Company Quick10K Filing
Quick10K
Delcath Systems
10-Q 2019-06-30 Quarter: 2019-06-30
10-Q 2019-03-31 Quarter: 2019-03-31
10-K 2018-12-31 Annual: 2018-12-31
10-Q 2018-09-30 Quarter: 2018-09-30
10-Q 2018-06-30 Quarter: 2018-06-30
10-Q 2018-03-31 Quarter: 2018-03-31
10-K 2017-12-31 Annual: 2017-12-31
10-Q 2017-09-30 Quarter: 2017-09-30
10-Q 2017-06-30 Quarter: 2017-06-30
10-Q 2017-03-31 Quarter: 2017-03-31
10-K 2016-12-31 Annual: 2016-12-31
10-Q 2016-09-30 Quarter: 2016-09-30
10-Q 2016-06-30 Quarter: 2016-06-30
10-Q 2016-03-31 Quarter: 2016-03-31
10-K 2015-12-31 Annual: 2015-12-31
10-Q 2015-09-30 Quarter: 2015-09-30
10-Q 2015-06-30 Quarter: 2015-06-30
10-Q 2015-03-31 Quarter: 2015-03-31
10-K 2014-12-31 Annual: 2014-12-31
10-Q 2014-09-30 Quarter: 2014-09-30
10-Q 2014-06-30 Quarter: 2014-06-30
10-Q 2014-03-31 Quarter: 2014-03-31
10-K 2013-12-31 Annual: 2013-12-31
8-K 2019-07-24 Officers, Other Events, Exhibits
8-K 2019-07-15 Enter Agreement, Sale of Shares, Other Events, Exhibits
8-K 2019-07-11 Enter Agreement, Sale of Shares, Shareholder Rights, Amend Bylaw, Other Events, Exhibits
8-K 2019-06-06 Enter Agreement, Off-BS Arrangement
8-K 2019-05-23 Enter Agreement, Off-BS Arrangement
8-K 2019-05-09 Enter Agreement, Off-BS Arrangement
8-K 2019-04-24 Enter Agreement, Off-BS Arrangement, Off-BS Arrangement
8-K 2019-04-19 Enter Agreement, Off-BS Arrangement
8-K 2019-04-15 Off-BS Arrangement
8-K 2019-04-10 Officers
8-K 2019-03-26 Enter Agreement, Other Events
8-K 2019-02-11 Other Events, Exhibits
8-K 2019-02-01 Sale of Shares, Officers, Exhibits
8-K 2019-01-18 Leave Agreement
8-K 2018-12-31 Enter Agreement, Sale of Shares
8-K 2018-12-28 Other Events
8-K 2018-12-27 Enter Agreement, Sale of Shares
8-K 2018-12-24 Enter Agreement, Sale of Shares
8-K 2018-12-17 Enter Agreement, Other Events
8-K 2018-12-12 Other Events
8-K 2018-11-05 Enter Agreement, Sale of Shares, Amend Bylaw, Exhibits
8-K 2018-10-24 Other Events, Exhibits
8-K 2018-10-17 Other Events
8-K 2018-09-28 Other Events
8-K 2018-09-26 Other Events, Exhibits
8-K 2018-09-21 Enter Agreement, Off-BS Arrangement, Sale of Shares
8-K 2018-08-31 Enter Agreement, Off-BS Arrangement, Sale of Shares, Exhibits
8-K 2018-07-27 Other Events
8-K 2018-07-20 Enter Agreement, Sale of Shares, Exhibits
8-K 2018-06-04 Enter Agreement, Off-BS Arrangement, Sale of Shares, Exhibits
8-K 2018-04-21 Amend Bylaw, Exhibits
8-K 2018-04-03 Accountant, Exhibits
8-K 2018-03-20 Officers, Exhibits
8-K 2018-03-13 Regulation FD, Other Events, Exhibits
8-K 2018-02-09 Other Events
8-K 2018-01-25 Other Events
UFS Domtar 2,940
HIFR Infrareit 928
CAC Camden National 712
FSTR Foster L B 232
PYDS Payment Data Systems 44
OPHC Optimumbank Holdings 7
ECR Eclipse Resources 0
BTOP Recall Studios 0
STBZ State Bank Financial 0
PSD Puget Energy 0
DCTH 2019-06-30
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_7.htm
EX-31.2 dcth-ex312_9.htm
EX-32.1 dcth-ex321_8.htm
EX-32.2 dcth-ex322_6.htm

Delcath Systems Earnings 2019-06-30

DCTH 10Q Quarterly Report

Balance SheetIncome StatementCash Flow

10-Q 1 dcth-10q_20190630.htm 10-Q dcth-10q_20190630.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 June 30, 2019

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

 

OTCQB

 

 

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 August 8, 2019, 18,277,807 shares of the Company’s common stock, $0.01 par value, were outstanding.

