Delcath Systems Inc.
02/26/2026 | Press release | Distributed by Public on 02/26/2026 08:17
Annual Report for Fiscal Year Ending December 31, 2025 (Form 10-K)
Management's Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and notes thereto appearing elsewhere in this Annual Report on Form 10-K.
Overview
We are an interventional oncology company focused on the treatment of cancers primary or metastatic to the liver. Our lead product, the HEPZATO KIT (melphalan for Injection/Hepatic Delivery System), a drug/device combination product, was approved by the FDA on August 14, 2023, indicated as a liver-directed treatment for adult patients with uveal melanoma with unresectable hepatic metastases affecting less than 50% of the liver and no extrahepatic disease, or extrahepatic
disease limited to the bone, lymph nodes, subcutaneous tissues, or lung that is amenable to resection, or radiation. The first commercial use of the HEPZATO KIT for the treatment of mUM took place in January 2024.
In the United States, HEPZATO is considered a combination drug and device product and is regulated as a drug by the FDA. Primary jurisdiction for regulation of HEPZATO has been assigned to the FDA's Center for Drug Evaluation and Research. The FDA has granted us six orphan drug designations (five for melphalan in the treatment of patients with ocular (uveal) melanoma, cutaneous melanoma, intrahepatic cholangiocarcinoma, hepatocellular carcinoma, and neuroendocrine tumor indications and one for doxorubicin in the treatment of patients with hepatocellular carcinoma).
We have sufficient raw material and component constituent parts of the HEPZATO KIT to meet anticipated demand and we intend to manage supply chain risk through stockpiled inventory and contracting with multiple suppliers for critical components.
In Europe, the hepatic delivery system is a stand-alone medical device having the same device components as HEPZATO, but without the melphalan hydrochloride and is approved for sale under the trade name CHEMOSAT Hepatic Delivery System for Melphalan, or CHEMOSAT, where it has been used at major medical centers to treat a wide range of cancers in the liver. On February 28, 2022, CHEMOSAT received MDR certification under the European Medical Devices Regulation (EU) 2017/745, which may be considered by jurisdictions when evaluating reimbursement. As of March 1, 2022, we have assumed direct responsibility for sales, marketing and distribution of CHEMOSAT in Europe.
The FOCUS Trial
Our clinical development program for HEPZATO was comprised of the FOCUS Trial, a global registration clinical trial that investigated objective response rate in patients with mUM. The current focus of our clinical development program is to generate clinical data for CHEMOSAT and HEPZATO in patients with mUM, either as monotherapy or in combination with immunotherapy. On May 6, 2024, we announced the publication of results from our Phase 3 FOCUS Trial, including an ORR of 36.3%, which included 7.7% of patients with Complete Response, as determined by an Independent Review Committee. An ORR of 36.3% in the FOCUS study was statistically significantly better than the pooled ORR estimate (a weighted mean of the observed ORR) of 5.5% in the historical control group. We expect that the publication will support increased clinical adoption of and reimbursement for CHEMOSAT in Europe, and support reimbursement in various jurisdictions, including the United States.
In addition to HEPZATO's use to treat mUM, the Company believes that HEPZATO has the potential to treat other cancers in the liver, such as metastatic colorectal cancer, metastatic breast cancer, metastatic neuroendocrine tumors and intrahepatic cholangiocarcinoma.
Our IND application for a Phase 2 clinical trial evaluating HEPZATO in combination with SOC for liver-dominant mCRC was cleared by the FDA in December 2024. The Phase 2 trial will evaluate the safety and efficacy of HEPZATO in combination with trifluridine-tipiracil and bevacizumab compared to trifluridine-tipiracil and bevacizumab alone in patients with liver-dominant mCRC receiving third-line treatment. Approximately 90 patients will be enrolled in this randomized, controlled trial. Patient enrollment began during the third quarter of 2025, with the study expected to take place at more than 20 sites across the United States and Europe. In July 2025, we received authorization from the European Union and United Kingdom regulatory authorities for the clinical study of Melphalan for Injection/Hepatic Delivery System in patients with refractory metastatic colorectal cancer with the liver dominant disease. The trial's primary endpoint, hPFS, is anticipated to read out by the end of 2027, while OS, a secondary endpoint, is expected in 2028. We estimate that the total addressable market ("TAM") for liver-dominant mCRC receiving third-line treatment is between 6,000 and 10,000 patients annually in the United States. This market includes patients who present with significant liver disease burden, with liver-dominant status determined through radiological and clinical criteria. By targeting this patient population, we aim to provide a novel treatment option for those with limited therapeutic alternatives.
