Good morning, ladies and gentlemen, and welcome to the Velcat Systems Second Quarter 2026 Earnings Conference Call. At this time, online is in listen-only mode. Following the presentation, we will conduct a question-and-answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded on Thursday, August 6th, 2026. I would like to turn the conference over to Mr. David Hoffman, Velcat General Counsel. Please go ahead, sir.

Thank you, and welcome to Delcat System's second quarter 2026 earnings call. With me on the call are Gerard Michel, Chief Executive Officer, Sandra Pinnell, Chief Financial Officer, Kevin Muir, Chief Commercial Officer, Boyo Vukovic, Chief Medical Officer, and Martha Rook, Chief Operating Officer. This statement is made pursuant to the safe harbor for forward-looking statements described in the Private Securities Litigation Reform Act of 1995. The statements made on this call, with the exception of historical facts, may be considered forward-looking statements within the meaning of Section 27A, the Securities Act 1933, and Section 21E of the Securities Exchange Act of 1934. Although the company believes that expectations and assumptions reflected in these forward-looking statements are reasonable, it makes no assurance that such expectations will prove to have been correct. Full results may differ in a material manner from those expressed or implied in forward-looking statements due to various risk and uncertainties. For a discussion of such risk and uncertainties, which could cause actual results to differ from those expressed or implied in the forward-looking statements, please see risk factors detailed in the company's annual report on Form 10-K, those contained in filed quarterly reports on Form 10-Q, as well as in other reports that the company files from time to time with the Securities and Exchange Commission. Any forward-looking statements included in this call are made only as of the date of this call. We do not undertake any obligation to update or supplement any forward-looking statements to reflect subsequent knowledge, events, or circumstances. Press release with our second quarter 2026 results is available on our website under the Investors section and includes additional details. Our website also has our latest SEC filings, which we encourage you to review. The recording of today's call will be available on our website. Now, I would like to turn the call over to Gerard Michel. Gerard, please proceed.

Thank you for joining us today. Now well into our third year of commercial launch. We continue to deliver revenue growth and operate as a profitable business, supported by a platform with the potential to address larger patient populations well beyond metastatic uveal melanoma. We delivered a strong second quarter, driven by $27.2 million in Hipsado kit revenue, up 21% over the second quarter of 2025, a significant achievement given the introduction of 340B pricing in July of 2025. We activated two new treatment centers, bringing our total to 31, and sustained a healthy flow of new patients into our existing sites. Our commercial execution in metastatic uvm melanoma is now self-funding the investment needed to extend our liver-directed platform into other cancers where the liver is a dominant site of disease. We remain on track to activate approximately six additional centers by year-end, which would bring us to 37 active centers. We are not simply opening more centers, we are opening the right centers. Most of our targets are part of one of two overlapping groups of institutions. The first is National Comprehensive Cancer Network Member Institutions, or NCNN, an alliance of 34 leading cancer centers that help define oncology standards of care. The second is the National Cancer Institute's Comprehensive Care Centers, 58 institutions federally designated for excellence in cancer research, clinical trials, and multidisciplinary patient care. Today, approximately 80% of our active treatment centers hold NCI comprehensive designation. Nationally, we are now represented 41% of the 58 NCI comprehensive care centers and approximately half of the 34 NCCN member institutions. Our 2026 activations continued that pattern. This year, we added MD Anderson, UT Southwestern, Mayo Clinic Scottscale, the Knight Cancer Institute at OHSU, and the Herbert Irving Comprehensive Care Center at Columbia, all NCI comprehensive cancer centers, with MD Anderson, UT Southwestern, and Mayo Clinic, also NCCN member institutions. These are among the nation's leading referral destinations for complex oncology care and liver-directed therapy. By adding institutions with this level of academic influence and referral reach, we are building a network that supports both near-term growth and long-term leadership in metastatic QV melanoma and in the additional indications we intend to pursue. Beyond activating new centers, we are focused on increasing physician awareness and consideration of PHP for appropriate patients through targeted medical education, peer-to-peer engagement, and continued evidence generation. New patient starts remain solid in the second quarter, averaging approximately 0.5 new patients per site per month. Because patients typically receive a series of hepcidotreatments over up to three quarters, second quarter starts generate volume that blows into the back half of the year and support our full year revenue outlook. The data from the Chopin trial, a randomized phase two study published in the Lancet Mycology earlier this year, continues to accelerate broader adoption of combination approaches at leading centers. And at ASCO this year, investigators from MAPA Cancer Center presented a trials-in-progress abstract describing an ongoing Phase II study of Hepsado, followed by Keventefust in HLA-A2 positive patients with metastatic UV melanoma. We believe this and future planned combination therapy trials will be critical to moving hepcadal more consistently to a co-first-line setting. Turning to clinical development beyond metastatic uleum melanoma, we remain confident in hepcadal kit's potential in other liver-dominant cancers, and we continue to work with investigators to generate supporting data. At ESMO Breast Cancer in May 2026, independent investigators presented a retrospective analysis of 15 heavily pretreated patients with liver-dominant metastatic breast cancer treated with percutaneous hepatic refusion. Nine of the 15 patients showed a hepatic partial response, supporting further evaluation of this approach in that setting. Turning to our sponsored trials, in our sponsored Phase 2 trial in metastatic colorectal cancer, we now have 13 centers actively screening. Consistent with the acceleration we anticipated on our last call, recruitment has improved as we have added sites and applied specialized training and streamlined onboarding. We estimate that approximately 6,000 to 10,000 U.S. patients annually have liver-dominant disease in the third-line setting. In HER2-negative metastatic breast cancer, we recently dosed the first patient at the European Institute of Oncology in Milan. Six sites are activated in screening with additional sites in the activation process. We estimate a similar size addressable population in this indication. Beyond these two programs, we continue to evaluate additional liver-dominant indications through our Scientific Advisory Board and physician feedback. And we are preparing for pre-IND meetings with the FDA later this year to discuss new potential indications. Based on our first half of results and trends early in the third quarter, we are raising our full-year revenue guidance. Sandra will take you through the numbers and our updated outlook. Sandra?