 

 

 

 


DELCATH SYSTEMS, INC.

Table of Contents

 

 

Page

PART I—FINANCIAL INFORMATION

 

 

 

 

Item 1.

Financial Statements (Unaudited)

 

 

Condensed Consolidated Balance Sheets as of June 30, 2019 and December 31, 2018

4

 

Condensed Consolidated Statements of Operations and Comprehensive Loss for the three and six months ended June 30, 2019 and 2018

5

 

Condensed Consolidated Statements of Stockholders’ Deficit for the three and six months ended June 30, 2019 and 2018

6

 

Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2019 and 2018

8

 

Notes to the Condensed Consolidated Financial Statements

9

Item 2.

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

18

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

38

Item 4.

Controls and Procedures

38

 

 

 

PART II—OTHER INFORMATION

 

 

 

 

Item 1.

Legal Proceedings

39

Item 1A. 

Risk Factors

39

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

39

Item 3.

Defaults upon Senior Securities

39

Item 4.

Mine Safety Disclosures

40

Item 5.

Other Information

40

Item 6.

Exhibits

41

 

 

 

SIGNATURES

42

 

 

 

 

 

 

3


DELCATH SYSTEMS, INC.

Condensed Consolidated Balance Sheets

(Unaudited)

(in thousands, except share and per share data)

 

 

 

June 30,

 

 

December 31,

 

 

 

2019

 

 

2018

 

Assets

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

352

 

 

$

2,516

 

Restricted cash

 

 

1,062

 

 

 

1,062

 

Accounts receivables, net

 

 

180

 

 

 

585

 

Inventories

 

 

687

 

 

 

858

 

Prepaid expenses and other current assets

 

 

664

 

 

 

898

 

Total current assets

 

 

2,945

 

 

 

5,919

 

Property, plant and equipment, net

 

 

805

 

 

 

925

 

Right-of-use assets

 

 

1,886

 

 

 

 

Total assets

 

$

5,636

 

 

$

6,844

 

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders' Deficit

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

Accounts payable

 

$

10,713

 

 

$

7,715

 

Accrued expenses

 

 

9,119

 

 

 

7,964

 

Notes payable, net of debt discount

 

 

9,838

 

 

 

 

Convertible notes payable, net of debt discount

 

 

523

 

 

 

2,038

 

Lease liabilities, current portion

 

 

1,050

 

 

 

 

Warrant liability

 

 

9

 

 

 

33

 

Total current liabilities

 

 

31,252

 

 

 

17,750

 

Deferred revenue

 

 

3,143

 

 

 

3,405

 

Lease liabilities, long-term portion

 

 

848

 

 

 

 

Other non-current liabilities

 

 

122

 

 

 

628

 

Total liabilities

 

 

35,365

 

 

 

21,783

 

 

 

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders' deficit

 

 

 

 

 

 

 

 

Preferred stock, $.01 par value; 10,000,000 shares authorized; no shares and 101 shares

   issued and outstanding at June 30, 2019 and December 31, 2018,

   respectively

 

 

 

 

 

 

Common stock, $.01 par value; 1,000,000,000 shares authorized; 18,277,807 and

   10,299,954 shares issued and outstanding at June 30, 2019 and December 31, 2018,

   respectively*

 

 

183

 

 

 

103

 

Additional paid-in capital

 

 

328,018

 

 

 

328,962

 

Accumulated deficit

 

 

(357,907

)

 

 

(344,054

)

Accumulated other comprehensive income

 

 

(23

)

 

 

50

 

Total stockholders' deficit

 

 

(29,729

)

 

 

(14,939

)

Total liabilities and stockholders' deficit

 

$

5,636

 

 

$

6,844

 

 

 

 

 

 

 

 

 

 

*reflects a one-for-five hundred (1:500) reverse stock split effected on May 2, 2018.

