
PART I—FINANCIAL INFORMATION This section presents the company's financial statements and management's discussion and analysis for the reporting period Item 1. Financial Statements This section presents the unaudited condensed consolidated financial statements and related notes Unaudited Condensed Consolidated Balance Sheets This statement provides a snapshot of the company's assets, liabilities, and equity at specific points in time Condensed Consolidated Balance Sheet Highlights | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | Change (in thousands) | % Change | | :-------------------------------- | :----------------------------- | :------------------------------- | :-------------------- | :------- | | Assets | | | | | | Cash and cash equivalents | $34,421 | $32,412 | $2,009 | 6.19% | | Short-term investments | $46,584 | $20,821 | $25,763 | 123.74% | | Total current assets | $113,482 | $73,760 | $39,722 | 53.85% | | Total assets | $116,876 | $76,589 | $40,287 | 52.60% | | Liabilities | | | | | | Total current liabilities | $10,435 | $6,144 | $4,291 | 69.84% | | Total liabilities | $11,890 | $7,843 | $4,047 | 51.60% | | Stockholders' Equity | | | | | | Total stockholders' equity | $104,986 | $68,746 | $36,240 | 52.72% | - Total assets increased by $40.3 million (52.6%) from December 31, 2024, to June 30, 2025, primarily driven by a significant increase in short-term investments and cash and cash equivalents11 - Total stockholders' equity increased by $36.2 million (52.7%) over the six-month period, reflecting net income and additional paid-in capital11 Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income and Loss This statement details the company's revenues, expenses, and net income or loss over specific periods Condensed Consolidated Statements of Operations Highlights (Three Months Ended June 30) | Metric (in thousands) | 2025 | 2024 | Change | % Change | | :-------------------------------- | :----- | :----- | :----- | :------- | | Product revenue | $24,156 | $7,766 | $16,390 | 211.05% | | Gross profit | $20,838 | $6,247 | $14,591 | 233.58% | | Operating income (loss) | $2,590 | $(3,912) | $6,502 | -166.21% | | Net income (loss) | $2,697 | $(13,741) | $16,438 | -119.63% | | Basic income (loss) per common share | $0.08 | $(0.48) | $0.56 | -116.67% | | Diluted income (loss) per common share | $0.07 | $(0.48) | $0.55 | -114.58% | Condensed Consolidated Statements of Operations Highlights (Six Months Ended June 30) | Metric (in thousands) | 2025 | 2024 | Change | % Change | | :-------------------------------- | :----- | :----- | :----- | :------- | | Product revenue | $43,940 | $10,905 | $33,035 | 302.93% | | Gross profit | $37,777 | $8,483 | $29,294 | 345.32% | | Operating income (loss) | $3,232 | $(14,190) | $17,422 | -122.78% | | Net income (loss) | $3,766 | $(24,852) | $28,618 | -115.15% | | Basic income (loss) per common share | $0.11 | $(0.93) | $1.04 | -111.83% | | Diluted income (loss) per common share | $0.09 | $(0.93) | $1.02 | -109.68% | - Product revenue for the three months ended June 30, 2025, increased by 211.05% to $24.2 million, and for the six months ended June 30, 2025, increased by 302.93% to $43.9 million, compared to the same periods in 202413 - The company reported net income of $2.7 million for the three months and $3.8 million for the six months ended June 30, 2025, a significant improvement from net losses of $(13.7) million and $(24.9) million, respectively, in the prior year periods13 Unaudited Condensed Consolidated Statements of Stockholders' Equity This statement tracks changes in the company's equity from various sources over specific periods Stockholders' Equity Changes (Six Months Ended June 30, 2025) | Item (in thousands) | Amount | | :-------------------------------- | :----- | | Balance at January 1, 2025 | $68,746 | | Compensation expense for stock options | $13,972 | | Compensation expense for ESPP | $100 | | Issuance of common stock (ESPP) | $238 | | Warrant Exercise - Series F | $16,158 | | Stock Option Exercise | $1,496 | | Net income | $3,766 | | Unrealized gain on investment adjustments | $296 | | Foreign currency translation adjustments | $214 | | Balance at June 30, 2025 | $104,986 | - Total stockholders' equity increased from $68.7 million at January 1, 2025, to $105.0 million at June 30, 2025, driven by net income, stock-based compensation, and proceeds from warrant and stock option exercises16 - Common stock shares outstanding increased from 33,061,002 at January 1, 2025, to 34,955,974 at June 30, 2025, primarily due to warrant and stock option exercises16 Unaudited Condensed Consolidated Statements of Cash Flows This statement summarizes the cash inflows and outflows from operating, investing, and financing activities Condensed Consolidated Statements of Cash Flows Highlights (Six Months Ended June 30) | Cash Flow Activity (in thousands) | 2025 | 2024 | Change | | :-------------------------------- | :----- | :----- | :----- | | Net