dcth-20230630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

_____________________

FORM 10-Q

______________________


x			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2023


o			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________ to ___________

Commission File Number: 001-16133

______________________

DELCATH SYSTEMS, INC.

(Exact name of registrant as specified in its charter)

______________________


Delaware			06-1245881
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

1633 Broadway, Suite 22C

New York, NY 10019

(Address of principal executive offices)

(212) 489-2100

(Registrant’s telephone number, including area code)

______________________

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common stock, $0.01 par value per share

DCTH

The NASDAQ Capital Market

______________________

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Securities Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

As of August 3, 2023, 15,276,487 shares of the Company’s common stock, $0.01 par value, were outstanding.

Table of Contents

DELCATH SYSTEMS, INC.

Table of Contents


		Page
PART I—FINANCIAL INFORMATION

Item 1.	Financial Statements

	Unaudited Condensed Consolidated Balance Sheets as of June 30, 2023 and December 31, 2022	3

	Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss for the three and six months ended June 30, 2023 and 2022	4

	Unaudited Condensed Consolidated Statements of Stockholders’ Equity for the three and six months ended June 30, 2023 and 2022	5

	Unaudited Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2023 and 2022	6

	Notes to the Condensed Consolidated Financial Statements	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	26

Item 4.	Controls and Procedures	26

PART II—OTHER INFORMATION		28

Item 1.	Legal Proceedings	28

Item 1A.	Risk Factors	28

Item 6.	Exhibits	55

SIGNATURES		56

Table of Contents

DELCATH SYSTEMS, INC.

Condensed Consolidated Balance Sheets

(Unaudited)

(in thousands, except share and per share data)


	June 30, 2023		December 31, 2022
Assets
Current assets
Cash and cash equivalents	$	14,540	$	7,671
Restricted cash	50		4,151
Accounts receivable, net	127		366
Inventory	2,480		1,998
Prepaid expenses and other current assets	2,275		1,969
Total current assets	19,472		16,155
Property, plant and equipment, net	1,403		1,422
Right-of-use assets	175		285
Total assets	$	21,050	$	17,862
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable	$	966	$	2,018
Accrued expenses	5,546		4,685
Lease liabilities, current	92		186
Loan payable, current	4,510		7,846
Total current liabilities	11,114		14,735
Warrant liability	3,780		—
Other liabilities, non-current	1,146		1,144
Loan payable, non-current	411		3,070
Convertible notes payable, non-current	4,841		4,772
Total liabilities	21,292		23,721
Commitments and contingencies (see note 13)
Stockholders’ equity (deficit)
Preferred stock, $0.01 par value; 10,000,000 shares authorized; 20,981 and 11,357 shares issued and outstanding at June 30, 2023 and December 31, 2022, respectively	—		—
Common stock, $0.01 par value; 80,000,000 shares authorized; 15,250,469 shares and 10,046,571 shares issued and outstanding at June 30, 2023 and December 31, 2022, respectively	153		100
Additional paid-in capital	473,355		451,608
Accumulated deficit	(473,686)		(457,484)
Accumulated other comprehensive loss	(64)		(83)
Total stockholders’ equity (deficit)	(242)		(5,859)
Total liabilities and stockholders’ equity	$	21,050	$	17,862

See accompanying Notes to Condensed Consolidated Financial Statements.

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DELCATH SYSTEMS, INC.

Condensed Consolidated Statements of Operations and Comprehensive Loss

(Unaudited)

(in thousands, except share and per share data)


	Three months ended June 30,				Six months ended June 30,
	2023		2022		2023		2022
Product revenue	$	495	$	797	$	1,092	$	1,003
Other revenue	—		—		—		171
Total revenues	495		797		1,092		1,174
Cost of goods sold	(150)		(180)		(331)		(214)
Gross profit	345		617		761		960
Operating expenses:
Research and development expenses	3,555		5,606		8,131		10,087
Selling, general and administrative expenses	4,787		4,497		8,952		8,699
Total operating expenses	8,342		10,103		17,083		18,786
Operating loss	(7,997)		(9,486)		(16,322)		(17,826)
Change in fair value of warrant liability	1,160		—		1,160		—
Interest expense, net	(371)		(665)		(1,059)		(1,309)
Other income (expense)	6		(8)		19		(24)
Net loss	(7,202)		(10,159)		(16,202)		(19,159)
Other comprehensive income:
Foreign currency translation adjustments	—		(31)		19		(29)
Total other comprehensive loss	$	(7,202)	$	(10,190)	$	(16,183)	$	(19,188)
Common share data:
Basic and diluted loss per common share	$	(0.58)	$	(1.24)	$	(1.35)	$	(2.34)
Weighted average number of basic and diluted shares outstanding	12,463,665		8,190,483		12,035,738		8,190,483

See accompanying Notes to Condensed Consolidated Financial Statements.

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DELCATH SYSTEMS, INC.

Condensed Consolidated Statements of Stockholders’ Equity (Deficit)

(Unaudited)

(in thousands, except share data)


	Preferred Stock $0.01 Par Value			Common Stock $0.01 Par Value			Additional Paid in Capital		Accumulated Deficit		Accumulated Other Comprehensive Income (Loss)		Total
	No. of Shares	Amount		No. of Shares	Amount
Balance at January 1, 2023	11,357	$	—	10,046,571	$	100	$	451,608	$	(457,484)	$	(83)	$	(5,859)
Compensation expense for issuance of stock options	—	—		—	—		1,661		—		—		1,661
Private placement -issuance of common shares, net of expenses	—	—		19,646	1		55		—		—		56
Issuance of common stock with the employee stock purchase plan	—	—		15,417	—		47		—		—		47
Net loss	—	—		—	—		—		(9,000)		—		(9,000)
Total comprehensive income	—	—		—	—		—		—		19		19
Balance at March 31, 2023	11,357	$	—	10,081,634	$	101	$	453,371	$	(466,484)	$	(64)	$	(13,076)
Compensation expense for issuance of stock options	—	—		—	—		1,661		—		—		1,661
Conversion of Preferred F-1 shares to common shares	—	—		4,629,539	47		11,222		—		—		11,269
Preferred F-2 Shares Issuance	9,624	—		—	—		7,099		—		—		7,099
Prefunded warrant exercise	—	—		538,828	5		—		—		—		5
Issuance of common stock related to stock option exercises	—	—		468	—		2		—		—		2
Net loss	—	—		—	—		—		(7,202)		—		(7,202)

Balance at June 30, 2023	20,981	$	—	15,250,469	$	153	$	473,355	$	(473,686)	$	(64)	$	(242)


	Preferred Stock $0.01 Par Value			Common Stock $0.01 Par Value			Additional Paid in Capital		Accumulated Deficit	Accumulated Other Comprehensive Income (Loss)	Total
	No. of Shares	Amount		No. of Shares	Amount
Balance at January 1, 2022	11,357	$	—	7,906,728	$	79	$	432,831

SEC Form 10-Q filed by Delcath Systems Inc.