 

 

 

 

 

 

 

 

See accompanying Notes to Condensed Consolidated Financial Statements.

 

 

 

4


DELCATH SYSTEMS, INC.

Condensed Consolidated Statements of Operations and Comprehensive Loss

(Unaudited)

(in thousands, except share and per share data)

 

 

Three months ended June 30,

 

 

Six months ended June 30,

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Product revenue

$

221

 

 

$

858

 

 

$

311

 

 

$

1,560

 

Other revenue

 

191

 

 

 

 

 

 

371

 

 

 

 

Cost of goods sold

 

(172

)

 

 

(220

)

 

 

(268

)

 

 

(367

)

Gross profit

 

240

 

 

 

638

 

 

 

414

 

 

 

1,193

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative

 

2,653

 

 

 

2,641

 

 

 

5,203

 

 

 

5,007

 

Research and development

 

1,714

 

 

 

4,089

 

 

 

5,011

 

 

 

9,781

 

Total operating expenses

 

4,367

 

 

 

6,730

 

 

 

10,214

 

 

 

14,788

 

Operating loss

 

(4,127

)

 

 

(6,092

)

 

 

(9,800

)

 

 

(13,595

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Change in fair value of the warrant liability, net

 

10

 

 

 

2,513

 

 

 

17

 

 

 

17,209

 

Loss on issuance of financial instrument

 

(6

)

 

 

(2,826

)

 

 

(6

)

 

 

(2,826

)

Interest expense

 

(1,837

)

 

 

(248

)

 

 

(4,064

)

 

 

(251

)

Other income (expense)

 

1

 

 

 

(5

)

 

 

 

 

 

(10

)

Net (loss) income

$

(5,959

)

 

$

(6,658

)

 

$

(13,853

)

 

$

527

 

Other comprehensive (loss) income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustments

 

(23

)

 

 

(36

)

 

 

(74

)

 

 

(78

)

Other comprehensive (loss) income

$

(5,982

)

 

$

(6,694

)

 

$

(13,927

)

 

$

449

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common share data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic (loss) income per common share*

$

(0.08

)

 

$

(7.26

)

 

$

(0.19

)

 

$

0.67

 

Diluted loss per common share*

$

(0.08

)

 

$

(7.26

)

 

$

(0.19

)

 

$

(0.12

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of basic shares outstanding*

 

71,303,364

 

 

 

916,706

 

 

 

72,069,390

 

 

 

788,512

 

Weighted average number of diluted shares outstanding*

 

71,303,364

 

 

 

916,706

 

 

 

72,069,390

 

 

 

799,430

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

*reflects a one-for-five hundred (1:500) reverse stock split effected on May 2, 2018.

 

 

 

 

 

 

 

 

 

 

See accompanying Notes to Condensed Consolidated Financial Statements.

 

 

5


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, 2019

 

 

10,299,954

 

 

$

103

 

 

 

101

 

 

$

 

 

$

328,962

 

 

$

(344,054

)

 

$

50

 

 

$

(14,939

)

Compensation expense for

   issuance of stock options

 

 

 

 

 

 

 

 

 

 

 

 

 

 

54

 

 

 

 

 

 

 

 

 

54

 

Compensation expense for

   issuance of restricted stock

 

 

15,000

 

 

 

 

 

 

 

 

 

 

 

 

4

 

 

 

 

 

 

 

 

 

4

 

Issuance of Series D Preferred

  Stock

 

 

 

 

 

 

 

 

15

 

 

 

 

 

 

150

 

 

 

 

 

 

 

 

 

150

 

Retirement of Series D

  Preferred Stock

 

 

 

 

 

 

 

 

(116

)

 

 

 

 

 

(1,160

)

 

 

 

 

 

 

 

 

(1,160

)

Exercise of Pre-Funded Series D

  Warrants

 

 

4,119,500

 

 

 

41

 

 

 

 

 

 

 

 

 

(41

)

 

 

 

 

 

 

 

 

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(7,894

)

 

 

 

 

 

(7,894

)

