Delcath Systems Q3 2023 Earnings Call Transcript

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Provided by Quartr
November 13, 2023

There are 10 speakers on the call.

Operator

Good day, and welcome to the DelCath Systems Reports Third Quarter Fiscal Year 2023 Financial Results. All participants will be in listen only mode. After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to David Hoffman, Please go ahead, sir.

Speaker 1

Thank you. And once again, welcome to Del Cast Systems 2023 3rd quarter earnings and business update call. With me on the call are Gerard Michel, Chief Executive Officer Sandra Pinnell, Senior Vice President of Finance Kevin Muir, General Manager, Interventional Oncology Oyle Vukovic, the Chief Medical Officer and John Popora, Chief Operating Officer, I'd like to begin the call by reading the Safe Harbor statement. This statement is made pursuant to the Safe Harbor for forward looking statements described in the Private Securities Litigation Reform Act of 1990 5, all statements made on this call with the exception of historical facts may be considered forward looking Statements within the meaning of Section 27A of the Securities Act of 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.

Speaker 1

Actual results may differ materially from those expressed or implied in forward looking statements due to various risks and uncertainties. For a discussion of such risks 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 ks, those contained and subsequently 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.

Speaker 1

Now I would like to turn the call over to Gerard Michel. Gerard, please proceed.

Speaker 2

Thank you everyone for joining today. Since the FDA approval of HEBSATO KIT on August 14 for patients with metastatic uveal melanoma, We have been focused on outreach to potential treating sites and building our commercial team in preparation for commercial launch, which is now anticipated for January. While this has taken slightly longer than expected to work with our CMOs to finalize and produce QC released, labeled and packaged melphon specific to Hepzado, We have been productively using the time between approval and launch to expand the number of treatment teams that have undergone didactic training and attended a preceptorship, both of which required before a new treating team can perform their first proctored case. In sepsadocat's FDA approval, we have been into their practices treating patients with metastatic uveal melanoma. While we are fielding interest from more than 20 sites, We are primarily focused on a subset of these to ensure that we achieve our planned activation targets throughout the year.

Speaker 2

In conjunction with the local medical oncologists at each of our target sites, we have been working with the site's intervention radiologists to identify and train hepsado kit In addition to training the treatment teams at each site, we are also working to get HEPLYTOKIT approved through the various Hospital formulary and value analysis committees and we have started that process in 13 hospitals. Currently, we have 3 EAP sites, Moffitt Cancer Center, Duke University and the University of Tennessee, which are fully trained that can start treating patients upon the availability of commercial product. In addition, we now have a further four sites Mayo Clinic, Thomas Jefferson, Ohio State University and Stanford University that have completed the necessary steps to conduct their first commercial treatment under the guidance of a proctor once commercial product is available and formulary and value analysis committee approvals are obtained. Beyond those 7 sites, another 4 sites, UCLA, Providence St. John's, Mass General and Piedmont Hospital Currently have the preceptor ships scheduled in November or December.

Speaker 2

In total, we expect at least 10 sites will have completed the required training treat a commercial case by the end of January, contingent on scheduling a proctor team for that first case and the successful Completion of the various value analysis committee processes. Given the need for the first case to be proctored and the required committee approvals, I don't expect all of the 11 previously mentioned sites to be actively treating patients in the Q1. However, based on interest and progress to date, I am Confident that we will achieve at least 5 active treatment sites sometime in the Q1, 10 by the end of the second quarter and 15 treating centers by the end of 2024. We expect treatments per site to start out at approximately 1 per month and end the year at approximately 2 per month. Since sepsadokit is a liver directed intervention radiology procedure and not an acute drug, we are focused Medical Centers has currently mentioned that they currently offer liver directed therapies for metastatic uveomelanoma patients and currently treat a meaningful number of patients with liver directed therapy.

Speaker 2

Noteworthy centers include Thomas Jefferson University, led by uveal melanoma oncologist thought leader, Marlena Orloff Interventional radiologist, David Eshelman, a leader in liver directed therapy. Thomas Jefferson by far treats the largest number of metastatic uveal and alanella patients in the country. Other noteworthy centers include UCLA with the UB melanoma, thought leader of medical oncologist Bartosz Chymalowski and interventional radiologists at Pavia Mayo Clinic with medical oncologists, Roxanne Dronka and Yiyi Yan interventional oncologists, Charles Ritchie and Bo Tozkitsk Moffitt Cancer Center with the FOCUS trial, Principal Investigator John Zager and Sanford University with medical oncologist, Danielle Reddy Interventional radiologist, Gloria Huang. Since approval, Kevin Muir, Delcat's General Manager, Interventional Oncology has been busy building the commercial organization. Kevin has made a point of bringing on team members that have deep experience in launching complex therapies require multiple stakeholders in the hospital setting.

