Full Press Release Details
NOVEMBER 07, 2012 / 09:30PM GMT, DCTH - Q3 2012 Delcath Systems, Inc. Earnings Conference Call
CORPORATE PARTICIPANTS
Doug Sherk EVC Group, Incorporated - IR
Delcath Systems, Incorporated - CEO, President
Graham Miao Delcath Systems, Incorporated - EVP, CFO
CONFERENCE CALL PARTICIPANTS
Chris Lewis Roth Capital Partners - Analyst
Jason Mills Canaccord Genuity - Analyst
Securities - Analyst
Jason Butler JMP Securities - Analyst
Good day, ladies and gentlemen,
and welcome to the Third Quarter 2012 Delcath Systems, Inc. Earnings Conference Call. My name is Erica and I ll be your coordinator for today. (Operator Instructions) I would now like to turn the presentation over to your host for today s
call, Mr. Doug Sherk. Please proceed.
Doug Sherk. Thank you, Erica, and good afternoon, everyone. Thank you for joining us today for
this conference call and webcast to provide an update on Delcath s third quarter 2012 results and recent corporate progress.
the conference call will be made approximately will be available approximately two hours after the conclusion of today s call, and it will be available for seven days. The operator will provide replay details at the conclusion of
today s call. A live webcast of this call is available at www.Delcath.com, and the call will also be archived on the website.
begin, I d like to remind you that some of the statements made during this conference call will contain forward-looking statements within the meaning of the Safe Harbor provision of the US Private Securities Litigation Reform Act of 1995. These
statements are subject to certain risks and uncertainties, and actual results could differ materially from those projected in any forward-looking statements.
Factors that could cause actual results to differ are discussed from time to time in the Company s filings with the SEC, including our annual report on Form 10-K, and our reports on Form 10-Q and
8-K. These documents are available on the Investor Relations section of our website, and we encourage you to review the material. The Company has no obligation to publicly update or revise these forward-looking statements to reflect the events or
circumstances after the date they are made.
Participating on today s call are Eamonn Hobbs, President and Chief Executive Officer, and
Graham Miao, Executive Vice President and Chief Financial Officer. Following their opening remarks, we will open the call to questions from analysts and institutional investors. To maximize the time allowed for Q&A, please ask two questions, and
if you have additional questions, please re-queue to ask those additional questions. In advance, we thank you for your cooperation with this procedure.
And now, I d like to turn the call over to Mr. Hobbs.
Eamonn Hobbs - Delcath Systems,
Incorporated - CEO, President
Thanks, Doug, and good afternoon, everyone. Since our call with you in early August, the team at
Delcath has achieved several significant milestones. Most important of these was FDA acceptance of our new drug application for our proprietary chemosaturation system with Melphalan Hydrochloride for injection for substantive review. As we announced
recently, the FDA has designated a goal date of June 15, 2013. Acceptance of our NDA is the culmination of many months of work and we hope represents the first step towards U.S. commercialization.
NOVEMBER 07, 2012 / 09:30PM GMT, DCTH - Q3 2012 Delcath Systems, Inc. Earnings Conference Call
Also during the quarter, we continued to implement our launch in Europe, completing applications for
interim reimbursement in key markets and signing our exclusive distribution agreements in Italy and Spain. Recently, we also received regulatory approval for our Generation Two CHEMOSAT delivery system in Australia, and have satisfied all the
requirements to affix the CE mark to the hepatic CHEMOSAT delivery system device for intrahepatic arterial delivery and extracorporeal filtration of Doxorubicin in October 2012, which helps establish a pathway for regulatory approval in large key
These developments help lay the foundation for realizing the full potential of our system in the U.S. and other markets around
the world. After reviewing these achievements with you briefly, I will turn the call over to Graham for a review of our financial results.
I ll begin with the most important development for Delcath in many years, the FDA s acceptance of our NDA. This is a tremendously important
development, not only for Delcath but for the patients in the U.S. who have a critical need for our treatment. We look forward to working closely with the agency throughout the review process with the goal of securing approval of our application.
Our most important objective is to be able to provide patients in the U.S. with unresectable metastatic melanoma in the liver a new option for treating their disease.
