Company Quick10K Filing
Delcath Systems
Price0.11 EPS-1
Shares18 P/E-0
MCap2 P/FCF-0
Net Debt-16 EBIT-21
TEV-14 TEV/EBIT1
TTM 2019-09-30, in MM, except price, ratios
10-Q 2020-03-31 Filed 2020-05-14
S-1 2020-01-27 Public Filing
S-1 2020-01-13 Public Filing
10-K 2019-12-31 Filed 2020-03-25
10-Q 2019-09-30 Filed 2019-11-14
S-1 2019-08-21 Public Filing
10-Q 2019-06-30 Filed 2019-08-08
10-Q 2019-03-31 Filed 2019-07-17
10-K 2018-12-31 Filed 2019-06-14
10-Q 2018-09-30 Filed 2018-11-13
S-1 2018-08-15 Public Filing
10-Q 2018-06-30 Filed 2018-08-14
S-1 2018-06-12 Public Filing
S-1 2018-04-09 Public Filing
10-Q 2018-03-31 Filed 2018-05-10
10-K 2017-12-31 Filed 2018-03-16
10-Q 2017-09-30 Filed 2017-11-14
10-Q 2017-06-30 Filed 2017-08-08
10-Q 2017-03-31 Filed 2017-05-09
10-K 2016-12-31 Filed 2017-03-29
10-Q 2016-09-30 Filed 2016-11-10
10-Q 2016-06-30 Filed 2016-08-15
10-Q 2016-03-31 Filed 2016-05-04
10-K 2015-12-31 Filed 2016-03-18
10-Q 2015-09-30 Filed 2015-11-10
10-Q 2015-06-30 Filed 2015-08-05
10-Q 2015-03-31 Filed 2015-05-06
10-K 2014-12-31 Filed 2015-03-11
10-Q 2014-09-30 Filed 2014-11-05
10-Q 2014-06-30 Filed 2014-08-06
10-Q 2014-03-31 Filed 2014-05-07
10-K 2013-12-31 Filed 2014-03-12
10-Q 2013-09-30 Filed 2013-11-06
10-Q 2013-06-30 Filed 2013-08-06
10-Q 2013-03-31 Filed 2013-05-09
10-K 2012-12-31 Filed 2013-03-13
10-Q 2012-09-30 Filed 2012-11-07
10-Q 2012-03-31 Filed 2012-05-09
10-K 2011-12-31 Filed 2012-03-06
10-Q 2011-09-30 Filed 2011-11-09
10-Q 2011-06-30 Filed 2011-08-04
10-Q 2011-03-31 Filed 2011-05-05
10-K 2010-12-31 Filed 2011-03-08
10-Q 2010-09-30 Filed 2010-11-02
10-Q 2010-06-30 Filed 2010-07-29
10-Q 2010-03-31 Filed 2010-05-05
10-K 2009-12-31 Filed 2010-02-26
8-K 2020-06-11
8-K 2020-05-21
8-K 2020-05-18
8-K 2020-05-06
8-K 2020-05-06
8-K 2020-04-08
8-K 2020-03-11
8-K 2020-02-24
8-K 2020-02-14
8-K 2020-01-06
8-K 2019-12-17
8-K 2019-11-27
8-K 2019-11-21
8-K 2019-10-29
8-K 2019-10-17
8-K 2019-09-30
8-K 2019-09-17
8-K 2019-08-19
8-K 2019-08-15
8-K 2019-07-24
8-K 2019-07-15
8-K 2019-07-11
8-K 2019-06-06
8-K 2019-05-23
8-K 2019-05-09
8-K 2019-04-24
8-K 2019-04-19
8-K 2019-04-15
8-K 2019-04-10
8-K 2019-03-26
8-K 2019-02-11
8-K 2019-02-01
8-K 2019-01-18
8-K 2018-12-31
8-K 2018-12-28
8-K 2018-12-28
8-K 2018-12-27
8-K 2018-12-24
8-K 2018-12-17
8-K 2018-12-12
8-K 2018-11-05
8-K 2018-10-24
8-K 2018-10-17
8-K 2018-09-28
8-K 2018-09-26
8-K 2018-09-21
8-K 2018-08-31
8-K 2018-07-27
8-K 2018-07-20
8-K 2018-06-04
8-K 2018-04-21
8-K 2018-04-06
8-K 2018-04-03
8-K 2018-03-20
8-K 2018-03-13
8-K 2018-02-09
8-K 2018-01-25