Thank you, Gerard. Total revenue in the second quarter of 2026 is $29.1 million compared with $24.2 million in the second quarter of 2025. This includes $27.1 million of Hepsado kit revenue and $2 million of chemostat revenue. This represents 17% sequential Hepsado volume growth over the first quarter, and 30% volume growth versus the same period in 2025. Now, turning to 2026 guidance, we are increasing our full-year revenue guidance to range from $104 million to $108 million, which reflects at least a 28% growth in HEPS AutoCit volume over 2025. Our decision to raise guidance is driven primarily by first-half performance, particularly the pace of new patient starts. We've also modestly reduced the seasonal step-down we had assumed for the third and fourth quarters. A part of last year's seasonality came from centers operating with a single REM certified treatment team where staff absences translated directly into lost treatment capacity. We have since worked with centers to train backup teams, including some of our highest volume sites, which should ease that constraint. In addition, enrollment in ongoing clinical trials during 2025 reduced the number of patients available for our treatment. Growth margin for the quarter was 90% compared to 86% in the second quarter of 2025. We are guiding to full year 2026 growth margin between 86% to 89%, and we also expect to report positive adjusted EBITDA for the full year. Research and development expense in the second quarter was $10.4 million compared to $6.9 million in the prior quarter. Driven primarily by continued investment in our clinical organization and ongoing Phase II trials. Selling general and administrative expense in the second quarter was $13.4 million compared to $11.4 million in the prior year quarter, reflecting our investment into continued commercial expansion and increasing marketing activities. Net income for the second quarter in both 2026 and 2025 was $2.7 million. On a non-GAAP basis, adjusted EBITDA for the quarter with $7.6 million compared to $9.8 million in the second quarter of 2025. We ended the quarter with cash investments of $95.9 million, cash provided by operations with $5.7 million in the quarter, and we purchased a small amount of common shares in the second quarter under the company's approved $25 million shareback-byback program. To date, we have purchased approximately $9 million worth of common shares. I want to thank you all for participating today, and I'll ask the operator to open the line for Q&A. Thank you.