The NDA was accepted with our generation two hemofiltration cartridge included as a technical change in the chemistry, manufacturing and control module of the NDA. Assuming our NDA is approved, this
potentially represents the rapid availability of Gen Two for U.S. patients we ve always hoped for, and will help enhance our launch of the system in the United States. Our NDA has been assigned a Prescription Drug User Fee Act or PDUFA goal
date of June 15, 2013. FDA also advised us that we should expect an Oncology Drug Advisory Committee, or ODAC, panel to be convened as part of the review process. No date has been set and we will announce the date once it has been determined.
While we work with the FDA on review of our application, we continue to move forward with our expanded access program in the United States.
As you know, the FDA accepted our amendments to our investigational new drug or IND application, and our EAP to include the Generation Two filter. These amendments permit physicians at select U.S. cancer centers to use the Generation Two system in
expanded access and compassionate use cases after they obtain institutional review board, or IRB, approval. We expect to enroll six centers under the EAP, all of which were phase three trial sites, one of which has already obtained IRB approval, and
the others are in various stages of their IRB approval process.
We are also working with each site to finalize the clinical trial agreements
necessary to begin treatments under the program and we continue to expect patient treatments under the EAP program to begin this fall. This program will play a valuable role in providing access to patients in urgent need of our treatment while our
NDA is under review.
As we said on our last call, the IND amendments also laid the groundwork for the use of the Generation Two system in the
clinical trials we have planned as part of our clinical development program, and it is our intention to use Gen Two in all upcoming prospective clinical trials.
Turning now to Europe, we are continuing to execute on our rollout plan. As we stated previously, revenues for this year are expected to be minimal and weighted towards our fourth quarter with sales
driven primarily by the centers we have activated so far and by third party distributors. Drivers continue to be the current status of reimbursement, which is critical to our commercialization efforts, and expanding our clinical experience. We
continue to address both elements in parallel.
On the reimbursement front, a concentrated effort is underway in three EU markets we believe
offer the quickest path to establishing reimbursement, namely Italy, German, and the U.K. In Italy, we learned this week that the CHEMOSAT procedure can be reimbursed under an existing diagnosis related group code, or DRG. This is highly significant
news in that we believe it provides us with our first national reimbursement mechanism for CHEMOSAT procedures in Europe, and these procedures are now eligible to be reimbursed in Italy. We believe the reimbursement under this code will be between
EUR11,000 and EUR16,000, depending on the region in Italy, and while not ideal we believe this provides a viable pathway to reimbursed procedures in Italy.
To potentially increase the level of reimbursement, we will continue to seek additional supplemental new technology payments and potentially pursue a new national DRG specific to CHEMOSAT.
In Germany, we have submitted two extraordinary insurance effort applications to date, and we and the sponsoring institution are awaiting response. These
are case by case applications for reimbursement. Additionally, 12 centers agreed to sponsor a new diagnostic and therapeutic methods application, or NUB, as it s known in Germany. The German Radiology Society has also agreed to sponsor that
An NUB is a specific reimbursement payment for a new technology treatment paid to the sponsoring hospitals. If approved, this
NUB application will be sufficient to provide referral coverage across Germany. We are hopeful that all of the reimbursement activity in Germany will lead to a positive response in the first quarter of next year and enable all German patients to be
covered for CHEMOSAT procedures.
NOVEMBER 07, 2012 / 09:30PM GMT, DCTH - Q3 2012 Delcath Systems, Inc. Earnings Conference Call
In the U.K., our lead centers are seeking to gain PCT, or primary care trust funding, which we hope will
be granted in Q1 of 2013. This would allow us to perform CHEMOSAT procedures in three to four key centers in the U.K. with referrals being made nationwide. The U.K. is currently reorganizing its healthcare system and our partner centers are
preparing to apply for reimbursement from a new national body in April. This will provide us with the opportunity to seek interim reimbursement for CHEMOSAT on a nationwide basis and it is worth pointing out that we are supported by key members of
this new national body.
Pursuit of reimbursement in other key European markets is continuing, but the timeframe for success in these markets
is a work in progress.