Speaker 2

For example, our new Director of Sales, Zach MacLean comes from Boston Scientific and has over 20 years' experience Leading teams are bringing new liver based interventional procedures to market. Under Zach's guidance, we have divided the U. S. Into 4 regions, each of which will be served by a commercial team comprised of a liver directed therapy representative and 2 oncology managers. The liver directed therapy The representative will manage the hospital approval process and ensure that the SatoKit procedure team is trained and supported while performing the procedure.

Speaker 2

The oncology managers will engage community based medical oncologists outside of our treating centers with the goal of building referral networks to the oncologists within the treating centers. In addition, each team will be supported by a clinical specialist who will support the treatment teams in preparation for and during the treatment with the goal of ensuring and improving patient outcomes. To ease patient access, Kevin's team has been working with market access consultants to submit the required to obtain the C code, J code and NTAP from CMS. Given the nature of hepato kit, we anticipate all codes and add on payments to be granted. We are in the final stages of designing a patient access program called HebsadoKit access, designed to assist patients and hospitals in numerous aspects to treatment planning, including prior authorization.

Speaker 2

We are working with a well established hub service with significant experience in both the ultra orphan diseases and oncology to design and manage this program. We continue to support both internal and external efforts To add to a growing body of evidence that the PHP procedure, whether utilizing melclin delivered by Delcas chemo sac or the hepato kit, is an important treatment option for patients with liver dominant uveal melanoma. We recently announced the publication of results from a retrospective comparative study of chemoSat and Selective Internal Radiation or SIRT published in the Journal of Cancers. The independent investigator study from the University Hospital Tubingen, Germany and patients with liver dominant metastatic uveal melanoma. Median overall survival was 301 days for the 34 patients treated with SIRT and 5 16 days for the 28 patients treated with ChemoSET.

Speaker 2

In adjusted Cox regression model, there was a significant difference between certain ChemoSET with a hazard ratio of 0.32, associated 95 percent confidence interval of 0.14 to 2.73 at a p value of 0.006. The overall survival results clearly demonstrate the positive impact of treating liver metastases on patient outcomes with Chemostat. As a reminder, there is an ongoing investigator initiated randomized Phase 2 trial in Europe, the SHIPAN trial, evaluating the effect of adding immunotherapy to ChemoStat liver directed therapy. The trial has enrolled 55 of the planned 76 patients and the investigators expect the trial to be fully enrolled mid-twenty 24. The primary objective of the trial is to determine the efficacy of combination recommending the continuation of the study without modification.

Speaker 2

As mentioned earlier, we now expect to start commercializing Since our commercial sales in January 2024, we have been utilized the time between approval and launch to increase the number of trained treating centers and initiating the formulary approval process in numerous institutions. The feedback and progress today gives us confidence that HEBSATO kit will become the standard of liver directed therapy care for metastatic uvevaluminal patients quickly after launch. I will now hand the call over to Sandra details on our financial position. Sandra?

Speaker 3

Thank you, Gerard. We ended Q3 with $40,500,000 in cash, cash used in operations was approximately $9,200,000 in the 3rd quarter and $23,100,000 for the 1st 9 months of the year. The increase in cash is due to the funding received as part of the tranche warrant exercise. Specifically, the tranche warrants were exercised for for $35,000,000 for the equivalent of $7,500,000 in common stock. The $35,000,000 should be sufficient to fund the company until another 4 1,000,000 shares of common stock equivalents are issuable at a strike price of $6 as part of the tranche fee warrant without having to issue additional equity capital.