DCTH 10Q Quarterly Report

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part Ii: Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2.Unregistered Sales of Equity Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Mine Safety Disclosures
Item 5. Other Information
Item 6. Exhibits
EX-31.1 dcth-ex311_8.htm
EX-31.2 dcth-ex312_7.htm
EX-32.1 dcth-ex321_9.htm
EX-32.2 dcth-ex322_6.htm

Delcath Systems Earnings 2020-03-31

Balance SheetIncome StatementCash Flow
0.10.10.0-0.0-0.1-0.12012201420172020
Assets, Equity
0.10.10.0-0.0-0.1-0.12013201520172019
Rev, G Profit, Net Income
0.10.10.0-0.0-0.1-0.12012201420172020
Ops, Inv, Fin

10-Q 1 dcth-10q_20200331.htm 10-Q dcth-10q_20200331.htm

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2020

Or

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to ____________

Commission File Number:  001-16133

 

DELCATH SYSTEMS, INC.

(Exact name of registrant as specified in its charter)

 

Delaware

 

06-1245881

(State or other jurisdiction of
incorporation or organization)

 

(I.R.S. Employer
Identification No.)

1633 Broadway, Suite 22C

New York, NY 10019

(Address of principal executive offices)

(212) 489-2100

(Registrant’s telephone number, including area code)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading Symbol(s)

 

Name of each exchange on which registered

Common stock

 

DCTH

 

The Nasdaq Capital Market

 

 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

 

Yes   No  

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act.

 

Yes   No  

 

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes   No   

Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No   

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.  See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer 

 

Accelerated filer

 

 

 

 

Non-accelerated filer   

 

Smaller reporting company

 

 

 

 

 

 

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Securities Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes   No

As of May 14, 2020, 2,760,401 shares of the Company’s common stock, $0.01 par value, were outstanding.

 

 

 

1


DELCATH SYSTEMS, INC.

Table of Contents

 

 

Page

PART I—FINANCIAL INFORMATION

 

 

 

 

Item 1.

Financial Statements (Unaudited)

 

 

Condensed Consolidated Balance Sheets as of March 31, 2020 and December 31, 2019

3

 

Condensed Consolidated Statements of Operations and Comprehensive Loss for the three months ended March 31, 2020 and 2019

4

 

Condensed Consolidated Statements of Stockholders’ Deficit for the three months ended March 31, 2020 and 2019

5

 

Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2020 and 2019

6

 

Notes to the Condensed Consolidated Financial Statements

7

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

15

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

18

Item 4.

Controls and Procedures

19

 

 

 

PART II—OTHER INFORMATION

 

 

 

 

Item 1.

Legal Proceedings

20

Item 1A. 

Risk Factors

20

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

20

Item 3.

Defaults upon Senior Securities

20

Item 4.

Mine Safety Disclosures

20

Item 5.

Other Information

20

Item 6.

Exhibits

21

 

 

 

SIGNATURES

22

 

 

 

 

 

 

2


DELCATH SYSTEMS, INC.

Condensed Consolidated Balance Sheets

(Unaudited)

(in thousands, except share and per share data)

 

 

 

March 31,

 

 

December 31,

 

 

 

2020

 

 

2019

 

Assets

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

4,540

 

 

$

10,002

 

Restricted cash

 

 

181

 

 

 

181

 

Accounts receivables, net

 

 

69

 

 

 

21

 

Inventories

 

 

790

 

 

 

654

 

Prepaid expenses and other current assets

 

 

2,642

 

 

 

1,759

 

Total current assets

 

 

8,222

 

 

 

12,617

 

Property, plant and equipment, net

 

 

867

 

 

 

735

 

Right-of-use assets

 

 

688

 

 

 

860

 

Total assets

 

$

9,777

 

 

$

14,212

 

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders' Deficit

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

Accounts payable

 

$

4,997

 

 

$

4,533

 

Accrued expenses

 

 

7,424

 

 

 

6,947

 

Lease liabilities, current portion

 

 

622

 

 

 

664

 

Warrant liability

 

 

 

 

 

3,368

 

Total current liabilities

 

 

13,043

 

 

 

15,512

 

Deferred revenue

 

 

2,672

 

 

 

2,860

 

Lease liabilities, long-term portion

 

 

67

 

 

 

197

 

Convertible notes payable, long-term

 

 

2,000

 

 

 

2,000

 

Total liabilities

 

 

17,782

 

 

 

20,569

 

 

 

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders' deficit

 

 

 

 

 

 

 

 

