Buying opportunity with upcoming catalysts |
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| By Patrick Crutcher |
| Monday, 30 August 2010 00:39 |
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Recently, DCTH decided to raise about $35M in capital with Canaccord Genuity as the underwriter. These sales occured at $6.51 pps for 5.18M shares and a 30-day option for Canaccord to purchase up to an additional 777,750 shares of common stock to cover over-allotments, if any. Based on DCTH’s analysis, their fully diluted price after this capital raise is roughly $5.59. They should have roughly $55-59M on hand now, which should take them well into 2011, based on $2M monthly burn rate. Investors should know that DCTH was that FDA granted the Delcath Percutaneous Hepatic Perfusion (PHP) System with melphalan Fast Track designation for the treatment of hepatic tumors secondary to melanoma and their pivotal Phase 3 trial was conducted under a Special Protocol Assessment(SPA) with the FDA. DCTH posted great results from their Phase 3 trial, namely, DCTH’s PHP System treatment caused the survival rate to triple (398 days vs. 124 with the best alternative care). The hepatic progression-free survival (hPFS - primary endpoint) was 245 days in the PHP arm and 49 days in the BAC (best alternative care) arm. All of which are statistically significant. This reflects a 196-day prolongation of hPFS over BAC control arm, with less than half the risk of progression and/or death in the PHP system with melphalan group compared to the BAC control group. The PHP System essentially allows for doctors to administer significantly higher doses of existing chemotherapy drugs to the liver without exposing each patient’s entire body to the anti-cancer drugs. Their technology represents a great solution that promises to increase the effectiveness of approved anti-cancer drugs while reducing systemic side effects. Traditional herpatic perfusion suffers from several problems, mainly they are highly invasive surgical procedures with high morbidity, hepatic toxicities limit drug dosing, and likelihood of liver disease recurrence after surgery. They are also conducting a separate Phase II clinical trial of the DCTH’s PHP System with melphalan in patients with primary and metastatic hepatic malignancies (liver cancer), stratified into four arms: neuroendocrine tumors (carcinoid and islet cell tumors), hepatocellular carcinoma (primary liver cancer), ocular or cutaneous melanoma (eye or skin cancer who have been previously treated with regional therapy using melphalan), and metastatic adenocarcinoma (glandular cancer). The Phase III and Phase II clinical trials are subject to a Cooperative Research and Development Agreement(CRADA) with the National Cancer Institute(NCI). The status of the Phase 2; based on their Clinicaltrials.gov page, indicates that they are still actively recruiting patients.
DCTH is aiming to price the PHP system at about $20k per treatment with about 2.5 treatments per patient, so roughly $50K revenue per patient. In their Phase 3 trial, roughly 90% of the patients had ocular melanoma and 10% had cutaneous; they expect approval for both indications. A rough estimate of the patient population is about 10,000-15,000/year.(There is also the potential for off-label use in liver cancer, but I won’t address that.) This puts revenue potential at about $500M - $750M. They could see approval next year in early to mid-2011, since they have Fast-Track designation and would likely get a 6-month priority review. If they submit their NDA by mid-October, they could have a decision from the FDA by mid to late April 2011. BiomedReports is not paid or compensated to report news and developments about publicly traded companies. Full disclosure can be read in the About Us Section Add this page to your favorite Social Bookmarking websites            |
Since this year's ASCO conference, the bears have really come out on Delcath Systems Inc. (NASDAQ:DCTH), based on the recent short interest (8.8M shares) and lack of news. DCTH has declined roughly 65% from their pre-ASCO highs. Prices at these levels still represent a great buying opportunity for upcoming catalysts.