Speaker 3

The tranche fee warrant would result in $25,000,000 of gross proceeds upon the company achieving $10,000,000 in quarterly revenue. Current shares outstanding is 22,100,000 and $40,500,000 on a fully diluted basis. Revenue from our sales of ChemoSAT was $400,000 for the 3 months ended September 30, 2023 compared to $900,000 for the 3 months ended September 30, 2022. For the 3 months ended September 30 this year, R and D expenses were $4,700,000 compared to $4,100,000 for the 3 months ended September 30, 2022. Fee increase is due to activities related to the FDA inspection and other requests in advance of their approval For the 3 months ended September 30, 2023 compared to the same period in 2022, Selling, general and administrative expenses have increased from $4,800,000 to $6,200,000 due to activities to prepare for commercial launch.

Speaker 3

That concludes our earnings and business update. And I'd ask the operator to open the line for Q and A. Can you please check for questions?

Operator

We will now begin the question and answer session. Our first question comes from Bill Magan with Canaccord Genuity. Please go ahead.

Speaker 4

Hi, good afternoon and thank you. So, I have two questions. So you talk about Getting sites up and running and the last hurdles to go through being proctor availability SITE's Value Analysis Committee approvals. On the SITE's Value Analysis Committee approvals, how active is Delcat in that process? Or Is that generally an internal hospital process?

Speaker 4

And how much how certain is the outcome of those processes? In other words, Sort of check the box operation or is there any uncertainty in that approval? Second question is, how do you see this how do you see HEBSADA being used post chemtraq? Are these patients Simply too far along to be an addressable market. Thanks.

Speaker 2

All right. Yes. Let me start with the first question, Bill. Good to hear from you. And I think, Kevin, you could probably add some color to this, but I think I wouldn't go as far as to say check the box, but I would also say and cover add some color to this that we have a lot of There's no place that we're moving forward in aggressively where we aren't confident of support.

Speaker 2

But David, Kevin can give some color there. And we certainly Support the sites to some extent, but I think the days that the company going in and presenting are long gone, but you do have to support them to some extent. Kevin, can you add some color?

Speaker 5

Yes, sure. Thank you. It's far from check the box. It's a formal Within each facility. And they're basically looking for, if we code this procedure, will we get paid, will we get reimbursed?

Speaker 5

And so we are asked to provide a limited amount of information and then a hospital makes Decision on itself. We feel confident with our hub services, Gerard mentioned earlier in the call, and They're assisting with the coating the kind of the coating forecast For the facilities and then it's up to them to see if that's beneficial to them. And the feedback that we've had to this point in time has been very good. So we're Out of the 11 sites that Gerard mentioned, we'll have 5 of them that will perform procedures by the end of January.

Speaker 2

And Kevin, I think it's fair to say that we haven't there have been a number of these meetings already and it's usually not just one meeting, But a number of these meetings have started. We've yet to have any, geez, this isn't going to happen type reactions. Is that correct?

Speaker 5

It's entirely correct. We've been overwhelmed by the response that we've had and the Two way communications that we've had with each hospital to this point in time, as George mentioned, we've had several of these calls and presentations that we've made to the hospitals and we anticipate Most, if not all of these coming back with the value analysis committee in our favor.

Speaker 2

Now Bill, in terms of your second question, our patients who are post Cabenifas, will they be too far I think the answer is some may be, some may not be. I think if we take a step back, the first question really is, Should you use liver directed first? There are certainly some oncologists out there who believe That in many cases, Liberty directed first makes sense. There are others that want to go to systemic first. So it's not going to be everyone automatically going to Tebby 1st.

Speaker 2

I think one of the points we're going to make to oncologists is that you can tell after 2 treatments from us whether or not you're getting a benefit. With tibetopast, they recommend treating through progression because of pseudo progression with immuno oncology agents. So you run the risk of going too long with tebib before you really know whether it's working or not. So it may make sense to start with us from that rationale. The third thing I'll say is we have seen patients post tebbi.

Speaker 2

So we've seen patients that are applicable for tebbi coming with us first and we've seen patients post tebbi. So clearly, it's going to be a mix, but we think we have a sound argument because the liver is usually the life limiting Organ site of metastases and you can get a quicker read on whether you're getting efficacy when you go with us first. We think we have a good argument to go with us first. But if not, I think we'll still get a fair number of those tebupases that unfortunately eventually progress.

Speaker 4

Got it. Thank you very much.

Operator

The next question comes from Scott Henry with Roth Capital. Please go ahead.