cash provided by (used in) operating activities | $9,496 | $(14,035) | $23,531 | | Net cash (used in) provided by investing activities | $(25,563) | $14,944 | $(40,507) | | Net cash provided by financing activities | $17,892 | $1,167 | $16,725 | | Net increase in total cash | $2,009 | $2,086 | $(77) | | End of period cash and cash equivalents | $34,421 | $14,782 | $19,639 | - Net cash provided by operating activities significantly improved to $9.5 million for the six months ended June 30, 2025, compared to $14.0 million used in the same period in 202420 - Cash flows from investing activities shifted from a net inflow of $14.9 million in 2024 to a net outflow of $25.6 million in 2025, primarily due to increased purchases of investments20 - Net cash provided by financing activities increased substantially to $17.9 million in 2025 from $1.2 million in 2024, mainly driven by proceeds from warrant exercises20 Notes to the Unaudited Condensed Consolidated Financial Statements These notes provide detailed explanations of the accounting policies and specific financial statement items (1) General This note provides an overview of Delcath Systems, Inc., its primary business focus on interventional oncology with its lead product HEPZATO KIT and CHEMOSAT, and assesses the company's liquidity - Delcath's lead product, HEPZATO KIT, received FDA approval on August 14, 2023, for uveal melanoma with unresectable hepatic metastases, with its first commercial use in January 202423 - The company is conducting Phase 2 clinical trials for HEPZATO in liver-dominant metastatic colorectal cancer (IND cleared December 2024, patient enrollment H2 2025) and liver-dominant metastatic breast cancer (IND cleared April 2025, patient enrollment Q4 2025)283031 - As of June 30, 2025, the company had $34.4 million in cash and cash equivalents and $46.6 million in short-term investments, believing these resources are sufficient for at least 12 months of operations3738 (2) Revenue This note details the company's revenue recognition policies for HEPZATO KIT in the US and CHEMOSAT in Europe, provides a breakdown of product revenue, and highlights customer concentration Revenue by Product (in thousands) | Product | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | CHEMOSAT | $1,656 | $1,196 | $3,417 | $2,327 | | HEPZATO KIT | $22,500 | $6,570 | $40,523 | $8,578 | | Total revenue | $24,156 | $7,766 | $43,940 | $10,905 | - HEPZATO KIT revenue saw substantial growth, increasing from $6.6 million to $22.5 million (242.5%) for the three months ended June 30, 2025, and from $8.6 million to $40.5 million (372.4%) for the six months ended June 30, 2025, compared to the prior year49 - The company entered into the National Drug Rebate Agreement (NDRA) with CMS, subjecting it to Medicaid rebates, Pharmaceutical Pricing Agreement (PPA) for 340B pricing, and a master agreement with the U.S. Department of Veterans Affairs (VA) for Federal Ceiling Price sales, effective July 1, 202551 (3) Investments This note summarizes the company's marketable debt securities, classified as available-for-sale and carried at fair value Marketable Securities (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :------------------------ | :------------ | :---------------- | | Amortized Cost | $46,153 | $20,686 | | Gross Unrealized Gains | $431 | $135 | | Estimated Fair Value | $46,584 | $20,821 | - The fair value of short-term investments, primarily U.S. government agency bonds, increased significantly from $20.8 million at December 31, 2024, to $46.6 million at June 30, 20255253 (4) Inventory This note provides a breakdown of the company's inventory, including raw materials, work-in-process, and finished goods Inventory Breakdown (in thousands) | Category | June 30, 2025 | December 31, 2024 | | :--------------- | :------------ | :---------------- | | Raw materials | $7,227 | $3,849 | | Work-in-process | $2,339 | $2,260 | | Finished goods | $957 | $824 | | Total inventory | $10,523 | $6,933 | - Total inventory increased by $3.6 million (51.8%) from $6.9 million at December 31, 2024, to $10.5 million at June 30, 2025, primarily due to an increase in raw materials54 - Approximately $0.6 million in finished goods were held on consignment at hospitals and treatment centers as of June 30, 202554 (5) Prepaid Expenses and Other Current Assets This note details the components of prepaid expenses and other current assets, highlighting significant increases in clinical trial expenses and professional services Prepaid Expenses and Other Current Assets (in thousands) | Category | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :---------------- | | Clinical trial expenses | $2,405 | $222 | | Professional services | $1,249 | $762 | | Interest receivable | $448 | $125 | | Total prepaid expenses and other current assets | $6,118 | $2,704 | - Prepaid expenses and other current assets more than doubled, increasing from $2.7 million at December 