of 54.7% compared to 8.3 months and 15.8% for the control group, respectively[41]. - The median Overall Survival (OS) was 23.1 months with a 1-year OS rate of 82.8%, while the control group had a median OS of 19.6 months and a 1-year OS rate of 82.2%[41]. - The historical benchmark for checkpoint combination therapy in metastatic uveal melanoma shows an overall response rate (ORR) of 15% and median OS of 16 months, indicating the company's treatment is performing significantly better[41]. - The company reported a median duration of response (DOR) of 14.0 months and a median overall survival (OS) of 20.5 months in its recent trials[51]. - HEPZATO may reduce immune tolerance effects in liver metastases, potentially enhancing the efficacy of immune-oncology therapies[35]. Patient Management and Treatment Accessibility - The company is focusing on expanding its patient population through targeted therapies, particularly in the liver-directed treatment segment[21]. - The initial screening and surveillance processes are being enhanced to improve patient outcomes and treatment decisions[21]. - The company aims to increase the frequency of screening among higher-risk patients, which constitutes about 50% of the patient population[21]. - The commercialization of HEPZATO KIT is set to begin with a J-Code assigned and active from April 1, 2024, and NTAP status approval expected by October 1, 2024[31]. - Delcath has engaged a hub service to assist with benefit verification and navigation for outpatient treatment[31]. - The company anticipates that the majority of patients will be treated as outpatients under Medicare guidelines[31]. Safety and Adverse Reactions - Adverse reactions related to study treatment occurred in ≥10% of patients, with thrombocytopenia at 64% and leukopenia at 44%[53]. - 55% of patients experienced grade 3 or 4 thrombocytopenia, while 34% experienced grade 3 or 4 leukopenia[53]. - Anemia was reported in 61% of patients, with 33% experiencing grade 3 or 4 anemia[53]. - Neutropenia occurred in 35% of patients, with 29% classified as grade 3 or 4[53]. - The side effect profile is similar to standard melphalan use, with most hematological side effects resulting from melphalan[53]. - Nausea and fatigue were reported in 47% and 43% of patients, respectively, with no grade 3 or 4 occurrences[53]. - The study included a total of 95 patients, indicating a significant sample size for evaluating adverse reactions[53]. - Blood bilirubin increased in 11% of patients, with 3% experiencing grade 3 or 4[53]. - Activated partial thromboplastin time was prolonged in 26% of patients, with 8% classified as grade 3 or 4[53]. - The overall safety profile suggests a need for careful monitoring of hematological parameters during treatment[53].