Good day, ladies and gentlemen, and welcome to the First Quarter 2013 Delcath Systems Earnings Conference Call. My name is Derrick, and I'll be your operator for today. [Operator Instructions] As a reminder, this conference is being recorded for replay purposes. I would now like to turn the conference over to Mr. Doug Sherk. Please proceed.

Thank you, Derrick, and good afternoon everyone. Thank you for joining us today for this conference call and webcast to provide an update on Delcath's first quarter 2013 results and recent developments. A replay of the conference call will be available approximately 2 hours after the conclusion of today's call and it will be available for 7 days. The operator will provide the replay details at the conclusion of today's call. A live webcast of this call is also available at www.delcath.com and the call will also be archived on the website. Before we begin, I'd like to remind you that some of the statements made during this conference call will contain forward-looking statements within the meaning of the Safe Harbor provision of the U.S. Private Securities Litigation Reform Act of 1995. These statements are subject to certain risk and uncertainties, and actual results could differ materially from those projected in any forward-looking statement. Factors that could cause actual results to differ are discussed from time to time in the company’s filings with the SEC, including our annual report on Form 10-K and our reports on Form 10-Q and 8-K. These documents are available on the Investor Relations section of our website, and we encourage you to review the material. The company has no obligation to publicly update or revise these forward-looking statements to reflect the events or circumstances after the date they are made. Participating on today's call are Eamonn Hobbs, President and Chief Executive Officer; and Graham Miao, Executive Vice President and Chief Financial Officer. Following their opening remarks, we will open the call for questions from analysts and institutional investors. [Operator Instructions] And with that, I'd like to turn the call over to Mr. Hobbs.

Thanks, Doug. Good afternoon, everyone, and thanks for joining us today. Of course, the most significant development at our company since we talked with you in early March was last Thursday's highly disappointing and surprising vote by the FDA's Oncologic Drugs Advisory Committee or ODAC. This afternoon, we'll provide an update on the ODAC panel outcome and overview of our strategy going forward, including our clinical development program for other indications, and we'll provide a brief update on our EU commercialization. Graham will then review our first quarter financial results and provide an update on the availability and use of resources now and in the coming months. Let's start with the ODAC panel outcome. On May 2, 2013, the Oncologic Drugs Advisory Committee, ODAC, to the U.S. Food and Drug Administration voted that the benefits of treatment with Melblez Kit do not outweigh the risks. It's important to note that the ODAC committee met solely to review certain aspects of the Melblez Kit NDA with the Generation One filter. Equally important is to recall the Delcath NDA contained our Generation Two filter included as a technical change in the chemistry, manufacturing and control module of the NDA as a means to bring the enhanced safety of the Gen Two filter to U.S. patients sooner. As a reminder, our European product is being commercialized with the Gen Two filter. The FDA briefing documents released before the meeting stated that the clinical trial data would be necessary to consider the Generation Two filter for approval, indicating that FDA found our preclinical bridging studies were insufficient alone to approve the marketing of a device containing a new filter. In addition to collecting clinical safety data, the FDA stated in a briefing document that the impact of a filter change on the efficacy of…

Thank you, Eamonn. Good afternoon, everybody. Let me start by discussing the company's financial condition. Thanks to the funding instruments we put in place during the first quarter 2013. We raised approximately $30 million through a combination of At-The-Market or ATM equity offering, which raised the $20.9 million and through committed equity financing facility or CEFF, which raised about $9 million. We believe these funding vehicles offered the most efficient and the less dilutive ways of capital ways compared to other alternatives. As a result, our cash position as of March 31, 2013, was strong at $42.8 million compared to $23.7 million at December 31, 2012. Furthermore, as part of our continued efforts of effective cost management, our cash utilization in the first quarter of this year was $11.3 million, a 23% reduction compared to the $14.7 million used in the first quarter of 2012. The decrease in cash utilization during the first quarter was in part due to a reduction in NDA submission costs, as well as the elimination of EU commercialization startup costs. As a reminder, in early April this year, we implemented a plan to decrease our expected 2013 quarterly operating cash use to between $9 million and $10 million from the previously communicated range of $9 million to $12 million. Beginning in the second half of the year, post ODAC, we are actively examining additional cost of reduction strategies to reduce cash utilization even further. Turning to the income statement. For the first quarter 2013, we recorded revenue of $0.4 million, of which $0.3 million was related to the recognition of previously deferred revenue as a result of satisfying certain requirements of the company's research and the distribution agreement with Chi-Fu Trading Co. in Taiwan. The remainder of the revenue was related to product sales. Operating loss was $10.2 million, which included approximately $0.7 million in noncash stock-based compensation expense, as compared with an operating loss of $14.6 million including $0.9 million in noncash stock-based compensation expense in the first quarter of 2012. Selling, general and administrative, SG&A expenses were $6.1 million, a decrease from $7.4 million for the same period in 2012. The lower SG&A expense was primarily due to the elimination of EU commercialization startup costs. Research and development expenses were $4.5 million, a decrease from $7.1 million for the same period in the prior year. The lower R&D expenses reflect a significant reduction of NDA-related expenses. As Eamonn mentioned, we expect the product revenue ramp to be slow until further progress is made on securing compelling reimbursement in Europe. We are continuing to work hard at establishing reimbursement mechanisms for the CHEMOSAT procedure in our target countries, which we believe in combination with increased clinical experience in Europe will help support future revenue growth. With that, let me turn the call to the operator. We would like to open the call for questions.

[Operator Instructions] We do have a question coming from the line of David Nierengarten, Wedbush.

