Delcath Systems Third Quarter 2026 Earnings Call - DELCATH SYSTEMS INC

Good morning, ladies and gentlemen. Welcome to the DELCA Systems 3rd Quarter 2026 Earnings Conference Call. At this time, all lines are 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 0 for the operator. This call is being recorded on November 9, 2026. I would now like to turn the conference over to Mr. David Hoffman, DELCAS General Counsel, please go ahead. Thank you, and welcome to DEL CAS System's third 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. 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 1933 and Section 21E of the Security 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. Actual results may differ in a material manner from those expressed or implied in forward-lookings statements due to various risks and uncertainties. For a discussion of such risks and uncertainty, please see the risk factors detailed in the company's annual report on Form 10-K reports on Form 10-Q, and 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. We will also discuss adjusted EBITDA, a non-GAAP financial measure. This measure should not be considered a substitute for GAAP results. The reconciliation to net income is included in our earnings release. The third quarter 2026 earnings release is available in the investor section of our website, along with additional details on our financial results and our latest SEC filings. We encourage you to review those materials. A recording of today's call will also be available on our website. Now, I'll turn the call over to Gerard and Michelle. Gerard, please proceed. Thank you, David, and good morning. DELFCAST's record third quarter of $35.1 million in revenue, up 71% in the third quarter in 2025, reflects the growing adoption of HepsadoKit and the hard work of both the Delcath and Physician Treatment teams. Just as importantly, we are delivering positive operating cash flow, which gives us the flexibility to support investment in both the treatment network and ongoing research that will expand the platform. The growth and profitability was driven by strong new patient starts for the quarter at approximately 0.6 new patient starts per site per month. We now have 33 active treatment centers in the U.S. Since our last update, we have added the University of Nebraska and AdventHealth. Two additional new centers have patients scheduled this month, and we expect at least one more activation before year-end, which would bring us to at least 36 centers by year-ends. The addition of AdventHeath is especially meaningful given its scale as one of the nation's largest integrated health systems with more than 50 hospitals, over 2,000 care sites, and roughly 4 million unique patients served each year, providing a robust platform for referral volume and system-wide utilization of Hepzato. Our focus remains on both expanding the network and increasing utilization at existing centers through referral relationships, community physician education, and better coordination across the patient pathway. Combination treatment with systemic therapy is increasingly becoming the norm. Most physicians view the two approaches as complementary rather than mutually exclusive. Chopin has provided an important foundation for this treatment strategy. An independent real-world experience continues to inform patient selection and sequencing strategy. In the third quarter, the 1,000th commercial hepato treatment in the United States took place, which reflects the broadening acceptance of the therapy across a growing number of centers. In addition, University Hospital Southampton delivered their 500th chemo staff procedure led by Dr. Sasha Nmodi. This illustrates how, once the center gains experience and sees results, the therapy tends to become firmly incorporated as an important component of standard of care. On the clinical development side, the phase two colorectal trial continues to enroll at a pace that supports an interim analysis in the middle of next year. As we've discussed in prior calls, enrollment in the breast cancer trial has been slower than initially anticipated. We are not yet in a position to provide guidance on the timing of an interim analysis. However, the first patient was dosed in July at the European Institute of Oncology in Milan, and we now have multiple sites recruiting patients in Europe and the U.S., and we continue to work with sites to support enrollment. We are also expanding our pipeline with a planned IND submission for cholangiocarcinoma in early 2027 and pending FDA agreement, depletion of an ongoing preclinical development of an oxaloplatin-based PHB program by mid-2027 to support a subsequent IND. Both clinical programs have substantial strategic significance. The cholangiocarcinoma trial has broad support in the medical community, based on both clinical development experience with chemo set in Europe and the very high unmet need. Delcath is exploring the oxaloplatin-based PHB product because physicians are already highly familiar and comfortable with oxaloplatin as a standard backbone agent in colorectal and other GI cancer treatments. By delivering high-dose oxalplatin regionally through the hepatic delivery system and reducing systemic exposure, we may be able to incorporate it in a standard Folfax regime in patients with liver diameter cancers without meaningfully increasing toxicity, particularly cumulative neuropathy. From a biology standpoint, many oncologists view oxaloplatin as a better match to colorectal liver metastases and therefore may be more comfortable using oxaloplatin-based PHB treatment in a first or second line setting versus a melphalan-based product. We will provide updates on these two programs as they reach regulatory and operational milestones in 2027. With that, I'll turn the call over to Sandra. SANDRA J. Thank you, Gerard. For the third quarter of 2026, total revenue was $35.1 million, compared with $20.6 million in the third quarter of 2025. A Sato kit revenue was 32.7 million, compared to $19.3 million in prior year third quarter. This represents a HEP-SATO volume increase of 19% from the prior quarter and 72% year-over-year. Chemostat revenue was $2.4 million compared with $1.3 million in the prior year third quarter. Gross margin was 89% for the quarter compared with 87% in the third quarter of 2025. Research and development expense was $11 million compared with $8 million in a prior year quarter. The increase primarily reflects additional clinical headcount and increased clinical trial