On April 28, 2025, we announced our IND application clearance by the FDA for the Phase 2 clinical trial of HEPZATO in mBC. The Phase 2 trial will evaluate the safety and efficacy of HEPZATO in combination with SOC versus SOC alone in patients with liver-dominant HER2-negative mBC following the failure of previous treatments. The SOC options will be the physician's choice of eribulin, vinorelbine or capecitabine. We expect approximately 90 patients will be enrolled in this randomized, controlled trial. The study will take place at more than 15 sites across the United States and Europe, with patient enrollment expected to begin in the first quarter of 2026. The trial's primary endpoint, hPFS, is anticipated to read out by the end of 2028, while results for OS, a secondary endpoint, is expected in 2029.
We estimate that approximately 7,000 patients annually in the United States are affected by HER2-negative metastatic breast cancer with liver metastases and are candidates for third line treatment. This population includes patients with a significant burden of liver metastases, which are likely to be the primary cause of mortality. By focusing on this demographic, we intend to offer a novel therapeutic option to those patients with limited treatment alternatives.
We believe that these and similar disease states are areas of unmet medical needs that represent significant market opportunities.
We expense research and development costs as they are incurred. We expect our research and development expenses to increase for the foreseeable future relating to the costs required to complete these Phase 2 clinical trials.
Our expected research and development expenses will consist primarily of:
•salaries and related overhead expenses for personnel in research and development functions, including stock-based compensation;
•fees paid to trial sites, consultants, and the CRO for the clinical trials, along with other related clinical trial fees, including, but not limited to, clinical trial database management, clinical trial material management and statistical compilation and analysis; and
•costs related to compliance with regulatory requirements.
At this time, we cannot reasonably estimate or know the exact nature, timing and estimated costs of the efforts that will be necessary. Non-refundable advance payments that are made for future research and development activities are recorded as prepaid expenses. The prepaid amounts are expensed as the services are performed, or when it is no longer expected that the services will be rendered.
The CHOPIN Trial
On October 18, 2025, independent investigators presented results from the Phase 2 CHOPIN clinical trial. The randomized Phase 2 trial was designed to compare the safety, tolerability, and efficacy of CHEMOSAT with melphalan for PHP when used alone versus when combined with the systemic ICIs ipilimumab and nivolumab. Ipilimumab and nivolumab are approved by the FDA and European Union for the treatment of unresectable metastatic melanoma. The CHOPIN trial included 76 patients randomized 1:1 to receive two PHP treatments alone at weeks one and seven (PHP group) or four cycles of ICI every three weeks over approximately nine weeks with two PHP treatments at weeks one and seven (combination group). The primary study endpoint of one-year progression-free survival rate was met with 54.7% in the combination group versus 15.8% in the PHP group. The secondary endpoints included Safety, OS, PFS and ORR. The combination group saw an increase in median OS of 23.1 months versus 19.6 months (HR = 0.39; p = 0.006), median PFS 12.8 months versus 8.3 months (HR = 0.34; p<0.001) and ORR of 76.3% in the combination group versus 39.5% (p<0.001). Grade 3 or higher treatment-related adverse events were more frequent in the combination group (81.6% versus 40.5%, P<0.001), but most were manageable with standard care. The combination treatment adverse events were consistent with the types, rates, and frequencies of adverse events in PHP and checkpoint inhibitors. No new safety signals were identified.
Liquidity and Capital Resources
Cash Flows
The following table summarizes our sources and uses of cash for each of the periods presented:
|
Years Ended December 31, |
|||||||||||
| (in thousands) | 2025 | 2024 | |||||||||
| Net cash provided by (used in) operating activities | 22,516 | (18,681) | |||||||||
| Net cash used in investing activities | (26,590) | (981) | |||||||||
| Net cash provided by financing activities | 15,048 | 39,410 | |||||||||
| Foreign currency effects on cash | 68 | (32) | |||||||||
| $ | 11,042 | $ | 19,716 | ||||||||
On December 31, 2025, we had cash and cash equivalents totaling $43.5 million and short-term investments totaling $47.6 million, as compared to cash and cash equivalents totaling $32.4 million and short-term investments totaling $20.8 million on December 31, 2024.