31, 2024, to $6.1 million at June 30, 2025, largely driven by a significant rise in prepaid clinical trial expenses55 (6) Property, Plant, and Equipment This note outlines the company's property, plant, and equipment, net of accumulated depreciation, and provides estimated useful lives for various asset categories Property, Plant, and Equipment, Net (in thousands) | Category | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :---------------- | | Property, plant and equipment, gross | $7,504 | $6,744 | | Accumulated depreciation | $(5,103) | $(4,954) | | Property, plant and equipment, net | $2,401 | $1,790 | - Net property, plant, and equipment increased by $0.6 million (34.1%) from $1.8 million at December 31, 2024, to $2.4 million at June 30, 202556 (7) Accrued Expenses This note details the composition of accrued expenses, including clinical expenses, compensation, professional fees, and inventory-related accruals Accrued Expenses (in thousands) | Category | June 30, 2025 | December 31, 2024 | | :------------------------ | :------------ | :---------------- | | Clinical expenses | $1,095 | $615 | | Compensation, excluding taxes | $2,891 | $3,471 | | Professional fees | $305 | $57 | | Total accrued expenses | $5,603 | $5,078 | - Total accrued expenses increased by $0.5 million (10.3%) from $5.1 million at December 31, 2024, to $5.6 million at June 30, 2025, primarily due to higher clinical expenses and professional fees57 (8) Leases This note describes the company's operating lease arrangements for facilities in the U.S. and Ireland, including the Queensbury Lease initiated in January 2024 Operating Lease Liabilities (in thousands) | Category | U.S. | Ireland | Total | | :-------------------------------------------------------------------------------- | :----- | :------ | :------ | | Operating lease liabilities included in the condensed consolidated balance sheets at June 30, 2025 | $944 | $49 | $993 | - The company entered into a new Queensbury Lease in January 2024 for manufacturing and office space in New York, with an annual rent expense of less than $0.2 million for a five-year term61 - Total operating lease liabilities were $993 thousand as of June 30, 2025, with remaining maturities totaling $1.37 million before present value discount62 (9) Stockholders' Equity This note details changes in stockholders' equity, including public and private placements, authorized and outstanding shares, and equity incentive plans - As of June 30, 2025, 34,955,974 shares of common stock were issued and outstanding, compared to 33,061,002 shares at December 31, 202411 - The company has a 2020 Omnibus Equity Incentive Plan with 9,325,000 shares reserved, of which 2,382,636 shares remained available for issuance as of June 30, 202569 Stock Option Activity (Six Months Ended June 30, 2025) | Metric | Number of Options | Weighted Average Exercise Price Per Share | | :-------------------------- | :---------------- | :---------------------------------------- | | Outstanding at January 1, 2025 | 5,766,927 | $7.23 | | Granted | 2,632,163 | $15.76 | | Exercised | (243,684) | $6.14 | | Outstanding at June 30, 2025 | 8,082,243 | $10.01 | Share-Based Compensation Expense (in thousands) | Category | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Selling, general and administrative | $4,718 | $1,930 | $9,247 | $3,971 | | Research and development | $1,773 | $895 | $3,341 | $1,543 | | Cost of goods sold | $718 | $244 | $1,484 | $500 | | Total | $7,209 | $3,069 | $14,072 | $6,014 | (10) Net Income (Loss) per Share This note explains the calculation of basic and diluted net income (loss) per share, providing a reconciliation of weighted average shares outstanding Weighted Average Shares Outstanding (Six Months Ended June 30) | Metric | 2025 | 2024 | | :-------------------------------- | :----------- | :----------- | | Weighted average number of basic shares outstanding | 35,217,887 | 26,625,955 | | Weighted average number of diluted shares outstanding | 39,890,102 | 26,625,955 | - Basic EPS for the six months ended June 30, 2025, was $0.11, a significant improvement from $(0.93) in the prior year, reflecting the company's net income13 - Potentially dilutive securities, including common stock warrants, preferred stock, and stock options, totaling 2,818,739 for the six months ended June 30, 2025, were excluded from diluted EPS calculation as their effects were anti-dilutive80 (11) Income Taxes This note addresses the company's income tax provision, valuation allowance against deferred tax assets, and the impact of recent tax legislation - The company recorded an income tax provision of $0.7 million for the six months ended June 30, 2025, compared to no provision in the same period of 202481 - The company maintains a valuation allowance against the full amount of its net deferred tax assets82 - The recently signed One Big Beautiful Bill (OBBB) is being evaluated for its impact on future financial