Total comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

7

 

 

 

7

 

Balance at March 31, 2019

 

 

14,434,454

 

 

$

144

 

 

 

 

 

$

 

 

$

327,969

 

 

$

(351,948

)

 

$

57

 

 

$

(23,778

)

Compensation expense for

   issuance of stock options

 

 

 

 

 

 

 

 

 

 

 

 

 

 

75

 

 

 

 

 

 

 

 

 

75

 

Exercise of Pre-Funded Series D

  Warrants

 

 

3,779,353

 

 

 

38

 

 

 

 

 

 

 

 

 

(39

)

 

 

 

 

 

 

 

 

(1

)

Exchange of warrants

 

 

64,000

 

 

 

1

 

 

 

 

 

 

 

 

 

13

 

 

 

 

 

 

 

 

 

14

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(5,959

)

 

 

 

 

 

(5,959

)

Total comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(80

)

 

 

(80

)

Balance at June 30, 2019

 

 

18,277,807

 

 

$

183

 

 

 

 

 

$

 

 

$

328,018

 

 

$

(357,907

)

 

$

(23

)

 

$

(29,729

)

 

 

 

6


 

 

Common Stock Issued

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$0.01 Par Value

 

 

Treasury Stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

No. of Shares

 

 

Amount

 

 

No. of Shares

 

 

Amount

 

 

Additional Paid

in Capital

 

 

Accumulated

Deficit

 

 

Accumulated

Other

Comprehensive

Income (Loss)

 

 

Total

 

Balance at January 1, 2018

 

 

263,305

 

 

$

3

 

 

 

(1

)

 

$

(51

)

 

$

325,516

 

 

$

(324,832

)

 

$

42

 

 

$

678

 

Compensation expense for

   issuance of stock options

 

 

 

 

 

 

 

 

 

 

 

 

 

 

7

 

 

 

 

 

 

 

 

 

7

 

Compensation expense for

   issuance of restricted stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

14

 

 

 

 

 

 

 

 

 

14

 

Sale of common stock, net of

  expenses

 

 

668,854

 

 

 

6

 

 

 

 

 

 

 

 

 

4,245

 

 

 

 

 

 

 

 

 

4,251

 

   Fair value of warrants issued

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(18,306

)

 

 

 

 

 

 

 

 

(18,306

)

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

7,185

 

 

 

 

 

 

7,185

 

Total comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(34

)

 

 

(34

)

Balance at March 31, 2018

 

 

932,159

 

 

$

9

 

 

 

(1

)

 

$

(51

)

 

$

311,476

 

 

$

(317,647

)

 

$

8

 

 

$

(6,205

)

Compensation expense for

   issuance of stock options

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(47

)

 

 

 

 

 

 

 

 

(47

)

Compensation expense for

   issuance of restricted stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(95

)

 

 

 

 

 

 

 

 

(95

)

Sale of common stock, net of

  expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(41

)

 

 

 

 

 

 

 

 

(41

)

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(6,658

)

 

 

 

 

 

(6,658

)

Total comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(44

)

 

 

(44

)

Balance at June 30, 2018

 

 

932,159

 

 

$

9

 

 

 

(1

)

 

$

(51

)

 

$

311,293

 

 

$

(324,305

)

 

$

(36

)

 

$

(13,090

)

 

See accompanying Notes to Condensed Consolidated Financial Statements.

 

 

 

7


 

DELCATH SYSTEMS, INC.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(in thousands)

 

 

 

Six months ended June 30,

 

 

 

2019

 

 

2018

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net (loss) income

 

$

(13,853

)

 

$

527

 

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

 

 

 

 

 

 

 

 

Stock option compensation expense

 

 

129

 

 

 

(40

)

Restricted stock compensation expense

 

 

4

 

 

 

(81

)

Depreciation expense

 

 

122

 

 

 

236

 

Amortization of right of use assets

 

 

552

 

 

 

 

Warrant liability fair value adjustment

 

 

(17

)

 

 

(17,209

)

Non-cash interest income

 

 

 

 

 

(1

)

Loss on issuance of financial instrument

 

 

6

 

 

 

2,826

 

Interest expense accrued related to convertible notes

 

 

329

 

 

 

 

Debt discount amortization

 

 

3,444

 

