Delcath Systems, Inc. Issues Third Quarter Update
STAMFORD, Conn., Nov. 20 /PRNewswire-FirstCall/ -- Delcath Systems, Inc. , today issued the following third quarter update to shareholders.
Dear Fellow Delcath Shareholders:
I would like to thank my fellow shareholders for their support during the recent months. We look forward to continuing to focus on the advancement of the Delcath system through the Phase III clinical trials, FDA approval and into commercialization. Our accomplishments for the quarter have included, continued progress in our pivotal Phase-III studies using melphalan and doxorubicin, expanding our management team, adding two new Board of Directors, and hiring a nationally renowned investment bank.
Clinical Trials
We were especially pleased to announce the newest clinical trial site, the Methodist Health Care System in San Antonio, Texas, enrolled in the Doxorubicin Phase III trial. The Company has already received the Site's Institutional Review Board ("IRB") and budgeting approvals and has initiated its outreach for patient enrollment. Dr. Rohit Kapoor, M.D. will be the site's principal investigator and oversee the trial, which in addition to its main facility will utilize The Cancer Center of San Antonio and LabCorp, also of San Antonio, as additional locations participating in recruitment and treatment of patients.
As an update for the Phase III Melphalan clinical trial, the National Cancer Institute ("NCI"), the lead site for the trial, continues to successfully recruit and enroll patients. As of September 30, 2006, there have been eight patients enrolled in the study. Regarding the enrollment of additional sites for the Phase III Melphalan trial, we are still waiting for the NCI's IRB to declare it a multi-site trial and allow new sites to join in on the study under the NCI's leadership. Due to the complex regulatory procedures, we are unable to provide a timeframe for completion of this process. However, we continue to have an ongoing dialogue with several hospitals, including the University of Maryland, which have expressed interest in participating either as a clinical site or by referring patients.
As part of our continued relationship with the NCI, we are currently in discussions to sign a revised Cooperative Research and Development Agreement ("CRADA"). This is an important agreement for the Company as it provides us the ability to work with the NCI, pooling our resources to further the advancement of the Delcath system. The new agreement will be for approximately 5 years. The original CRADA was signed in 2001.
Management Team
During the quarter we expanded our management team with the appointment of Dr. Seymour Fein to a newly created position as Chief Scientific Officer. Dr. Fein, who is board certified in both oncology and internal medicine, was previously the Medical Director on Delcath's Scientific Advisory Board. He has more than 38 years in clinical research and as a consultant for biotechnology and medical device companies, playing an active role in obtaining FDA approval for several drugs, including those for the treatment of cancer as recombinant interferon alpha.
Dr. Fein's new role includes responsibilities that were handled by the Chief Technical Officer position, which was held by Delcath's Chairman Dr. Samuel Herschkowitz. With the announcement of Dr. Fein's new position we have phased out the Chief Technical Officer position. Dr. Herschkowitz will maintain his role as the Company's Chairman.
Expansion of the Board of Directors
During the quarter, we announced the appointment of a new independent member to Delcath's Board of Directors, Harold S. Koplewicz, M.D. Dr. Koplewicz is a nationally recognized psychiatrist with key relationships within the medical community at some of the leading hospitals in the United States. We believe through his contacts he will be able to assist us in creating a greater awareness of the Delcath system's advanced cancer therapy and sign up additional sites for our clinical trials.
As the majority of our shareholders are probably already aware, we appointed Mr. Robert Ladd, principal of Laddcap Value Partners, our largest shareholder, as an independent director to the Company's Board. His nomination was part of the Board's settlement with Laddcap to end its consent solicitation.
In conjunction with the Board's promise to shareholders following this year's annual meeting to expand the number of new independent board members by the end of the year, as well as part of its settlement with Laddcap, the Board appointed Mr. Richard Taney, 50, to our Board of Directors earlier this week. He was chosen from a pool of five candidates that Laddcap recommended to the Board.
Mr. Taney is a seasoned executive with 25 years of experience in the financial markets. He is the founding member of T2 Capital Management, LLC, an investment firm with activities in money management, private equity and investment advisory areas. Prior to establishing his money management venture, he spent 20 years advising and managing assets for high net worth clients both domestically and internationally, most recently as Managing Director of Banc of America Securities. Mr. Taney was one of the founding employees of Goldman Sachs Asset Management, a world-renowned money management firm where he served as a Director of Fixed Income Marketing from 1989 to 1991. He earned his BA from Tufts University and his JD from Temple University School of Law. Mr. Taney's broad financial experience is a welcome addition to the Delcath board of directors, and we look forward to his making a meaningful contribution to the future of Delcath.