Thank you. Ladies and gentlemen, we're now beginning the question and answer session. If you'd like to ask a question, please press star, follow-up on number one on your telephone keypad. If your question has been answered and you'd like to withdraw from the queue, please press star, follow-up on number two. And if you're using a speakerphone, please lift your hands up before pressing any keys. One moment, please, while we compile the roster. The first question comes from Mary Thibault with Bancor BTIG. Please go ahead.

Thank you for taking the questions. I wanted to ask a question here just sort of on the referral pathway and some of the efforts I know that you've been making on the commercial side. So, you know, wanted to understand how the referral network efforts have been progressing. I know you've been working on for a few quarters. you know, are there ways to sort of describe, you know, the outreach that you've been making to the medical oncologist that is translating into incremental new patient starts? And then second, I'll just ask my follow-up here. I wanted to follow up. I think there was an effort to try to mitigate summer seasonality, get, you know, second treatment teams trained at various centers, just an update on how that has been progressing as well. Thanks for taking the questions.

Sure, Marie. Good to hear from you. In terms of the referral network, I would say about a third of the referral network is a static network, and that is within the institutions we are currently part of, any oncology networks that are part of that. So there, you know, we know who the oncologists are. They have, you know, a meaningful number of patients. Meaningful could be two, three, four, but on a relatively consistent basis. The other part of the referral network, and probably should be kind of called a just-in-time referral, are the many, many doctors who just get one patient. Now, many of those patients eventually make their way to one of our treating sites or one of our targeted sites that will open in the next one month to two years as we continue to expand. But many of those are not. And what we have to do is find them in real time if we want to get them first line, if we don't want to lose patients who progress too quickly. Our efforts there right now are multifaceted.

We lost you for a while, Gerard. We lost you for a minute.

Okay. All right. So where did you lose me, the perils of cell phones?

We were just past kind of talking about those folks that only see one patient. We got a little bit past that.

Right. So what we need to do is get a just-in-time network, which is kind of the term I'm using internally with the team. Now, right now, we're using claims data that lags, but we generally know patients who've been recently diagnosed. Recently could be anywhere from a month to six months given claims lags. And we try to get in front of those doctors a number of different ways. We'd like to do better than that. We're investigating the use of other forms of data that are refreshed more frequently. That's not in place yet, but we will get it in place. We recognize that we have, you know, a higher hill to climb in terms of execution than something like an Immunocore in that, you know, community oncologists can't use our product, but we have definitive plan. We are definitely working that right now, so we are actively finding patients about a recent biopsy and stuff, and we're working to improve that over time. It will be a core, it is and will be a core part of our strategy. Now, your second question was about training additional docs at centers. We've had several centers that I think our efforts led to backup teams. And, you know, at least one or more of those are very high volume centers that it was critical to do that in. I wouldn't say that we have backup teams everywhere we would like to, but a meaningful percentage of our volume now is covered by centers of backup teams.

Thank you so much.

Thank you. Your next question comes from John Newman with Caneco Genuity. Please go ahead.

Thanks for taking my question. Really nice execution on the quarter. I have a couple of questions here. So I'm curious as to how much of the increased guidance for the year could be related to better uptake due to the Chopin data. I'm also wondering if you can discuss your enrollment expectations for both colorectal and the breast cancer studies. And I'm wondering with those two studies, if you're able to utilize overlap between existing centers that are already using hepcadol for liver meds due to uveal melanoma.

All right. So first part of your question in terms of how much of the increase is from Chopin. And, you know, it's all anecdotal. The data, the claims data is rather thin. And for some reason, our claims data comes in very slow relative to other treatments. But our anecdotal experience is that more and more of these patients are getting combination therapy, and that's undoubtedly a result of the Chopin data. um in terms of site recruitment which i think was your third question uh i i we're not going to give guidance on that i think the only guidance we're going to give is that we expect an interim readout for colorectal uh sometime late next year and we're not providing guidance on breasts but we are encouraged by both an uptick of both trials in terms of site activation enrollment and there was a second question they're embarrassed to say i lost it could you remind me, John, what it was?

Sure. Just curious if you're able to utilize existing centers that are using Hepstato in terms of also signing them up for enrollment with breast and colorectal cancer.