statements, particularly regarding the full expensing of U.S. research and development costs and changes to Section 163(j) taxable income base8586 (12) Commitments and Contingencies This note details the company's commitments and contingencies, including the settlement of the medac matter, manufacturing and supply agreements, and clinical trial support - The company has an estimated remaining fair value of $0.8 million for the medac settlement as of June 30, 2025, with $0.2 million recorded as accrued expenses and $0.6 million as non-current other liabilities89 - A Supply Agreement with Synerx Pharma, LLC and Mylan Teoranta for melphalan was extended through December 31, 2028, with $2.1 million of melphalan received in 202590 - The company has made $2.3 million in deposits for clinical trial support, including a Clinical Research Organization (CRO) engagement for Phase 2 trials in mCRC and HER2-negative mBC91 (13) Fair Value Measurements This note describes the company's fair value measurements, classifying financial assets and liabilities into Level 1, Level 2, and Level 3 categories Fair Value Measurements (in thousands) - June 30, 2025 | Category | Level 1 | Level 2 | Level 3 | Total | | :------------------------ | :------ | :------ | :------ | :------ | | Assets: | | | | | | Money market funds | $8 | — | — | $8 | | U.S. government agency bonds | — | $46,584 | — | $46,584 | | Total Assets | $8 | $46,584 | — | $46,592 | | Liabilities: | | | | | | Contingent Liability | — | — | $802 | $802 | | Total Liabilities | — | — | $802 | $802 | - The contingent liability related to the medac settlement, classified as Level 3, had a balance of $802 thousand at June 30, 2025, down from $974 thousand at January 1, 2025, due to liability payments and fair value adjustments94 (14) Segment Information This note states that the company operates as a single reportable segment focused on the research, development, manufacture, and distribution of hepatic delivery systems - Delcath Systems, Inc. operates as a single reportable segment, focusing on hepatic delivery systems for cancer treatment98 - The company's CODM, comprising the CFO, COO, CMO, and General Manager, assesses financial performance using consolidated gross profit and net income or loss98 (15) Subsequent Events The company has evaluated subsequent events through the date of this report and has not identified any recordable or disclosable events not already reported - No recordable or disclosable subsequent events were identified through the report date99 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the company's financial condition and results of operations Company Overview Delcath Systems, Inc. is an interventional oncology company focused on liver cancer treatments, with its lead product HEPZATO KIT and advancing Phase 2 clinical trials - HEPZATO KIT received FDA approval on August 14, 2023, for uveal melanoma with unresectable hepatic metastases, with the first commercial use in January 2024105 - The company's IND for a Phase 2 clinical trial evaluating HEPZATO in liver-dominant metastatic colorectal cancer was cleared by the FDA in December 2024, with patient enrollment expected in the second half of 2025. The estimated total addressable market for this indication is 6,000 to 10,000 patients annually in the U.S113 - The IND for a Phase 2 clinical trial of HEPZATO in liver-dominant HER2-negative metastatic breast cancer was cleared by the FDA on April 28, 2025, with patient enrollment expected in Q4 2025. Approximately 7,000 patients annually in the U.S. are candidates for third-line treatment in this population114115 Results of Operations The company experienced substantial financial improvement for the three and six months ended June 30, 2025, driven by significant increases in product revenue and improved profitability Key Financial Results (in thousands) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | | Total revenues | $24,156 | $7,766 | $43,940 | $10,905 | | Gross profit | $20,838 | $6,247 | $37,777 | $8,483 | | Operating income (loss) | $2,590 | $(3,912) | $3,232 | $(14,190) | | Net income (loss) | $2,697 | $(13,741) | $3,766 | $(24,852) | - Total revenue for the six months ended June 30, 2025, increased by 302.9% to $43.9 million, compared to $10.9 million in the same period of 2024, primarily due to the commercial expansion of HEPZATO in the U.S. and CHEMOSAT in Europe118119 - Research and development expenses increased to $11.9 million for the six months ended June 30, 2025, from $7.1 million in 2024, driven by expanding the clinical team and initiating Phase 2 trials for mCRC and mBC118121 - Selling, general and administrative expenses rose to $22.7 million for the six months ended June 30, 2025, from $15.6 million in 2024, due to continued commercial expansion activities and increased personnel-related share-based compensation118122 Liquidity and Capital Resources The company's liquidity significantly improved, with