 

 

238

 

Changes in assets and liabilities:

 

 

 

 

 

 

 

 

Prepaid expenses and other assets

 

 

232

 

 

 

318

 

Accounts receivable

 

 

404

 

 

 

(163

)

Inventories

 

 

143

 

 

 

43

 

Accounts payable and accrued expenses

 

 

3,827

 

 

 

3,985

 

Deferred revenue

 

 

(240

)

 

 

 

Other non-current liabilities

 

 

(504

)

 

 

44

 

Principal payments on leases

 

 

(540

)

 

 

 

Net cash used in operating activities

 

 

(5,962

)

 

 

(9,277

)

 

 

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Purchase of property, plant and equipment

 

 

(2

)

 

 

(39

)

Net cash used in investing activities

 

 

(2

)

 

 

(39

)

 

 

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Net proceeds from the issuance of debt

 

 

3,719

 

 

 

 

Net proceeds from sale of Series D Preferred Stock

 

 

150

 

 

 

 

Net proceeds from sale of common stock and warrants

 

 

 

 

 

4,210

 

Net proceeds from convertible debt financing

 

 

 

 

 

2,172

 

Net cash provided by financing activities

 

 

3,869

 

 

 

6,382

 

Foreign currency effects on cash, cash equivalents and restricted cash

 

 

(69

)

 

 

(45

)

Net decrease in cash, cash equivalents and restricted cash

 

 

(2,164

)

 

 

(2,979

)

 

 

 

 

 

 

 

 

 

Cash, cash equivalents and restricted cash:

 

 

 

 

 

 

 

 

Beginning of period

 

 

3,578

 

 

 

5,324

 

End of period

 

$

1,414

 

 

$

2,345

 

 

 

 

 

 

 

 

 

 

Supplemental non-cash financing activities:

 

 

 

 

 

 

 

 

Fair value of warrants issued

 

$

 

 

$

23,532

 

 

See accompanying Notes to Condensed Consolidated Financial Statements.


 

8


 

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 and six months ended June 30, 2019 and 2018 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, 2018 (the “Annual Report”), which was filed with the Securities Exchange Commission (the “SEC”) on June 14, 2019 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 primary research focus is on ocular melanoma liver metastases (“mOM”) and intrahepatic cholangiocarcinoma (“ICC”), a type of primary liver cancer, and certain other cancers that are metastatic to the liver. We believe the disease states we are investigating represent a multi-billion dollar global market opportunity and a clear unmet medical need.

 

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”).

Liquidity and Operating Matters

The accompanying interim condensed 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. The Company has incurred losses since inception and expects to continue incurring losses for the next several years. These losses, among other factors, raise substantial doubt about the Company’s ability to continue as a going concern.

The Company’s existence is dependent upon management’s ability to obtain additional funding sources or to enter into strategic alliances. There can be no assurance that the Company’s efforts will result in the resolution of the Company’s liquidity needs. The accompanying statements do not include any adjustments that might result should the Company be unable to continue as a going concern.

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, in the opinion of management, 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 June 30, 2019 and 2018; 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.

 

 

9


 

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, 2018.

Recently Adopted Accounting Pronouncements

In February 2018, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2018-02, Income Statement—Reporting Comprehensive Income (Topic 220). ASU 2018-02 allows a company to elect a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act. ASU 2018-02 is effective for periods beginning after December 15, 2018.  Upon adoption of ASU 2018-02, the Company did not elect to reclassify the tax effects of the Tax Cuts and Jobs Act from accumulated other comprehensive income to retained earnings, as the stranded tax effects were insignificant.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) effective January 1, 2019, electing the practical expedients and applying the transition provisions as of the effective date. Reporting periods beginning on or after January 1, 2019 are presented under Topic 842, while prior period amounts, as reported under previous GAAP, were not adjusted. The adoption of Topic 842 on January 1, 2019 did not have a significant impact on the Company’s consolidated results of operations or cash flows.

 

(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:

 

 

 

June 30,

 

 

December 31,

 

(in thousands)

 

 

2019

 

 

 

2018

 

Cash and cash equivalents

 

$

352

 

 

$

2,516

 

Letters of credit

 

 

1,012

 

 

 

1,012

 

Security for credit cards

 

 

50