Speaker 6

Thank you and good afternoon. Just had a couple of questions. First, as far as I'm just thinking about the launch metrics you sort of laid out, Gerard. When we think about 1 per month Moving to 2 per month, do you think about that as an average or do you think of that as a high volume Location or just trying to get a sense because I know obviously some people will do more, some will do less. How you try to put that 1 to 2 in reference.

Speaker 2

Yes. I think here's what we have. Before we really get out there and get moving, I'm kind of averaging it, maybe down, who knows. I do know, I'm confident there'll be some sites that are doing 1 a week. And I think there are others as they get started and we're building the referral networks, they might be doing 1 every 2 months.

Speaker 2

Eventually, my hope is that sites do at least 1 a week out some Time over the horizon, and that's what we need to do to get to peak share. But it's definitely an average, And it's really thinking there's 1 or 2 sites doing most of those and the new ones that have recently come on board, they're building their referral networks.

Speaker 6

Okay, great. And when we think about cycles per patient, how would you think about the average cycle, number of cycles a patient would have and how much time between cycles should we expect and utilization?

Speaker 2

Well, we saw in the FOCUS trial, I think as you know, it was 4.1. So we're kind of for our own modeling purposes assuming 4. In the FOCUS trial, we allow patients to go up to 8 weeks between cycles, 6 was the recommended. I think what we're seeing in other settings to Europe is that some docs, more in compassionate use settings Earlier in the U. S, some docs choose to do too quickly together, let's say, 6 to 8 weeks apart and then we do watchful waiting.

Speaker 2

Others follow the protocol perfectly. So I think my guess is we're going to have a subset that do 2, 8 weeks apart and then wait, others are going to go straight through. One thing I am certain of is patients that we lost in the trial That withdrew because their blood counts had not risen to the level or is appropriate to retreat them. We won't lose those likely in the commercial setting The docs will just wait a few extra weeks. So on average, I think

Speaker 5

it will be go ahead.

Speaker 6

So when we think about Cycles per quarter as we model out expectations for the launch. Obviously, everyone doesn't come in the 1st day of the quarter. It sounds like we should think about it as 1 to 2 cycles per quarter depending when Yes.

Speaker 2

1, on an average, kind of starting out early in the Q1, one treatment a month per site ending 2. And then when I say treatment, I mean a cycle or a It could be and we're not really counting patients right now because we were just scratching the surface at these levels in terms of the At some point, we'll have to start talking about number of patients on therapy, but right now we're just focused on treatments or cycles.

Speaker 6

Okay. And Gerard, maybe it'd be for the typical hospital, maybe if

Speaker 2

you could just walk through

Speaker 6

How that hospital gets paid with this product? What is the procedure? And how we should think about that?

Speaker 2

Yes. So for the typical hospital, there will be 3 components of payments, all right. And we're going to talk about Outpatient because the majority of these patients will be outpatient. They're going to put in a set of CPT codes For a facility fee, they're going to put in a set of CPT codes for the procedure for the doctor's time. Now most of these doctors are on salaries, so it's Not a direct incentive to them, but they do care.

Speaker 2

And the 3rd reimbursement component will be putting in for reimbursement for the drug itself, Ibsadarkit. That will initially be with a C code and then eventually we will get a J code. But that's a pass Through payment, so the hospital would get paid whatever we charge them, plus 6%. Let me just pause there and see if there's any more detail or any particular part of that process that you'd like to hear about.

Speaker 6

No, I think That's a good so these three codes that all come into place, are all of them necessary to start The process or is there a sequence that hospitals will want as they utilize this?

Speaker 2

Yes. So let me Kevin, why don't you explain the availability of how the CPT codes work in terms of being a portfolio of codes they're going to use? And then when the what they'll do initially and then when the C code comes in more than a J code?

Speaker 5

Yes. So thanks, Gerard. So CPT codes are nothing more than codes that describe what the physicians are doing during the procedure. So when they go through the step, there will be or when they go through the procedure, they will record what they do. The CPT codes will match what they do.

Speaker 5

They're presented CMS and the payment comes back. There's going to be 2 payments, 1 for the hospital, 1 for the physicians. We've gone through a number of coding exercises to Ensure both ourselves and our hospital partners that this will be there are codes in place. And if they code them correctly or they do the procedure, then the hospital will be reimbursed fully for what they are doing. Positions the same thing.

