Yahoo Finance Delcath Systems Inc (DCTH) Q1 2024 Earnings Call Transcript Highlights: Key Financials and ...
Revenue: HEPZATO $2 million, CHEMOSAT $1.1 million for Q1 2024.
Gross Margin: Reported at 71%, adjusted to 60% excluding non-recurring items.
Net Income: Not explicitly mentioned, focus on revenue and gross margin provided.
Cash and Investments: Ended Q1 with $27.2 million.
Cash Used in Operations: Approximately $9.6 million in Q1.
Financing: 2024 private placement financing of $7 million.
Research and Development Expenses: $3.7 million for Q1 2024, down from $4.7 million in Q1 2023.
Selling, General, and Administrative Expenses: Increased to $8.8 million in Q1 2024 from $4.2 million in Q1 2023.
Release Date: May 14, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
Delcath Systems Inc (NASDAQ:DCTH) reported US revenue for the first time, marking a significant milestone with $2 million from HEPZATO and $1.1 million from CHEMOSAT.
The company has successfully activated six treatment centers and is engaged with over 30 centers at various stages of training and activation, showing progress in expanding its operational footprint.
Delcath Systems Inc (NASDAQ:DCTH) has achieved an effective gross margin of approximately 60% in the first quarter, indicating strong profitability potential as volumes increase.
The establishment of a permanent J-Code effective April 1 has simplified the reimbursement process, enhancing the willingness of formulary committees to approve the use of the company's products.
Delcath Systems Inc (NASDAQ:DCTH) is supporting both internal and external efforts to add to the growing body of evidence that PHP procedure is an important treatment option for liver dominant cancers, indicating ongoing commitment to research and development.
Negative Points
The company experienced technical difficulties during the earnings call, which may reflect on operational challenges or issues with event management.
Delcath Systems Inc (NASDAQ:DCTH) is still in the early stages of commercialization, and the long-term adoption and success of its treatments are not yet fully proven.
The ramp-up of treatment centers and achieving consistent revenue from new centers may take longer than expected, as indicated by the current pace of center activations and treatments.
While the company has reported initial success in reimbursement, the long-term sustainability of reimbursement rates and processes, especially with private payers, remains uncertain.
Delcath Systems Inc (NASDAQ:DCTH) is dependent on the successful training and certification of healthcare providers under the REMS program, which requires significant commitment and may impact the speed of scaling operations.
Q & A Highlights
Q: What is the current revenue from sales of HEPZATO and CHEMOSAT, and how does it compare to previous periods? A: Gerard Michel, CEO of Delcath Systems, reported that in the first quarter, revenue from HEPZATO was $2 million and from CHEMOSAT was $1.1 million. This is a significant increase compared to $0.6 million for CHEMOSAT during the same period in 2023.
Q: Can you discuss the sustainability of the growth seen in EU revenue, particularly in Germany? A: Gerard Michel explained that the growth in EU, particularly from Germany, is sustainable. This growth is attributed to finally establishing a sales representative in Germany, which has taken about a year to impact sales positively. He anticipates continued growth, primarily driven by Germany, where there is a consistent form of reimbursement.
Q: What are the expectations for gross margins at scale? A: Gerard Michel anticipates that at peak revenue, gross margins could approach close to 90%. He noted that it might take around a year or more to reach this level, but he believes that these would represent peak gross margins for the company.
Q: How is the patient profile for those treated with your products so far, and are they returning for additional cycles? A: Gerard Michel shared that they have seen a variety of patient profiles, including first-line and patients who have received other treatments. Importantly, there is no trend of patients dropping off early and not returning for retreatment, which is encouraging.
Q: What impact has the establishment of the permanent J-Code had on reimbursement processes? A: According to Kevin Muir, General Manager, the permanent J-Code has simplified the reimbursement process significantly. Hospitals using the J-Code have found claims and formulary processes smoother and more predictable, which has facilitated hospital activations and financial planning.
Q: What are the plans for funding future R&D developments? A: Gerard Michel expressed a preference to fund future R&D off the profit and loss statement rather than through raising more equity capital. He emphasized the desire to avoid serial fundraising and believes that if the company achieves significant market penetration, the generated capital should sufficiently fund a robust development program.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