We believe that our current cash on hand, cash equivalents and investments will be sufficient to support our current operations through at least 12 months from the issuance of the consolidated financial statements included in this Annual
Report on Form 10-K. Our actual future liquidity and capital requirements will depend on numerous factors, including the initiation and progress of clinical trials and research and product development programs; obtaining regulatory approvals and complying with applicable laws and regulations; the timing and effectiveness of product commercialization activities, including marketing arrangements; the timing and costs involved in preparing, filing, prosecuting, defending and enforcing intellectual property rights; the resolution of any disputes with third parties; and the effect of competing technological and market developments.
Share Repurchase Program
On November 19, 2025, our board of directors authorized a share repurchase program under which we may repurchase up to $25 million of our outstanding shares of common stock, from time to time, through open market transactions, privately negotiated transactions or in such other manners approved by the board of directors. The repurchase program does not obligate us to purchase any shares and does not have an expiration date.
As of December 31, 2025, there have been 628,572 shares of common stock repurchased and retired under the repurchase program at an average price paid per share of $9.5254 for a total aggregate purchase price of approximately $6.0 million. We have approximately $19.0 million remaining under the stock repurchase authorization at December 31, 2025.
Capital Commitments
Our capital commitments over the next twelve months include $11.0 million to satisfy accounts payable, accrued expenses, current lease liabilities and current medac settlement. Additional capital commitments beyond the next twelve months include (a) $0.7 million for settlement of litigation with medac and (b) $1.1 million of lease liabilities.
Sources of Liquidity
June 2024 Shelf Registration Statement
On June 28, 2024, we filed a universal shelf registration statement on Form S-3 (the "June 2024 Shelf Registration Statement") with the SEC, pursuant to which we may offer, issue and sell any combination of shares of our common stock, par value $0.01 per share, shares of our preferred stock, par value $0.01 per share, debt securities, warrants to purchase common stock, preferred stock and/or debt securities, in one or more series, and units consisting of any combination of the other types of securities registered under such June 2024 Shelf Registration Statement in an aggregate amount of up to $150 million, in each case, to the public in one or more registered offerings.
Series F Warrants
In May 2020, we completed an underwritten public offering consisting of shares of common stock, Series F warrants to purchase shares of common stock and, to certain investors, in lieu of shares of common stock, pre-funded warrants to purchase shares of common stock. The Series F Warrants had an exercise price of $10.00 per share of common stock and expired on May 5, 2025, while the pre-funded warrants issued in such offering have an exercise price of $0.01, if exercised via cash payment. 1,615,775 Series F Warrants were exercised during the year ended December 31, 2025.
Results of Operations
| Year ended December 31, | ||||||||||||||
| (In thousands) | 2025 | 2024 | ||||||||||||
| Total revenues | $ | 85,231 | $ | 37,205 | ||||||||||
| Cost of goods sold | (11,797) | (6,188) | ||||||||||||
| Gross profit | 73,434 | 31,017 | ||||||||||||
| Research and development expenses | 29,246 | 13,874 | ||||||||||||
| Selling, general and administrative expenses | 43,528 | 29,553 | ||||||||||||
| Total operating expenses | 72,774 | 43,427 | ||||||||||||
| Operating income (loss) | 660 | (12,410) | ||||||||||||
| Interest and other income (expense) | 2,850 | (13,976) | ||||||||||||
| Income tax expense | 810 | - | ||||||||||||
| Net income (loss) | $ | 2,700 | $ | (26,386) | ||||||||||
Revenue
The increase in total revenue for the year ended December 31, 2025 compared to the same period for 2024 was due to the continued commercial expansion and demand of HEPZATO in the United States and CHEMOSAT in Europe. During the year ended December 31, 2025, 24 sites had treated at least one patient in HEPZATO versus 14 sites in the year ended December 31, 2024.
On October 23, 2025, the Company entered into a National Drug Rebate Agreement ("NDRA") with CMS, which also subjected the Company to entering into a Pharmaceutical Pricing Agreement ("PPA") with the Public Health Service and a master agreement with the U.S. Department of Veterans Affairs ("VA"). Pursuant to the NDRA, the Company must pay mandated rebates to states for Medicaid usage. Under the PPA, beginning on July 1, 2025, the Company began selling HEPZATO to eligible covered entities at the statutory 340B price. The Company is also obligated to make any sales to the VA at the Federal Ceiling Price. See Note 4, Revenue, in the accompanying notes to the consolidated financial statements for further details.