While we pursue reimbursement, we are seeking to build clinical experience by sponsoring investigator initiated
trials, or IITs, with leading EU key opinion leaders that have approached us to support new clinical research. Currently, we hope to initiate one IIT of CHEMOSAT with Melphalan in primary liver cancer or HCC at a major institution in Germany in the
first quarter of next year, and additional IITs are on the drawing board for centers in Spain, the Netherlands, and France for 2013.
addition to building our clinical case, these small trials help drive clinical experience at key centers, which we hope will facilitate wider usage once reimbursement mechanisms are working and become available.
In addition to IITs, we also expect to activate our EU patient registry by the end of this year. This registry will serve as a standardized safety and
efficacy database for up to 15 centers in all seven EU markets. Three of our initial launch and training centers are currently applying for ethical approvals and we expect that the first patient will be enrolled in the registry by the end of
Going forward, this registry will serve as a viable source of case studies and clinical outcomes and will further drive clinical
adoption. As we have communicated in the past, our EU commercialization strategy includes a mix of both direct sale channels by our own field force, and indirect sales channels through third party distributors. During the third quarter, we entered
into our first European third party distributor agreement with reputable companies in Italy and Spain, and we have already received the first distributor order for Italy. Of course, our ramp up in sales will continue to be dependent on the efforts
to gain clinical adoption and regional reimbursement. The existing DRG code for Italy I mentioned earlier will be of particular benefit in the near term, while we pursue additional supplemental new technology payments and-or a new, higher
reimbursing CHEMOSAT specific DRG in that country.
Turning to Symposia, at the Annual Meeting of the Cardiovascular and Interventional
Radiology Society for Europe, or CIRSE, held in Lisbon, Portugal in mid-September, physicians from Italy and Germany shared their experience with, and benefits of, the Generation Two CHEMOSAT in treating patients with cancers in the liver.
Specifically, they discussed CHEMOSAT s ability to directly treat the liver by addressing both visible tumors and micro metastases with higher dosing designed to improve tumor killing efficiency, thereby potentially allowing additional time to
treat disease outside the liver that is not imminently life threatening. Later that month at the Annual Congress of the European Society for Medical Oncology, or ESMO, in Vienna, Austria, leading clinicians presented findings from their experiences
in the use of CHEMOSAT and the potential role it may play in the management of European patients with cancers in the liver.
were well attended by clinicians throughout Europe and there is strong interest in offering patients the benefit of CHEMOSAT treatment.
Turning to other developments, we are pleased with the regulatory approvals we ve received in the recent weeks. In late October, we received
approval in Australia for our Generation Two CHEMOSAT delivery system device for intrahepatic arterial delivery with extracorporeal filtration with Melphalan. This approval is another significant milestone for Delcath since it represents our first
approval of the Generation Two system in the Pacific Rim and enhances our opportunity to address a market of potentially $50 million to $70 million. We are currently evaluating multiple exclusive distributor candidates to help develop the Australian
To support clinical adoption and eventually training of CHEMOSAT with Melphalan throughout the Pacific Rim, we plan to initiate an
IIT in primary liver cancer, or HCC, at Kobe University Hospital in Japan that we hope will eventually serve as our main training location for Asia.
As we announced recently, we have satisfied all of the requirements to affix the CE mark to the hepatic CHEMOSAT delivery system device for intrahepatic arterial delivery and extracorporeal filtration of
Doxorubicin. This helps establish a pathway for regulatory approval in large, key Asian markets. Doxorubicin is an established chemotherapeutic agent commonly used in Asia to treat hepatocellular carcinoma, or HCC, which is the most common primary
malignant tumor and is substantially more prevalent in Asia than western economies. Unlike Melphalan, the drug we used to launch CHEMOSAT in Europe and as part of our NDA in the U.S., Doxorubicin is approved and readily available in many Asian
With the CE mark for delivery system device for intrahepatic arterial delivery and extracorporeal filtration of Doxorubicin in hand,
we can now submit the product testing specifications to the Chinese State FDA for their evaluation by the end of 2012. In China, establishment of product testing standards would enable Delcath to import the CHEMOSAT system into China and use it in
human patients for clinical trials. At the same time, we believe the CE mark for the hepatic CHEMOSAT delivery system device for intrahepatic arterial delivery and extracorporeal filtration of Doxorubicin should help us advance partnership