Preferred stock, $.01 par value; 10,000,000 shares authorized; 41,447 and 41,517 shares

   issued and outstanding at March 31, 2020 and December 31, 2019, respectively

 

 

 

 

 

 

Common stock, $.01 par value; 1,000,000,000 shares authorized; 72,773 and

   67,091 shares issued and outstanding at March 31, 2020 and

   December 31, 2019, respectively*

 

 

1

 

 

 

1

 

Additional paid-in capital

 

 

370,933

 

 

 

364,785

 

Accumulated deficit

 

 

(379,032

)

 

 

(371,171

)

Accumulated other comprehensive income

 

 

93

 

 

 

28

 

Total stockholders' deficit

 

 

(8,005

)

 

 

(6,357

)

Total liabilities and stockholders' deficit

 

$

9,777

 

 

$

14,212

 

 

 

 

 

 

 

 

 

 

* reflects, a one-for-seven hundred (1:700) reverse stock split effected on December 24, 2019.

 

See accompanying Notes to Condensed Consolidated Financial Statements.

 

 

 

3


DELCATH SYSTEMS, INC.

Condensed Consolidated Statements of Operations and Comprehensive Loss

(Unaudited)

(in thousands, except share and per share data)

 

 

Three months ended March 31,

 

 

2020

 

 

2019

 

Product revenue

$

176

 

 

$

90

 

Other revenue

 

118

 

 

 

180

 

Cost of goods sold

 

(78

)

 

 

(96

)

Gross profit

 

216

 

 

 

174

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

Research and development expenses

 

2,974

 

 

 

3,298

 

Selling, general and administrative expenses

 

2,316

 

 

 

2,549

 

Total operating expenses

 

5,290

 

 

 

5,847

 

Operating loss

 

(5,074

)

 

 

(5,673

)

 

 

 

 

 

 

 

 

Change in fair value of the warrant liability, net

 

(2,832

)

 

 

7

 

Interest expense

 

(56

)

 

 

(2,229

)

Other income

 

101

 

 

 

2

 

Net loss

$

(7,861

)

 

$

(7,893

)

Other comprehensive (loss) income:

 

 

 

 

 

 

 

Foreign currency translation adjustments

 

65

 

 

 

57

 

Total other comprehensive loss

$

(7,796

)

 

$

(7,836

)

 

 

 

 

 

 

 

 

Common share data:

 

 

 

 

 

 

 

Basic loss per common share*

$

(108.07

)

 

$

(75.11

)

Diluted loss per common share*

$

(108.07

)

 

$

(75.11

)

 

 

 

 

 

 

 

 

Weighted average number of basic shares outstanding*

 

72,740

 

 

 

105,084

 

Weighted average number of diluted shares outstanding*

 

72,740

 

 

 

105,084

 

 

 

 

 

 

 

 

 

* reflects, one-for-seven hundred (1:700) reverse stock split effected on December 24, 2019.

 

 

See accompanying Notes to Condensed Consolidated Financial Statements.

 

 

4


DELCATH SYSTEMS, INC.

Condensed Consolidated Statements of Stockholders’ Deficit

(Unaudited)

(in thousands, except share data)

 

 

 

Common Stock

 

 

Preferred Stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$0.01 Par Value

 

 

$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, 2020

 

 

67,091

 

 

$

1

 

 

 

41,517

 

 

$

 

 

$

364,785

 

 

$

(371,171

)

 

$

28

 

 

$

(6,357

)

Compensation expense for

   issuance of stock options

 

 

 

 

 

 

 

 

 

 

 

 

 

 

25

 

 

 

 

 

 

 

 

 

25

 

Compensation expense for

   issuance of restricted stock

 

 

2,717

 

 

 

 

 

 

 

 

 

 

 

 

30

 

 

 

 

 

 

 

 

 

30

 

Conversion of Preferred stock into common stock

 

 

2,915

 

 

 

 

 

 

(70

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fractional rounding related to reverse stock split

 

 

50

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Registration of Series E and Series E-1 Preferred stock and related warrants

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(106

)

 

 

 

 

 

 

 

 

(106

)

Fair value of warrants reclassified from liability to equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6,199

 

 

 

 

 

 

 

 

 

6,199

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(7,861

)

 

 

 

 

 

(7,861

)

Total comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

65

 

 

 

65

 

Balance at March 31, 2020

 

 

72,773

 

 

$

1

 

 

 

41,447

 

 

$

 

 

$

370,933

 

 

$

(379,032

)

 

$

93

 

 

$

(8,005

)