Also, we were sad to announce recently that Victor Nevins retired from the Board. We thank him for his years of loyal service and investment in the Delcath system. He made substantial contributions to the Board with his insight and business acumen over the past few years and he will be missed.
Following the events of the past few of months, the Board has increased to seven members, five of which are independent. We feel the latest additions to the Board have strengthened the Company's leadership. We will be looking for these new members to play an active role in helping build awareness of the Delcath system in the healthcare community and enrolling new clinical trial sites and patients for our pivotal Phase III melphalan and doxorubicin trials.
Consent Solicitation
By far the most publicized event this quarter was the consent solicitation initiated by Laddcap Value Partners LP. As previously announced in October, both Laddcap and the Delcath Board made several concessions in the negotiations to reach an amicable agreement and settle the differences that initiated the consent solicitation. The settlement incorporated the recommendations of two leading proxy advisers: Institutional Shareholder Services and Glass Lewis & Co. In addition to appointing Mr. Ladd to our Board and nominating another new independent Board member, we issued approximately 100,000 shares of common stock to Laddcap as partial reimbursement for its expenses associated with the Consent Solicitation. Laddcap is permitted to increase its ownership in Delcath up to a maximum of 14.9% of Delcath's total outstanding common stock (currently Laddcap holds approximately 12%) by purchasing additional shares of Delcath common stock only and directly from the Company for a cash price equal to the 10 trading day average of the closing price of Delcath stock prior to the time that an additional purchase is made. Also, we agreed to terminate our lawsuit against Laddcap relating to its claims under Sections 13(d) and 14(a) of the Securities Exchange Act of 1934 and Laddcap agreed to end its attempt to remove the existing Delcath Board.
Now that both sides have come together, we are ready to work together and achieve our common goals, including the completion of our pivotal Phase III melphalan and doxorubicin trials, and ultimately approval for the Delcath system by the Food and Drug Administration.
Development and Manufacturing
During my presentation at the Town Hall meeting in September, we indicated that the Company is always looking to improve its products through value engineering and explore building new relationships with manufacturers in order to meet anticipated demand once we begin marketing the Delcath system following FDA approval. We have held discussions with several manufacturers both in the United States and worldwide, however, we have not made any material progress with any manufacturers interested in these projects at this stage. It is important to note that our current suppliers are meeting the needs of our on-going clinical trials and that while this is an important matter we have adequate time to address this issue.
Investor Relations
Over the past few months we have maintained a strong line of communications with our shareholders. As stated following our 2006 annual meeting we are continuing our program of providing a quarterly update to shareholders. On October 31st we presented at the C.E. Unterberg, Towbin Life Sciences Conference to introduce new investors to Delcath Systems, and building awareness of the potential of our innovative technology.
For further information, shareholders may contact Delcath's investor relations representative, Todd Fromer of KCSA Worldwide, at (212) 896-1215.
Sincerely, M.S. Koly President and Chief Executive Officer About Delcath Systems, Inc.
Delcath Systems is a developer of isolated perfusion technology for organ or region-specific delivery of therapeutic agents. The Company's intellectual property portfolio currently consists of 12 patents on a worldwide basis, including the United States, Europe, Asia and Canada. For more information, please visit the Company's website, http://www.delcath.com.
This release contains forward-looking statements, which are subject to certain risks and uncertainties that can cause actual results to differ materially from those described. Factors that may cause such differences include, but are not limited to, uncertainties relating to our ability to successfully complete Phase III clinical trials and secure regulatory approval of our current or future drug-delivery system and uncertainties regarding our ability to obtain financial and other resources for any research, development and commercialization activities. These factors, and others, are discussed from time to time in our filings with the Securities and Exchange Commission. You should not place undue reliance on these forward-looking statements, which speak only as of the date they are made. We undertake no obligation to publicly update or revise these forward-looking statements to reflect events or circumstances after the date they are made.
Company Contact: Delcath Systems, Inc. M. S. Koly, Chief Executive Officer 203-323-8668 http://www.delcath.com Investor Contacts: Todd Fromer / Garth Russell KCSA Worldwide (212) 896-1215 / (212) 896-1250 tfromer@kcsa.com / grussell@kcsa.com Media Contacts: Lewis Goldberg KCSA Worldwide (212) 896-1216 lgoldberg@kcsa.com
Delcath Systems, Inc.CONTACT: M. S. Koly, Chief Executive Officer, Delcath Systems, Inc.,+1-203-323-8668; or Investor, Todd Fromer, +1-212-896-1215,tfromer@kcsa.com, or Garth Russell, +1-212-896-1250, grussell@kcsa.com,both of KCSA Worldwide; or Media, Lewis Goldberg, KCSA Worldwide,+1-212-896-1216, lgoldberg@kcsa.com
Web site: http://www.delcath.com/