Speaker 5

Their codes will pay them adequately for their time. So those are the two main concerns When you really come down to it, this is a lot of what's done from the earlier question on the value analysis committee. Make sure the CPT codes are there for the hospital and physician. And then a final part of that is the product. And we should anticipate hearing very Back from CMS on our C code, or it's called actually called a PPT, transitional pass through application, which results in a C code.

Speaker 5

We're anticipating hearing on that shortly. Those usually go into effect on January 1, but Sometimes they drag into January. So that should, as Gerard mentioned, be a pass through payment the hospital and they get a 6% administration fee on top of that. So again, from the customers that are from the hospitals that we talked to at this point in time, There seems to be more than adequate reimbursement for them to move forward.

Speaker 6

Okay, great. That's helpful. Gerard, that should

Operator

The next question comes from Mire Thibault with BTIG. Please go ahead.

Speaker 7

Hey, good afternoon. This is Sam Iber on for Marie. Thanks here on the work with the CMOs. I think I caught your comments earlier on the call that it's taking a bit longer than expected. Just wanted to get any additional color on maybe some of the bottlenecks or work that's going on behind the scenes there?

Speaker 7

Thanks.

Speaker 2

Sure. So We've known for quite a while that we'd like to work more directly with a CMO for Melflin. What we Given that series of acquisitions based on who we initially signed up with, but Milt and I won't go through all The details, we ended up in a situation where Mylan holds the ANDA and they use a CMO NER Pharma in Italy, NER Pharma uses a set of CMOs or contract labelers to make the various labels and such. We have tried prior to approval and post approval to take some of that work on ourselves, Saying ship us naked vials, we'll label it, we'll make the labels and shipping out to Italy, anything we can to accelerate this. And unfortunately, since we're a very small player for this generic Product in these nested manufacturers, we really are having difficulty moving getting them to move off of what they say is basically here's your contracted lead times.

Speaker 2

Now there really was no way in our position to write a large check or even guess what the final label would be To get way ahead of this, this is an unusual situation again where we're using a generic product and we're getting them to carve outs a small run for us. And that's really what the bottom line is. Could it have been a little smoother? Perhaps, but at the end of the day, We've got to work with what I'm calling these massive CMOs. This won't be a problem longer term.

Speaker 2

We've already got an order in for a second full batch, which will be delivered probably shortly after the 1st batch. And so that will be well supplied going We wouldn't have these bottlenecks anymore. But again, it's kind of a situation where we're never really in a position to fund our own ANDA for this type Thanks. So we just kind of have to live with this situation. And as we go forward, we're going to focus a lot on making sure the supply chain is robust as possible.

Speaker 2

And we don't have any we're never at a stock out situation or a slowdown situation.

Speaker 7

Okay. Yes, that all makes sense. I appreciate the added color there. Maybe I could use my follow-up here on some of the VAC approval process questions. How long do these usually take?

Speaker 7

I mean, we hear for other products that could take 6 to 12 months. I assume that is probably a bit quicker here. Recognize it's not just a check the box kind of item, but Just wondering your thoughts on how long those VAC approvals, you expect to take?

Speaker 2

Yes. I think what's unique about this is, well, This is not another antibiotic to for a hospital acquired infection or Another stent. This is a product where there is no nothing else like it for this patient set. And our interventional radiologists and medical oncologists are very happy to champion this And push this forward outside the regular scheduled meetings. Now what I'm doing here is I'm repeating what Kevin has told me.

Speaker 2

But Kevin, is there anything I left out In terms of profitability, any further color?

Speaker 5

No. But to add a little color to the question, you're right. I mean, Throughout my entire career, I've budgeted 9 months for one of these value analysis committees. And Again, it's kind of been what has been so encouraging about this is that we have it's ultra rare disease, it's Lack of a standard of care for some of these patients and we're also at the right hospitals. So they recognize the need for the product that we're bringing and we're kind of moved outside of that 9 months and we're probably closer to 3 months and even in some scenarios maybe shorter than that.

Speaker 5

So it's been very encouraging from the response that we've received from these committees.

Speaker 7

Okay, really helpful. Maybe just a clarification question. How many of the Proctor sites do you have in the U. S. That could essentially do the proctored cases or that you expect to have?

Speaker 2

Kevin?