 

 

 

 

Common Stock Issued

 

 

Preferred Stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$0.01 Par Value

 

 

$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, 2019

 

 

14,715

 

 

$

 

 

 

101

 

 

$

 

 

$

329,065

 

 

$

(344,054

)

 

$

50

 

 

$

(14,939

)

Compensation expense for

   issuance of stock options

 

 

 

 

 

 

 

 

 

 

 

 

 

 

54

 

 

 

 

 

 

 

 

 

54

 

Compensation expense for

   issuance of restricted stock

 

 

20

 

 

 

 

 

 

 

 

 

 

 

 

4

 

 

 

 

 

 

 

 

 

4

 

Issuance of Series D Preferred Stock

 

 

 

 

 

 

 

 

15

 

 

 

 

 

 

150

 

 

 

 

 

 

 

 

 

150

 

Conversion of Series D Preferred Stock to Debt

 

 

 

 

 

 

 

 

(116

)

 

 

 

 

 

(1,160

)

 

 

 

 

 

 

 

 

(1,160

)

Exercise of pre-funded warrants

 

 

5,885

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(7,893

)

 

 

 

 

 

(7,893

)

Total comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

7

 

 

 

7

 

Balance at March 31, 2019

 

 

20,620

 

 

$

 

 

 

 

 

$

 

 

$

328,113

 

 

$

(351,947

)

 

$

57

 

 

$

(23,777

)

 

*reflects a one-for-seven hundred (1:700) reverse stock split effected on December 24, 2019.

 

See accompanying Notes to Condensed Consolidated Financial Statements.

 

 

 

5


 

DELCATH SYSTEMS, INC.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(in thousands)

 

 

 

Three months ended March 31,

 

 

 

2020

 

 

2019

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net loss

 

$

(7,861

)

 

$

(7,893

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

 

 

Stock option compensation expense

 

 

25

 

 

 

54

 

Restricted stock compensation expense

 

 

30

 

 

 

4

 

Depreciation expense

 

 

48

 

 

 

65

 

Amortization of right of use assets

 

 

172

 

 

 

 

Warrant liability fair value adjustment

 

 

2,832

 

 

 

(7

)

Non-cash interest income

 

 

(3

)

 

 

 

Interest expense accrued related to convertible notes

 

 

40

 

 

 

51

 

Debt discount amortization

 

 

 

 

 

2,160

 

Changes in assets and liabilities:

 

 

 

 

 

 

 

 

Decrease in prepaid expenses and other assets

 

 

(880

)

 

 

(108

)

Decrease in accounts receivable

 

 

(48

)

 

 

523

 

Decrease in inventories

 

 

(136

)

 

 

61

 

Decrease in accounts payable and accrued expenses

 

 

901

 

 

 

2,902

 

Deferred revenue

 

 

(188

)

 

 

(120

)

Principal payments on operating leases

 

 

(161

)

 

 

 

Decrease in other non-current liabilities

 

 

 

 

 

(462

)

Net cash used in operating activities

 

 

(5,229

)

 

 

(2,770

)

 

 

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Purchase of property, plant and equipment

 

 

(180

)

 

 

(2

)

Net cash (used in) investing activities

 

 

(180

)

 

 

(2

)

 

 

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Principal payments on financing leases

 

 

(11

)

 

 

 

Net proceeds from the issuance of debt

 

 

 

 

 

400

 

Net proceeds from sale of Series D Preferred Stock

 

 

 

 

 

150

 

Registration of Series E and Series E-1 Preferred stock and related warrants

 

 

(106

)

 

 

 

Net cash (used in) provided by financing activities

 

 

(117

)

 

 

550

 

Foreign currency effects on cash

 

 

64

 

 

 

(30

)

Net (decrease) increase in cash and cash equivalents

 

 

(5,462

)

 

 

(2,252

)

 

 

 

 

 

 

 

 

 

Cash and cash equivalents:

 

 

 

 

 

 

 

 

Beginning of period

 

 

10,183

 

 

 

3,578

 

End of period

 

$

4,721

 

 

$

1,326

 

 

 

 

 

 

 

 

 

 

 

See accompanying Notes to Condensed Consolidated Financial Statements.


 

6


 

DELCATH SYSTEMS, INC.