Yeah, I would say the majority of centers in the U.S. already were part of, you know, already REMS activated for MUM. In Europe, it's a lower percentage. We're actually activating some new centers um can you guys hear me i got another message that audio dropped we can hear you okay all right um we also have a number of uh in europe it's a smaller number of percentage that percentage of centers that were among centers i'd say you know maybe 60 40 um existing centers and new centers in the trial okay great thank you thank you your next question comes from chase snickerbucker with Craig Holland.

Please go ahead.

Good morning. Congrats on a really nice quarter, and thanks for taking the questions. I just wanted to dig in a little bit more on kind of the implied kind of second half in your guidance. And so if we kind of look at that, you know, it assumes a pretty meaningful kind of slowdown still. You know, with that in mind, can you just maybe kind of talk through exactly when you started seeing that softness in kind of new patient starts last year? And then kind of what you've seen so far, you know, through July, early August, you know, have you seen any green shoots from some of the programs that you put in place to try to train additional treatment teams, et cetera?

Without going into specific numbers, I will say, Chase, that the bulk of our increase in guidance is due to an impressive first half of the year. We have tempered the downturn we expect in the second half, partly due to, frankly, less demand from clinical trials. And the second part is really just a two-week lead. We only have a two- to three-week, you know, vision idea of what's going to happen going forward. And it looks reasonably strong, so we've tempered, you know, know, the overall seasonality as well. But I would say the bulk of our increase in guidance is based on our performance in the first half of the year. And as you well know, new patient starts drive business, you know, over two to three more quarters. And so fair to say that we haven't seen, you know, to date, you know, the same kind of, you know, softness and new patient starts, um you know at least yet and then just kind of second um follow-up would just be kind of the visibility that you have to kind of center ads in the back half of the year here um you know kind of and how you're thinking about that year-end target yeah i'll ask kevin in a moment to comment on how we feel about the additional uh six centers um in terms of it's fair to say we haven't seen the softness yet this is about when we saw it last year kind of two week look forward at this point it dropped dramatically now we haven't seen that yet um but again i think i want to caution listeners that we don't have a very long um you know forward looking visibility into these things it's about two to three weeks this time last year we saw some softness in that two to three week period we're not seeing that quite yet but you know that's only two to three weeks.

Kevin? Yes, thanks, Gerard, and thanks for the question, Chase.

We are looking kind of strong for the number of new sites we're bringing on.

We kind of get them in bits and starts when training is completed, so we have a number of sites that are in the queue to get our preceptorship and proctorship and it's just a matter of time uh until they open for the remainder of the year so i feel very strong that we can uh obtain uh towards goal of 37 yeah our goal of 37 my friend the uh um i also would say i think we have at least one patient scheduled maybe two right now and then uh one more looking for patients now these can you know Patients can get scheduled, that one I mentioned, but these are on the cusp, and what we found is the on the cusp ones can go in weeks, they can go in months, but there's a healthy on-deck circle here. The 37 is well within our reach. Fingers crossed a bit, as we know it's episodic, but it's not a soft pipe culling.

Helpful culler, guys. Thank you.

Thank you. Your next question comes from Sam Pankula Ramakamp with H.C. Wainwright. Please go ahead.

Thank you. This is R.K. from H.C. Wainwright. Good morning, Gerard and Sandra. A couple of quick questions here. I'm trying to bridge the gap between the 30% that's out of volume growth and the 20 some percent revenue growth. So how much of that gap is from 340B or Medicaid or just the side mix? And the second question is on the gross margin, you know you have a you exited last quarter at 90% but your guidance asked for a little bit lower than that for the full year so is that basically coming from the top line or is there something else that's going on?

Sandra?

Yes I can answer both questions with regard to the Q2 volume as well as the revenue from prior year. So reminder that 340B pricing, which reduced our effective ASP from about 185 or down to about 170, 173,000 per kit this year versus what we recognized last year. So even though revenue is only up 21%, it's actually representative of a 30% volume. So 100% of that difference between those two figures is due to 340B. With regards to gross margin, yes, we had a great quarter in Q2, recognizing 90%, which is up from 86% a year ago and is above our original guidance of 85% to 87% for the full year. Now, the Q2 improvement reflects better overhead absorption, favorable manufacturing performance, and obviously increased HITS auto volume. As we go into the remainder of the year, we do have to be a bit conservative around additional manufacturing costs. So the full year is 86 to 89 percent. We may see a quarter that dips a little bit below that 90 percent and one that hits 90 percent again, but that's our current guide.