Speaker 5

Yes. Looking at my list right now, we have the 3 EAP sites that are ready to go. The rest of the FOCUS trial sites have abbreviated training requirements. That would be another 1, 2, 3, 4. So we'll have 7.

Speaker 2

But Kevin, in terms of Proctor Teams ready to go, it's Moffett, right?

Speaker 5

No, Procter team. Yes. I'm sorry, I misunderstood the question.

Speaker 2

Yes, and that's one of the reasons it's going to be a bit slow, but we'll have another team, 2 or 3 teams up and going within a few months. And we have a number of Teams in Europe, you are more than happy to fly over in Proctor. So that's we're probably going to end up relying on some European teams as well.

Speaker 7

Got it. Okay. Thanks for taking the questions.

Speaker 2

Yes.

Operator

The next question comes from Yale Jen with Laidlaw and Company, please go ahead.

Speaker 8

Good afternoon and thanks for taking the questions and congrats on all the progress. A couple of quick ones. First one is that In terms of your inventory preparation for the launch, by beginning of the End of this year or beginning of next year, what do you think your inventory level might be? And how would that be How adequate was the price anticipated potential to anticipate the use over the next the subsequent quarters?

Speaker 2

Okay. I got the first question, the inventory level I'll answer, and that is we're trying to maintain at least a year's worth of inventory. I think once and so that will be a rolling demand forecast looking forward. I think once we get past the $10,000,000 revenue Milestone that will bring more cash to the balance sheet, but we just short of being breakeven then on an EBITDA basis. I think we'll probably increase Safety stock beyond the year on certain components, just to be careful because it's not always easy to switch out components if suppliers change.

Speaker 2

So that's the answer to your first question. What was the second nail?

Speaker 8

When you start to launch the product, You have adequate or how do you see that preparation at that time?

Speaker 2

So do we have adequate? Think we will probably based on orders coming in this year, and once the Melt one shows up, we'll have every component, We will have at least a year's worth of stock.

Speaker 8

Okay, great. That's helpful. And my second question here is that Given you indicated there is roughly 10 sites ultimately will be in the queue for the, I guess, first half of this first half of next year. What is your estimate or the total

Speaker 2

So are you asking what I think the volume will be for the full year?

Speaker 8

For full year, from those 10, I guess, hospitals

Speaker 2

Yes. Let me stick with what I've said before and then if there's I mean and that is and I think you could probably Do the math and that is with a little bit of range, which is I'm trying to ensure here is 5 By the end of the quarter, we'll definitely have 5 sites up and running. And I think ending the quarter, they'll be doing at least 1 a month. Middle of the year, At least 10 sites up and running, ended the year at least 15 sites up and running and they should end the year doing at least 2 a month, Excluding the year. You can get to fairly wide range plus or minus 30% in terms of volume In terms of how many patients that represent, Whatever number you have divided by 4.

Speaker 8

And maybe the last question here is that, is there any patient you anticipate that To be in the procedures when you launch the product, in other words, they become patients Presumably, people calling them, they're not getting fruits. Any number, any color on that? Yes.

Speaker 2

So if we are having the conversations with sites or had the conversation with sites, it varies by sight that we plan we'd like to transition EAP patients over to commercial patients Once commercial supply is available. With the exception, of course, if a patient doesn't have coverage, we wouldn't stop treating them. That the way we set up the protocol is it's not an automatic. We can't force that and there are some important reasons why we chose not to Set it up so that we could force it. But I don't know whether or not it will be a third or half, but there'll be some meaningful percentage of the patients that we'll treat in the first

Operator

The next question comes from Swayampakula Ramakanth with H. C. Wainwright. Please go ahead.

Speaker 9

Thank you. This is RK from H. C. Wainwright. In terms of getting entered ready when you start launching the drug, the kit In January, as you're preparing some of these hospitals, Are you getting a feel for like how long it's taking for some of these doctor teams or the surgery teams In terms of training and the so that they can start doing their surgeries And do you see that and also how do you think that training time is going to Yuval, as you launch and more of the physician teams start treating?