Notes to the Condensed Consolidated Financial Statements

 

(1)

General

The unaudited interim condensed consolidated financial statements of Delcath Systems, Inc. (“Delcath” or the “Company”) as of and for the three months ended March 31, 2020 and 2019 should be read in conjunction with the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019 (the “Annual Report”), which was filed with the Securities Exchange Commission (the “SEC”) on March 25, 2020 and may also be found on the Company’s website (www.delcath.com). In these notes to the condensed consolidated financial statements the terms “us”, “we” or “our” refer to Delcath and its consolidated subsidiaries. 

Description of Business

 

Delcath Systems, Inc. is an interventional oncology company focused on the treatment of primary and metastatic liver cancers. Our investigational product—Melphalan Hydrochloride for Injection for use with the Delcath Hepatic Delivery System (“Melphalan/HDS”) —is designed to administer high-dose chemotherapy to the liver while controlling systemic exposure and associated side effects. In Europe, our system is commercially available under the trade name Delcath Hepatic CHEMOSAT® Delivery System for Melphalan (“CHEMOSAT”), where it has been used at major medical centers to treat a wide range of cancers of the liver.

 

Our clinical development program (“CDP”) for Melphalan/HDS is comprised of The FOCUS Clinical Trial for Patients with Hepatic Dominant Ocular Melanoma (the “FOCUS Trial”), a global registration clinical trial that is investigating objective response rate in mOM, and the ALIGN Trial, a global Phase 3 clinical trial for ICC (the “ALIGN Trial”). Our CDP also includes a registry for CHEMOSAT commercial cases performed in Europe and sponsorship of select investigator-initiated trials (“IITs”).

 

The recent outbreak of a novel strain of coronavirus (COVID-19) has had an impact on our ability to monitor data at our clinical trial sites and is likely to cause a decline in product revenue for the forseeable future as many hospitals are prioritizing the treatment of patients diagnosed with COVID-19. This situation is rapidly changing and additional impacts to the business may arise that we are not aware of currently. The ultimate impact of the pandemic on the Company’s results of operations, financial position, liquidity or capital resources cannot be reasonably estimated at this time.

Liquidity

The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. We anticipate incurring losses until such time, if ever, that it can generate significant sales. As discussed in Note 13, in May 2020 we consummated an underwritten public offering resulting in gross proceeds of approximately $22.0 million.  We expect that the proceeds of the offering and our existing cash resources will be sufficient to fund our expected operations through the second quarter of 2021. We may need to raise additional capital in the future to support our operations.  We expect that any such financing activity will involve the public or private offering of our equity and/or equity-related securities. If we are unable to obtain sufficient capital to fund our operations, we would be required to curtail certain aspects of our operations or consider other means of obtaining additional financing, although there is no guarantee that we would be able to obtain the financing necessary to continue its operations.

Basis of Presentation

These interim condensed consolidated financial statements are unaudited and were prepared by the Company in accordance with generally accepted accounting principles in the United States of America (GAAP) and with the SEC’s instructions to Form 10-Q and Article 10 of Regulation S-X. They include the accounts of all entities controlled by Delcath and all significant inter-company accounts and transactions have been eliminated in consolidation.

The preparation of interim condensed consolidated financial statements requires management to make assumptions and estimates that impact the amounts reported. These interim condensed consolidated financial statements reflect all adjustments, consisting of normal recurring accruals, necessary for a fair presentation of the Company’s results of operations, financial position and cash flows for the interim periods ended March 31, 2020 and 2019; however, certain information and footnote disclosures normally included in our Annual Report have been condensed or omitted as permitted by GAAP. It is important to note that the Company’s results of operations and cash flows for interim periods are not necessarily indicative of the results of operations and cash flows to be expected for a full fiscal year or any interim period.

 

7


 

 

Significant Accounting Policies

A description of our significant accounting policies has been provided in Note 3 Summary of Significant Accounting Policies to the Consolidated Financial Statements included in the Company’s Annual Report filed for the fiscal year ended December 31, 2019.

Recently Issued Accounting Pronouncements

In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2019-12, Simplifying the Accounting for Income Taxes. The list of changes is comprehensive, however the changes will not significantly impact the Company due to the full valuation allowance that is recorded against the Company’s deferred tax assets. Early adoption of ASU 2019-12 is permitted, including adoption in any interim period for public business entities for periods for which financial statements have not yet been issued. An entity that elects to early adopt the amendments in an interim period should reflect any adjustments as of the beginning of the annual period that includes that interim period. Additionally, an entity that elects early adoption must adopt all the amendments in the same period. The Company will adopt ASU 2019-12 in 2021.

 

(2)

Restricted Cash

 

Cash and cash equivalents that are restricted as to withdrawal or use under the terms of certain contractual agreements are recorded in Restricted Cash on the balance sheets. Restricted cash does not include required minimum balances.