activity, selling general and administrative expense to $13.1 million compared with $10.3 million in the prior year quarter. This increase reflects our continued investment in commercial expansion. Net income was $7 million compared to $0.8 million in Q3 of 2025. On a non-GAAP basis, adjusted EBITDA was $11.5 million compared with $5.3 million in the prior year quarter. These results demonstrate the operating leverage in our commercial model. At the same time, quarterly profitability may vary as we continue to invest in treatment network expansion and clinical development. We ended the quarter with $104.3 billion in cash investments and no debt. Cash generated from operations was $8.2 million for the quarter compared with $4.8 million in a prior year order. Turning to our 2026 outlook, we are raising our full-year total revenue guidance to a range of $115 million to $117 million. We expect at least a 41 percent Pepsado kit volume growth over 2025. Our guidance reflects $25.8 million to 27.8 million total revenue in the fourth quarter of 2026, a year-on-year growth of approximately 25 to 34 percent. We also expect full- year gross margin of 87 to 89 percent and positive adjusted EBITDA. Thank you for joining us today. I'll now turn the call back to the operator to open the line for questions. Operator, we are opening the line back for questions Ladies and gentlemen, we will now conduct a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the queue. You may press star 2 if you would like to remove your question from the queue for participants using speaker equipment. It may be necessary to pick up your handset before pressing the star keys. One moment, please, while we call for questions. The first question comes from Marie Duval with USGaG. Please go ahead. Hi, good morning, Gerard and Sandra, and congrats on a really impressive quarter. I wanted to ask a little bit about what you think drove the outperformance this quarter. It was certainly several million more than I think folks were expecting, and it looks like your outlook is calling for a return to sort of a more normalized level in Q4. I'm not sure if that's some conservatism, but maybe you could get into a little more detail about whatyou saw at centers in the quarter and what your expectations are going forward from here. Yeah, I think probably two primary drivers for – well, three, I think, for the strong results. One is I think Chopin and combination therapy or sequencing therapy is becoming increasingly the norm. So we're no longer, you know, getting behind systemic treatments. I'm not – I don't believe we have a lot of first-line usage, But when the patients make it through our centers, if they're already on ipinevo, for an example, or Kevi, they'll add this on pretty quickly. Or if they are treatment naive, they will start with sequencing. Not all centers are doing that, but I would say it's probably more the norm now than the exception for background systemic therapy with PHP. So that essentially kind of moves us up a bit. And I think the patients stay on therapy longer. on combination therapy. So that should help the number of doses they get as well. I think the second thing is just docs are seeing results and the word is getting out there to the patient community and the patients are increasingly asking for the therapy. So that helps quite a bit as well when they show up fairly well informed about it. And then lastly, I think, you know, this time last year, we were faced with significant headwinds from clinical trials. There's less of that going on now. But I would add a fourth point, and that is that our teams did do a good job. We incentivized the sales force to try to get backup teams in place. It definitely was a component of scheduling last year. And quite a few centers, we managed to get backups both for the perfusionists, the anesthesiologists, as well as the IRs. And then, you know, which by definition increases the capacity at these centers. So there's four reasons for you. Very good. Okay, well, that's helpful. I'm glad to hear all of that is working together and driving results. And then maybe a question for Sandra, because I'd like to hear about pipeline, but I'm sure some of my colleagues on the line will also ask. I guess on the spending side, saw that the R&D headcount went up as you do, you know, more in the pipeline programs. So is it fair to assume that R&B spending is kind of at this new level that we should kind of sustain that level and then SG&A sort of fluxes with revenue? Or how would you sort of characterize spending going forward? Thank you for taking the question. Yeah, I think that's correct. You know, as we mentioned, I think at the first couple of calls this year that spending was a little bit slower on the R&D side due to slower than anticipated ramp in the trials. But now in Q3, we've seen that come back a bit. So this is probably more of the norm to increase quarter over quarter as we go into 2027. And then for an SG&A perspective, yes, I thinks we have a fully staffed, almost fully staffed commercial team based on the expansion to the nine regions. So this is likely a little bit more flat of a growth going into the fourth quarter and then next year, but also will flex a bit with the increase in sales quarter over quarter. All right. Thank you so much. Thank You. Thank YOU. The next question comes from John Newman with CounterCord. Please go ahead. Hi, thanks for taking my question. Another really great quarter. I just had a question about the progress in colorectal cancer. Gerard, I thought I heard you say we could get an update in the middle of next year, but I just wanted to double check that. I believe you may have previously mentioned year-end 27, and then just curious if you can give us any color enrollment there. Thank you. Yeah, I've noticed you guys do a good job paying attention to what I said last year, last call, and what changes. Yeah. You're right. I was more towards the back end of next year. And now I did say closer to mid this year. So I don't know. Q2, Q3 is probably when we'll provide an update on the interim results. Okay. Thank You. Thank you. The next question comes from Chase Knickerbocker with Craig Hellam. Please go ahead. Good morning. I'll add my congrats on a great quarter as well. Maybe just a double click on guidance. Q4 is an implied step down in your guide. That seemingly wouldn't be commensurate with that 0.6 new patient starts per site per month you mentioned. So I guess what's your level visibility to that and then