Cost of Goods Sold
During the year ended December 31, 2025, we recorded $11.8 million in cost of goods sold. Cost of goods sold increased $5.6 million over the same period in 2024. This increase is directly related to the increase in demand for product revenue which requires an increase in personnel and those associated costs.
Research and Development Expenses
Research and development expenses are incurred for the development of HEPZATO and consist primarily of payroll and payments to contract research and development companies. The increase for the year ended December 31, 2025 compared to the same period in 2024 is due to costs associated with expanding the clinical team including share-based compensation expense related to an increase in headcount and initiation of the Phase 2 clinical trial evaluating HEPZATO in combination with standard of care for mCRC and mBC. In 2024, these costs primarily related to medical affairs and regulatory costs associated with the approved products.
Selling, General and Administrative Expenses
Selling, general and administrative expenses consist primarily of payroll and professional services such as accounting, legal, marketing and commercial preparation services. For the year ended December 31, 2025 compared to the same period in 2024, selling, general and administrative expenses increased due to continued commercial expansion activities including marketing-related travel expenses and additional personnel on the commercial team. In addition, the increase in personnel along with higher grant date exercise prices has increased the share-based compensation expense.
Interest and other Income/Expense
Interest and other income in 2025 are primarily related to the interest income associated with marketable securities and cash on hand. In 2024, this amount was offset by interest expense related to our debt instruments and the change in fair value of warrant liability. There was no interest expense for the year ended December 31, 2025 due to all debt being paid
off in 2024. There was no change in warrant valuation during the year ended December 31, 2025 due to the exercise of all Tranche B Warrants in 2024.
Critical Accounting Estimates
Our consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States ("GAAP"). Certain critical accounting estimates have a significant impact on amounts reported in the consolidated financial statements. A summary of those critical accounting estimates is below. Additional details surrounding Significant Accounting Policies can be found in Note 3 to our consolidated financial statements contained in this Annual Report on Form 10-K.
Fair Value Measurements
GAAP emphasizes that fair value is a market-based measurement, not an entity-specific measurement. Therefore, a fair value measurement should be determined based on the assumptions that market participants would use in pricing the asset or liability. As a basis for considering market participant assumptions in fair value measurements, GAAP establishes a fair value hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within Levels 1 and 2 of the hierarchy) and the reporting entity's own assumptions about market participant assumptions (unobservable inputs classified within Level 3 of the hierarchy).
Our fair value measurements are generally related to a contingent liability, warrant liability, investments, and stock-based compensation.
Contingent Liabilities
Contingent liabilities are re-measured to fair value each reporting period using projected financial targets, discount rates, probabilities of payment, and projected payment dates. Projected contingent payment amounts are discounted back to the current period using a discounted cash flow model. Projected financial targets are based on our most recent internal operational budgets and may take into consideration alternate scenarios that could result in more or less profitability for the respective service line. Increases or decreases in projected financial targets and probabilities of payment may result in significant changes in the fair value measurements. Increases or decreases in discount rates and the time to payment may result in lower or higher fair value measurements. Increases or decreases in any of those inputs in isolation may result in a significantly lower or higher fair value measurement.
Stock Based Compensation
Valuation of stock options generally requires certain assumptions, including the fair market value of our common stock (generally an observable market price, as our common stock is publicly traded), the expected term of the financial instrument (judgment is required), the expected volatility of our common stock over the expected term (generally estimated by reference to the historical volatility of our common stock), our expected dividend rate over the expected term (currently estimated as zero) and the expected risk-free rate over the expected term (generally estimated by reference to United States treasury instruments with similar remaining terms).
Tax Valuation Allowance
A valuation allowance is recorded if it is more likely than not that a deferred tax asset will not be realized based on the weight of available evidence, both positive and negative. Due to our cumulative loss position and history of operating losses, a full valuation allowance against our net deferred tax assets was considered necessary. We will continue to monitor our cumulative loss position and forecasts and reevaluate the need for a valuation allowance as it could be reversed in future periods.
Accrued Expenses
We utilize CROs in order to perform research and development and conduct clinical trials. In some cases, these organizations do not bill on a timely basis. Management monitors certain key drivers of these costs and estimates accruals in an attempt to properly match expenses incurred with the appropriate reporting period. However, there is judgment involved and the actual billings could be more or less than the estimated accrual.
Delcath Systems Inc. published this content on February 26, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on February 26, 2026 at 14:17 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]