Delcath Systems, Inc 10-Q for FY2020 Q1

Delcath Systems, Inc. (DCTH)

10-Q 2020-05-14 For: 2020-03-31

Added on April 10, 2026

About this 10-Q

Delcath Systems, Inc filed this 10-Q on May 14, 2020, covering the quarter ended March 31, 2020 (FY2020 Q1).

Headline figures

Quarter ended March 31, 2020, as reported in this filing, compared with the same period a year earlier where the filing states it.

Net loss: $7.86M; compared with a net loss of $7.89M a year earlier
Diluted EPS: -$108.07; compared with -$75.11 a year earlier

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Delaware		06-1245881
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

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 ☒

Large accelerated filer ☐	Accelerated filer	☐

Non-accelerated filer ☐	Smaller reporting company	☒

	Emerging growth company	☐

		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

	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.

	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.

	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	)

	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

	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

(in thousands)	US			Ireland			Total
Lease Cost
Operating lease cost	$	118		$	52		$	170
Financing lease cost	12				—			12
Sublease income		—			(43	)		(43	)
Total	$	130		$	9		$	139

Other information
Operating cash flows out from operating leases		(118	)		(52	)		(170	)
Operating cash flows in from operating leases		-			43			43
Operating cash flows out from financing leases		(11	)		—			(11	)
Right-of-use assets exchanged for new operating lease liabilities		—			—			—
Weighted average remaining lease term		0.9			1.3
Weighted average discount rate - operating leases		8	%		8	%

	Number of Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value
Outstanding at December 31, 2019		1,640	$	196.70	9.1	$	—
Granted		—
Exercised		—
Cancelled/Forfeited		—
Outstanding at March 31, 2020		1,640	$	196.70	8.9	$	—
Exercisable at March 31, 2020		1,640	$	196.70	8.9	$	—

	Warrants			Exercise Price per Share	Weighted Average Exercise Price		Weighted Average Remaining Life (Years)
Outstanding at December 31, 2019		1,826,608		$7.00 - $23.04	$	23.04		5.0
Issued		—
Exercised		—
Expired		(9	)
Outstanding at March 31, 2020		1,826,599		$7.00 - $23.04	$	23.04		4.7

(in thousands)	Warrant Liability
Balance at December 31, 2019	$	3,368
Total change in the liability included in earnings		2,832
Fair value of warrants reclassified from liability to equity		(6,200	)
Balance at March 31, 2020	$	—

	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

	February 19,	December 31,
	2020	2019
Expected life (in years)	4.3		4.6
Expected volatility	208.2%	207.5%
Risk-free interest rates	1.4%	1.7%

	Assets and Liabilities Measured at Fair Value on a Recurring Basis
(in thousands)	Level 1				Level 2				Level 3				Total
	March 31, 2020		December 31, 2019		March 31, 2020		December 31, 2019		March 31, 2020		December 31, 2019		March 31, 2020		December 31, 2019
Liabilities
Derivative instrument liabilities	$	—	$	—	$	—	$	—	$	—	$	3,368	$	—	$	3,368

Exhibit No.		Description

31.1	*	Certification by Principal Executive Officer Pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2	*	Certification by Principal Financial Officer Pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1	**	Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2	**	Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS		XBRL Instance Document

101.SCH		XBRL Taxonomy Extension Schema Document

101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF		XBRL Taxonomy Extension Definition Linkbase Document

101.LAB		XBRL Taxonomy Extension Label Linkbase Document

101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document

May 14, 2020	DELCATH SYSTEMS, INC.
	(Registrant)

	/s/ Jennifer K. Simpson
	Jennifer K. Simpson
	President and Chief Executive Officer
	(Principal Executive Officer)

May 14, 2020	/s/ Barbra C. Keck
	Barbra C. Keck
	Chief Financial Officer
	(Principal Financial Officer)