can you just walk us through your assumptions to get to that implied q4 thanks yeah I think that the primary reason you're seeing that that step down is you know we're assuming and we did see this last year for we essentially lose two weeks close to two weeks due to the holidays so you know, if you take that out, that accounts for the majority of what you're characterizing as a step down. Could we be wrong? I'd love to be wrong, but I think it's prudent to assume that in terms of scheduling, we look at when patients were scheduled last year, look at the calendar this year, that we took out the days where we don't think we'll see any treatment. So that's the primary driver for, again, what you characterize as a stepped down. so fair on the kind of the rest of the quarter to kind of expecting new patient starts that are fairly consistent with what we saw in q3 q and q2 and then i just have a follow-up yeah and we've seen bounce all the way around but no we did we saw fewer we generally see fewer new patient starts in the fourth quarter um so we're taking it you know doing the best we can but we're taking into account what we've seen in prior fourth quarters in terms of new patient stars as well as what we've taken into account, what we're seeing in terms of weeks or days where patients are actually scheduled for treatment. Understood. And then just maybe with the final rules getting posted last week, any thoughts that you have around the 340B changes and any potential impact to your business as we think about 27? Yeah, I think we've given a fair amount of thought, as you might expect. I think what we believe is this will be a net neutral to a net positive for us in terms of ASPs without any impact on volume one way or the other. Got it. Thank you, Gerard. Thank you. The next question comes from Yale Jen. Please go ahead. Good morning and thanks for taking the questions and congrats on very good quarters. I just want to get a little bit deeper on the fourth quarter. We already have a one month passed in October. So what do you, I mean you get from your new guidance, I'm just curious whether, how was the October numbers sort of in line with your expectation for the fourth quarter? Well, I'll just say that the fourth-quarter, I mean, the October number is clearly input into the guidance we gave. Other inputs are what we saw in past fourth quarters in terms of new patient starts as well as, I think, last year, the new patient's starts were 0.3 to 0.35. or 3.3 to 0.35 in Q4 so you know if we assumed continued 0.6 I think we'd be being a bit aggressive so I'm not going to speak to precisely what we're seeing in October but I you know we're very comfortable with our guidance okay great that's very helpful and again congrats on the overall good quarters and Okay, moving forward. Thank you, Joe. Thank you. Once again, if you have a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. The next question comes from Sam Bakula, Ramakant, with H.C. Wainwright. Please go ahead. Thank you this is R.K. from H.P. Wienwright. good morning Gerard and Sandra congratulations on a quarter and I guess I guess now we got rid of the third quarter of cobwebs from last year so that's good thinking thinking through the point six new starts per site per month that yeah you stated for the third quarter you know where did that additional starts come from was there in new patients or repeat treatments? And also, is the growth that you're seeing, are they broad based among some of your mature centers that have been with you for a while now? Yeah, so the 0.6 new patients start by definition are new patients, but obviously returning patients round out the numbers. But I'll let Kevin give some color on where we're seeing this coming from. Thank you, Gerard. As he mentioned earlier in the call with the 0.6 new patients, it's been pretty broad-based across our treatment centers. However, our larger centers have increased capacity and have increased the treatment team. Sometimes those centers like MD Anderson, Mass General, have really picked up the level of treatments that they do in enrolling new patients. Thanks for that. And then, Gerard, you also stated ADVENT, which is an integrated health network, as a key addition during this quarter. much energy is being spent in trying to get such centers on board because as you stated once you get some of these centers up you can have broad-based patient adoption or adoption you know into the system well what's exciting for us is when sites like Advent health come on that have over 50 hospitals and within their integrated network. They also have a host of primary care centers and general oncologists that are within that integrated network, and they help us funnel patients with metastatic uveal melanoma to these treatment centers. So ADVENT in and of itself is large, but it's not unique. A lot of our other centers, some of those that I mentioned, have similar networks of oncologists that are now beginning to refer their patients into specific treatment centers that offer Hepzodoket. Thanks for that. One last question. I think you said, you know, 36 centers is what you're looking at for the end of the year. You know, what's the push and pull on that number? You know would could we be seeing you know more more than that number thanks yeah we mentioned we have two additional sites with patients scheduled right now um in the next week i think uh yeah a couple weeks and uh you know the danger there is they get cancelled and that happens occasionally uh and we probably have three others where we think it's possible that you get a patient in by December. And I think as everybody knows, I've been woefully inaccurate in my projections for new centers, but I've also overperformed on the new starts per center. So we've done okay. But we've got a good count of the two that are scheduled. There's probably six or so that could go. Now out of that, Do two go? Do three go? Four go? I don't know. We'll see. But I want to give color because I know there's an appetite to know what's going on out there in change center starts. I'm letting you know everything we have. And I think given the variability we've seen in the past, hopefully you guys understand that there's no guarantees on those numbers, but we are definitely headed in the right direction. Thank you. Thanks for taking all my questions, Gerald. Thank you. There are no questions at this time. This now concludes the conference call for today. Thank you for your participation. You may now disconnect your lines.