Thank you. Thank you, Sandra, for taking the questions.

Thank you.

Thank you. Your next Next question comes from Yael Jen with Lailo and Company. Please go ahead.

Good morning, and thanks for taking questions, and congrats on a good quarter performance. Just we have two here. The first one is that I noticed your recent deck in terms of the type of cancer that to the liver, you have about eight of them. and just curious initially why you choose the breast cancer and the DRC, given they are not necessarily the highest volume or other factors. Any thoughts of that when you made that decision?

And then I'll follow up. Yeah, that's a great question. And, you know, we started the conversations as to those two trials probably a good two years ago. And, you know, for CRC, there is a fair amount of – there's a large amount of liver-dominant cancer. It's one of the – it's probably the largest outside of primary. The setting we chose, third line, is not the largest. It's actually quite a bit cut down from the overall population of patients with liver-dominant cancer, CRC patients. But the reason we chose that, frankly, was when oncologists and, to a lesser extent, IRs who are fairly unfamiliar with our therapy, when we were having conversations about where to start, that's where we got traction. And so it was largely driven by Doc's willingness to participate. Now, I don't want people to think, well, that's a big negative. This is a very novel procedure. Oncologists generally prefer systemics, but I think the data as we generate it will bear out and oncologists will change their perception first in terms of trials they want to participate in and then eventually, obviously, actual commercial clinical usage. In terms of breast cancer, that one is a bit less, admittedly, but there was real interest in oncologists in terms of participating in that trial. Yes, we have, it's been slow to enroll and get started, but there were a couple of key KOLs who thought there was a real need here. Breast cancer, the various types of breast cancer tumors generally react well to chemotherapy, so that was one reason a number of docs were excited. But these were the starting sets where we could get traction with oncologists being interested. Who knows, if we started now with the level of understanding we have out there, would it be a different set? yes, that we had to start somewhere. I think these are meaningful markets for us and there's a real unmet need in these settings. And we'll add more, some orphan-type indications and some much larger indications going forward.

Okay, great. That's very helpful. Maybe just a tack on that one of the similar themes, which is with the current patient enrollment of those two trials, Are they with your expectation or you have different sort of hope in terms of the pace and other factors? And thanks.

Definitely lower than our expectations. There are a number of reasons for that. I think one not so obvious reason is that just as we had to get CITES REM certified and up and running, we had that issue with new centers. We also had to educate the clinical trial teams, and we found that getting the IR teams, which are less set up for clinical trials, to work with the oncology teams, which are very familiar with trials, but they're not familiar with this type of therapy, getting those teams to work together with a new patient flow, the type of data we need to gather in the IR suite. It was very new to them. Quite frankly, a number of centers that we thought would quickly activate and enroll. We got the disparate teams together. It became an issue. So with the dimension of change in training, we did not anticipate would be a problem in the clinical trial setting. So just as in the commercial setting, there was a hill to climb that we kind of understood we'd have to do when we started. It was a bigger hill than we thought. We found the same thing in the clinical trial. Getting the clinical trial teams to work together in this type of trial was a problem. We lost some centers, undoubtedly, and the bigger issue was just centers taking a while to get up and running. So, again, interesting product, different type of product, but we're working through the issues just as we have commercially. We're going to work through the issues on the clinical side as well.

Okay, great. This is very helpful, and certainly congrats on all the progress, and best luck to you guys.

Thank you. If there are enough for the questions on the phone line, I will turn the call back to Mr. Mitchell for some closing remarks.

Okay, I just want to thank everyone for their support, both the investors as well as the internal team here at DelCAP. We're getting a lot done, and it wouldn't be if it wasn't for the employees of the company who are very dedicated to move things forward for patients and to earn the trust of the investors. Thank you very much for your time, and have a great day.

Ladies and gentlemen, this concludes your conference call for today. We thank you for participating in Asset. Please disconnect your lines. Have a great day.