Delcath Systems Third Quarter 2026 Earnings Call - DELCATH SYSTEMS INC

Explicit Guidance:

• FY2026 Total Revenue: Raised to $115 million–$117 million (previously lower).
• FY2026 HepsadoKit Volume: Expecting at least 41% growth compared to FY2025.
• Q4 2026 Revenue: Guidance range of $25.8 million–$27.8 million, representing year-over-year growth of 25–34%.
• FY2026 Gross Margin: Expected range of 87–89%.
• FY2026 Adjusted EBITDA: Guidance for positive adjusted EBITDA for the full year.
• New Patient Starts: Current run rate of 0.6 new patient starts per site per month; Q4 guidance reflects an expected normalization in starts (historically 0.3–0.35) due to seasonal headwinds and holiday scheduling gaps.

Business-Segment Outlook:

• Network Expansion: Target of at least 36 active treatment centers by end of 2026 (currently 33; 2 scheduled this month, 1+ expected before year-end).
• Center Activation Risks: Acknowledged "no guarantees" on center activations; estimates include scheduled sites that could be cancelled or delayed.
• Utilization Strategy: Focus on increasing utilization at existing centers via referral relationships and community physician education; combination therapy with systemic treatments (e.g., ipilimumab, nivolumab) is becoming the norm, expected to increase patient persistence and dose frequency.
• Commercial Team: Commercial team described as "fully staffed, almost fully staffed" across nine regions; SG&A expected to remain relatively flat with slight flex based on sales volume.

Market and Competitive Outlook:

• Therapy Adoption: "Chopin" (combination sequencing) is increasingly viewed as complementary to systemic therapy rather than mutually exclusive; 1,000th commercial Hepzato treatment in the U.S. indicates broadening acceptance.
• Volume Drivers: Growth driven by word-of-mouth, informed patients requesting therapy, and expanded center capacity (backup teams for perfusionists, anesthesiologists, and IRs).
• Pricing Impact: Anticipated net neutral to net positive impact on Average Selling Prices (ASPs) from recent 340B final rules; no expected volume impact.
• Pipeline Expansion: Planned Investigational New Drug (IND) submission for cholangiocarcinoma in early 2027; pending FDA agreement for preclinical oxaliplatin-based PHB program (depletion) to support IND by mid-2027.

Macro / Industry Outlook:

• Clinical Trial Environment: Headwinds from clinical trial delays have diminished compared to the prior year; enrollment in the colorectal phase two trial supports an interim analysis in the middle of next year (2027).
• Breast Cancer Trial: Enrollment slower than anticipated; interim analysis timing not yet defined, though first patient dosed July in Europe with multiple US/EU sites recruiting.
• Regulatory: Pending FDA agreement for the oxaliplatin-based PHB program; management notes high unmet need in cholangiocarcinoma supporting broad medical community interest.

Strategic Initiatives:

• Product Pipeline: Developing an oxaliplatin-based PHB program to match patient comfort with standard Folfax regimens and reduce systemic toxicity (specifically cumulative neuropathy) in colorectal liver metastases.
• Capacity Investments: Continued investment in treatment network expansion and clinical development headcount; R&D expenses expected to sustain current higher levels into 2027 to support pipeline programs.
• Strategic Partnerships: Expanded integration with large health systems (e.g., AdventHealth) to funnel patients (e.g., metastatic uveal melanoma) from primary care/oncology networks to treatment centers.

Risks and Headwinds to Outlook:

• Scheduling Variability: Q4 revenue step-down is a function of losing ~2 weeks due to holidays and typical seasonal drops in new patient starts; actual results could vary if patient scheduling deviates from historical norms.
• Clinical Enrollment: Breast cancer trial enrollment uncertainty; inability to guarantee interim analysis timing for breast cancer vs. colorectal (mid-2027).
• Center Activation Uncertainty: No guarantees on the 36-center target; scheduled centers may face cancellations.
• Expense Fluctuation: R&D spending may vary quarter-to-quarter based on trial ramp; quarterly profitability may fluctuate as the company balances network expansion and clinical investment.

Management Tone on the Future:

• Confidence: Expresses confidence in FY2026 guidance and commercial model operating leverage; notes "overperformance" on new starts per center despite conservative projection history.
• Prudence: Describes Q4 guidance as "prudent" regarding holiday impacts and seasonal slowdowns; explicitly avoids aggressive assumptions for new patient starts in Q4 despite strong Q3 performance.
• Strategic Outlook: Optimistic regarding the shift to combination therapy and the strategic value of large integrated health systems; views the oxaliplatin PHB program as having "substantial strategic significance."

Miscellaneous:

• Financial Position: Ended Q3 2026 with $104.3 billion in cash and investments (no debt) and generated $8.2 million in operating cash flow for the quarter.
• Non-GAAP Measures: Adjusted EBITDA for Q3 2026 was $11.5 million (up from $5.3 million YoY); management notes that quarterly profitability may vary as investment continues.