 

Cash, cash equivalents, and restricted cash balances were as follows:

 

 

 

March 31,

 

 

December 31,

 

(in thousands)

 

 

2020

 

 

 

2019

 

Cash and cash equivalents

 

$

4,540

 

 

$

10,002

 

Letters of credit

 

 

131

 

 

 

131

 

Security for credit cards

 

 

50

 

 

 

50

 

Total cash, cash equivalents and restricted cash shown in

   the statements of cash flows

 

$

4,721

 

 

$

10,183

 

 

 

 

(3)

Inventories

Inventories consist of the following:

 

 

 

March 31,

 

 

December 31,

 

(in thousands)

 

2020

 

 

2019

 

Raw materials

 

$

448

 

 

$

375

 

Work-in-process

 

 

342

 

 

 

279

 

Total inventories

 

$

790

 

 

$

654

 

 

 

(4)

Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consist of the following:

 

 

 

March 31,

 

 

December 31,

 

(in thousands)

 

2020

 

 

2019

 

Clinical trial expenses

 

$

1,497

 

 

$

725

 

Insurance premiums

 

 

423

 

 

 

589

 

Professional Service Fees

 

 

518

 

 

 

 

Other1

 

 

204

 

 

 

445

 

Total prepaid expenses and other current assets

 

$

2,642

 

 

$

1,759

 

 

1 Other consists of various prepaid expenses and other current assets, with no individual item accounting for more than 5% of prepaid expenses and other current assets at March 31, 2020 and December 31, 2019.

 

 

8


 

 

(5)

Property, Plant, and Equipment

Property, plant, and equipment consist of the following:

 

 

 

March 31,

 

 

December 31,

 

 

Estimated

(in thousands)

 

2020

 

 

2019

 

 

Useful Life

Buildings and land

 

$

634

 

 

$

589

 

 

30 years - Buildings

Enterprise hardware and software

 

 

1,763

 

 

 

1,739

 

 

3 years

Leaseholds

 

 

1,787

 

 

 

1,695

 

 

Lesser of lease term or estimated useful life

Equipment

 

 

1,032

 

 

 

1,025

 

 

7 years

Furniture

 

 

202

 

 

 

198

 

 

5 years

Property, plant and equipment, gross

 

 

5,418

 

 

 

5,246

 

 

 

Accumulated depreciation

 

 

(4,551

)

 

 

(4,511

)

 

 

Property, plant and equipment, net

 

$

867

 

 

$

735

 

 

 

 

Depreciation expense for the three months ended March 31, 2020 was approximately $0.1 million as compared to approximately $0.1 million for the same period in 2019.

 

 

(6)

Accrued Expenses

Accrued expenses consist of the following:

 

 

 

March 31,

 

 

December 31,

 

(in thousands)

 

2020

 

 

2019

 

Clinical Expenses

 

$

2,580

 

 

$

2,497

 

Compensation, excluding taxes

 

 

3,933

 

 

 

3,525

 

Professional fees

 

 

361

 

 

 

263

 

Other1

 

 

550

 

 

 

662

 

Total accrued expenses

 

$

7,424

 

 

$

6,947

 

 

1 Other consists of various accrued expenses, with no individual item accounting for more than 5% of current liabilities at March 31, 2020 and December 31, 2019.

 

(7)

Leases

The Company recognizes right-of-use (“ROU”) assets and lease liabilities when it obtains the right to control an asset under a leasing arrangement with an initial term greater than twelve months. The Company leases its facilities under non-cancellable operating and financing leases.

The Company evaluates the nature of each lease at the inception of an arrangement to determine whether it is an operating or financing lease and recognizes the ROU asset and lease liabilities based on the present value of future minimum lease payments over the expected lease term. The Company’s leases do not generally contain an implicit interest rate and therefore the Company uses the incremental borrowing rate it would expect to pay to borrow on a similar collateralized basis over a similar term in order to determine the present value of its lease payments.

 

The following table summarizes the Company’s operating and financing leases as of and for the three months ended March 31, 2020:

 

 

9


 

(in thousands)

 

US

 

 

Ireland

 

 

Total

 

Lease Cost

 

 

 

 

 

 

 

 

 

 

 

 

Operating lease cost

 

$

118

 

 

$

52

 

 

$

170

 

Financing lease cost

 

12

 

 

 

 

 

 

12

 

Sublease income

 

 

 

 

 

(43

)