cash and short-term investments totaling $81.0 million at June 30, 2025, and sufficient resources for at least the next 12 months Liquidity Position (in millions) | Metric | June 30, 2025 | December 31, 2024 | | :------------------------ | :------------ | :---------------- | | Cash and cash equivalents | $34.4 | $32.4 | | Short-term investments | $46.6 | $20.8 | | Total cash and investments | $81.0 | $53.2 | - Cash provided by operating activities was $9.5 million for the six months ended June 30, 2025, a significant improvement from $14.0 million used in operating activities during the same period in 2024124125 - The company has capital commitments of $10.4 million over the next twelve months, including accounts payable, accrued expenses, current lease liabilities, and current medac settlement127 - A universal shelf registration statement on Form S-3, effective August 5, 2024, allows the company to offer and sell up to $150 million in various securities128 Critical Accounting Estimates There have been no material changes to the company's critical accounting estimates as reported in its Annual Report on Form 10-K filed on March 6, 2025 - No material changes to critical accounting estimates since the 2024 Annual Report on Form 10-K130 Application of Critical Accounting Policies There were no material changes to the company's critical accounting policies as reported in its Annual Report on Form 10-K - No material changes to critical accounting policies since the 2024 Annual Report131 Item 3. Quantitative and Qualitative Disclosures About Market Risk This item is not required for the company - This disclosure item is not required for the company132 Item 4. Controls and Procedures Management concluded the company's disclosure controls and procedures were effective as of June 30, 2025, with no material changes in internal control over financial reporting - The company's disclosure controls and procedures were deemed effective as of June 30, 2025134 - No material changes in internal control over financial reporting occurred during the six months ended June 30, 2025136 PART II—OTHER INFORMATION This section covers legal proceedings, risk factors, and other disclosures not included in the financial statements Item 1. Legal Proceedings The company is subject to claims in the ordinary course of business, which could result in litigation - Claims are made against the company in the ordinary course of business, which could lead to litigation139 - Details on the medac matter are provided in Note 12, 'Commitment and Contingencies - medac Matter'140 Item 1A. Risk Factors This section updates the company's risk factors, including those related to governmental pricing and tax laws - Failure to comply with reporting and payment obligations under governmental pricing programs (Medicaid Drug Rebate Program, 340B program, VA/FSS pricing) could result in penalties, sanctions, and fines143144146 - Changes in healthcare law and implementing regulations, such as the One Big Beautiful Bill (OBBB) and the Inflation Reduction Act (IRA), could significantly impact the company's business by reducing Medicaid spending, affecting Medicare drug price negotiations, and altering access to health insurance150151152 - New or changed tax laws, including the OBBB's restoration of R&D expensing, could adversely affect the company's business operations and financial performance155 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This item is not applicable to the company for the reporting period - This item is not applicable156 Item 3. Defaults Upon Senior Securities This item is not applicable to the company for the reporting period - This item is not applicable157 Item 4. Mine Safety Disclosure This item is not applicable to the company for the reporting period - This item is not applicable158 Item 5. Other Information During the three months ended June 30, 2025, no Section 16 officers and directors adopted, modified, or terminated Rule 10b5-1 trading arrangements or non-Rule 10b5-1 trading arrangements - No Section 16 officers or directors adopted, modified, or terminated Rule 10b5-1 trading arrangements or non-Rule 10b5-1 trading arrangements during the three months ended June 30, 2025159 Item 6. Exhibits This section lists all exhibits filed with the Form 10-Q, including amendments to the Certificate of Incorporation, By-Laws, equity incentive plans, and certifications - Exhibits include various corporate governance documents (e.g., Certificate of Incorporation, By-Laws), equity incentive plans (2020 Omnibus Equity Incentive Plan, 2021 Employee Stock Purchase Plan, 2023 Inducement Plan), and certifications required by the Sarbanes-Oxley Act160 SIGNATURES The report is duly signed on behalf of Delcath Systems, Inc. by its Chief Executive Officer and Chief Financial Officer - The Form 10-Q was signed by Gerard Michel, Chief Executive Officer, and Sandra Pennell, Chief Financial Officer, on August 6, 2025166