Speaker 2

Yes. So in terms of how long, it really varies. We have one site that immediately jumped on it and got their preceptorship done Within a month or so of having a discussion with maybe a month or 2, having a discussion with them. We have other sites that again, I've used the term multiple calls or 1 on ones herding cats, It's been very difficult to get an interventional radiologist and anesthesiologist and a perfusionist All attending a case at the same time, which requires an airplane flight, etcetera. So

Speaker 5

I think that's the reason why One of

Speaker 2

the reasons why I'm saying, look, we'll probably have 11 sites. Well, we're planning on having 11 sites preceptor, Hopefully within about 2 months plus. But of those, I think 5 will end up getting proctored, because then we have to look at a team of Experience stocks and right now that's just Moffett because we have a requirement that they need to have done a certain number in the recent past. The Moffett is the only one that checks off that box as well as some European sites. We expect there'll be some issues with experienced sites We're getting an experienced site to a precepted site.

Speaker 2

So that will be the 2nd gating item. Again, it's going to be it's tough to predict. That's what we're saying out of the 11 that we think will have attended preceptor ships, maybe 5 will get on board. We can't really decide which we don't know exactly which 5 it will be. Thereafter, as more sites do more cases And more sites definitely have beyond the I think it's 10 cases they have to do before they can be a proctor.

Speaker 2

Once they get beyond the 10 cases, All of a sudden, we'll have multiple experienced sites that can proctor. And I think towards the back end of next year, that's when it will really accelerate. And it will be a lot simpler to get sites up and running. So varied, hard to predict. It will take much longer in the beginning of this year than it will towards the end beginning of next year

Speaker 5

and then it will take towards the

Speaker 2

end of next year as more and more sites are available to be proctors. So hopefully that answers the question RK, which is basically it depends.

Speaker 9

Yes. No, I got that. And then in terms of how do you see Hospitals and even docs act trying to get on Treatment treating with HEPSADA kit versus KIM TRAK, and when you go in to have some of these conversations, What sort of monetizations do you end up having? And do you think you will be able

Speaker 2

Yes, I think well Kevin, why don't you give an example from a commercial rep perspective, what will the conversation be?

Speaker 5

Yes. I don't think that we will replace KimTrak with its auto kit. The conversations that we've had in the field right now have been have revolved around You have potential to use these 2 therapies in sequence. What's the best sequence? How can they complement each other?

Speaker 5

Ultimately, these patients are probably going to go at least on two lines of treatment, if not 3. So what is the order that is going to Provide these patients with the best options and ultimately the longest overall survival. So that's where the conversations have been really Not so much on the eitheror between Peps Auto Kid OR Kid Track.

Speaker 9

Very good. That's good to hear. Thank you.

Speaker 2

Yes. I think it's also important to remember, and I think Everyone on this call does remember this, but the KimTrak is indicated for about 40% to 45% of the overall population. So this is a subset of the patients that we this conversation is pertinent to, but I think everybody knows that, but worth highlighting.

Operator

This concludes our question and answer session. I would like to turn the conference over to Gerard Michel for any closing remarks.

Speaker 2

Okay. Well, I want to thank everyone for taking the time this afternoon. I look forward to providing future updates regarding the launch and subsequent to that commercial update. Thank you everyone and have a good evening.

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Key Takeaways

  • Since the FDA approval on August 14 for HEPSADO KIT in metastatic uveal melanoma, Delcath has trained 11 sites and expects 5 active treatment centers in Q1, ramping to 15 centers by end of 2024, with procedures per site increasing from ~1 to ~2 per month.
  • Delcath has built a specialized commercial organization divided into 4 U.S. regions, each with dedicated liver therapy reps, oncology managers and clinical specialists, and is finalizing codes (C, J, NTAP) and a patient access hub for streamlined reimbursement and prior authorizations.
  • As of Q3 FY23, Delcath held $40.5 M cash, used $23.1 M in operations YTD, received $35 M from warrant exercises, and reported ChemoSAT revenues of $0.4 M (vs. $0.9 M LY), with R&D and SG&A rising to support FDA inspection and commercial launch prep.
  • A retrospective comparative study in the Journal of Cancers showed ChemoSat outperformed SIRT with median overall survival of 516 days vs 301 days (HR 0.32, p = 0.006), and the investigator-led SHIPAN Phase 2 trial of ChemoSat plus immunotherapy is on track to complete enrollment mid-2024.
  • Though the CMO labeling and packaging process took longer than expected, Delcath secured a second batch order to ensure at least one year of inventory and is optimizing supply chain resilience ahead of the January launch.
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Earnings Conference Call
Delcath Systems Q3 2023
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