DELCATH SYSTEMS, INC. Q4 FY2024 earnings call

• 2024 was transformative with HEPZATO's U.S. launch in January, generating significant revenue. Secured permanent J-code and NTAP. • European CHEMOSAT grew 137% in 2024. • Fourth quarter cash burn was $1 million, adjusted EBITDA was $4.6 million. Ended 2024 with $53.2 million in cash and investments, no debt. • Activated three new U.S. treatment centers in Q4 2024, with plans to reach 30 active centers by year-end 2025. • CHEMOSAT volumes in Europe grew 137% in 2024. • Ongoing clinical trials, including SCANDIUM 3 in Sweden and CHOPIN in the Netherlands. • Expanded R&D with appointment of Dr. Michael Brunner to advance procedural improvements and new indications.

In 2024, Delcath generated $32.3 million in HEPZATO revenue in the U.S., with $13.7 million in the fourth quarter from 14 active U.S. treatment centers. Full-year CHEMOSAT revenue was $4.9 million, compared to $2.1 million in 2023. European CHEMOSAT saw a 137% growth in 2024 over 2023. Fourth-quarter gross margin was 86%, and full-year gross margin was 83%.

• Goal to have 30 active U.S. treatment centers by year-end 2025. • SG&A expenses expected to increase by 30%-40% in 2025, starting in the second quarter and fully staffed by mid-year. • R&D spending expected to be $35 million to $40 million in 2025. • Europe expected to see modest growth, with strategic importance for clinical trials and publications.

• Uncertainties in European reimbursement structures. • Competition from other treatments affecting patient flow. • Uncertainty in clinical trial outcomes and their impact on product adoption. • Dependence on successful execution of R&D initiatives for future growth.

Q: How are treatment cycles for HEPZATO patients changing with new sites?

A: The label allows up to 6 treatments, averaging 4.1 in the FOCUS trial. So far, no major changes in treatment cycles seen, with a steady trend.

Q: What's the plan for SG&A expansion?

A: SG&A expenses are expected to increase by 30%-40% in 2025, starting in the second quarter and fully staffed by mid-year.

Q: R&D OpEx and cash flow?

A: Don't rely on always being cash flow positive; will invest in R&D if opportunities are good.

Q: Price increase for HEPZATO?

A: Dependent on inflation as CMS pricing rules apply.

Q: Referral network?

A: Working well, with referrals from community to academic centers, but more centers are needed.

Q: CRC trial details?

A: Plan to deliver 2 cycles of HEPZATO followed by standard of care, with an option to retreat patients if needed.

Q: Europe revenue expectation?

A: Expected to have modest growth, with strategic value from clinical trials and publications.

Q: Centers activation and sales cycle?

A: There's a 'fear of missing out' among centers, with each center unique but seeing increasing interest.

Q: Gross margin and R&D impact?

A: Gross margin is expected to remain high, with R&D to be ramped up in 2025.

Q: R&D mandate?

A: Focus on treating other liver dominant cancers, including expanding to colorectal cancer, breast cancer, etc., and exploring sequencing therapy.