The one question that we have is looking at your timeline to commercialization, you mentioned that you would look to a publication to support compelling reimbursement for CHEMOSAT in Europe. Is there any timing on when that publication might happen?

David, the publication manuscript is with the authors, and has been circulated amongst the authors and is in the final stages. So we are hopeful that it will actually be submitted for publication in the near future. That's -- we spoke with the lead author earlier today and that's the latest information we have.

Is there any other potential ways you could secure reimbursement? Or a higher level of reimbursement, I should say?

Well, the publication is a key factor in securing reimbursement. But clearly, it's not the only factor. We have quite a large number of initiatives that are ongoing in our 7 target markets for reimbursement. And publication plays a role in all of those 7 markets, but we also have local data being generated. We have physician advocates in each of the markets that are working with their local reimbursement authorities to facilitate interim and ultimately, long-term reimbursement. So it's a multifront, multifaceted effort.

I take it after publication there would still be some time for application for reimbursement, and such. Is that fair and is that -- do you have a timing for how long that might take to publication and reimbursement, or a higher level of reimbursement?

Yes, I'd say that that's a fair estimate and the timeline is not statutory, so it really is hard to speculate on it.

At this time, I'm showing no further audio questions in queue.

We have a question from the webcast participant. In terms of the ODAC panel review, can you discuss the doctors' participation in the EAP program, the impact of the ODAC panel review on the doctors willing to consent to the EAP program?

The ODAC panel review has initiated quite a passionate, and if not, visceral response from our EAP clinical sites in that they felt that the ODAC got it wrong. And they are actively enrolling patients into the EAP and as I mentioned during the prepared remarks, there are currently 5 patients that are scheduled for treatment in the EAP, 5 additional patients. We'd expect that to continue.

Another question from the webcast participants. Can you provide an update on the term plans for the commercialization in Australia and New Zealand?

We are working with a distributor in Australia and New Zealand who is doing a market feasibility study that is scheduled to be completed by the end of the calendar year. They're a large -- they're a subsidiary of a very large, well-known company that we're not at liberty to name yet. But they're well into their feasibility plans for Australia and New Zealand. We're hoping that they'll come online either late this year or early next year.

We do have a audio question coming from the line of Mary Ellen Kay, Aegis Capital Corp.

On the studies that you're planning on other types of liver cancer, how are you going to get to funding for that?

Currently, we have approximately $40 million in the bank. The studies are not extremely material this fiscal year. And fundraising activities down the road will be based on facts and circumstances in that time period. Graham, would you want to add anything to that?

Yes. I agree.

It seems you're fairly short on cash, I mean looking forward. So certainly there is going to have to be some way to raise capital. What are your thoughts on that?

Well, we are reducing our -- as we previously stated, with $40 million in the bank, we're reducing our burn significantly based on a reduction in the need for expenses associated with ODAC prep and the NDA support. There are a number of avenues for access to financing, including capital markets, as well as revenue generation and partnerships.

Okay. We have a couple of other questions from webcast participants. First of all, what chemical agent do you plan to use in the HCC trial?

The decision that has been made to utilize melphalan in the HCC trial and that's been based on our very strong positive signals from our Phase II data, as well as the long history of isolated hepatic profusion with melphalan via the surgical route. We looked very closely at doxorubicin and although doxorubicin data is also appealing, the melphalan wins out in that doxorubicin is extremely liver toxic. So the dose escalation of doxorubicin is limited by the local toxicities where melphalan is not especially liver toxic. The healthy liver tolerates melphalan very, very well, so melphalan is relatively tumor-specific in the liver. And also it has a very short half-life whereas doxorubicin has a very long half-life. And our ability to dose-escalate is not limited by the liver, it's limited by our ability to keep the very large concentration or large dose of the drug contained within the liver. So the isolation methodologies we use including our Gen 2 filter come into play in a much more tangible way. So melphalan it is for HCC.

Okay. With regard to the ODAC concerns regarding hypotension issues, can you comment, please?

Yes. The FDA briefing document and ODAC really made this a very large issue and certainly, we take it seriously but our characterization of this issue was that it was overemphasized as being a material issue from a clinical perspective. Certainly, long periods of hypotension are very concerning in that they can lead to organ failure and other very serious conditions. The hypotensive episodes in our procedure are a brief and manageable. Now the Phase III trials did not collect real-time mean arterial pressures. So when the FDA connected the dots, if you will, between the very broad data that was collected, and they concluded that there were very long periods of hypotension that were of considerable concern. We -- in our trials going forward are going to measure mean arterial pressure very systematically in much shorter time intervals between measurement, which will provide a much clearer picture for FDA to understand that the hypotensive episodes are very brief in duration. They last seconds to a couple of minutes and are very easily managed by the anesthesiologists and attending physicians to make sure that the patient doesn't suffer any ill effects.

Last question that we have from the webcast participants is, what are your thoughts on approval in September if you're able to use data from your European EAP program?

Well, as we said in the prepared remarks, the FDA hasn't told us what they're going to need with regard to approving the Gen 2 filter system. So speculating on what they're going to be needing is probably not a good idea at this time. In the briefing document, FDA had suggested that not only would additional clinical data be required, but a randomized controlled trial to demonstrate both safety and efficacy is going to be required. When we read that, we felt that, that really did not properly characterize what a filter change could and couldn't do in that we don't feel that the filter can play a role in efficacy since the filter is only involved in removing the chemotherapeutic agent after it's done in job in the liver. So regardless of what filters used, when in fact even if no filter was used, the liver would see the same treatment dose and will have the same efficacy response. We had a meeting, an urgent meeting with the FDA and the FDA was gracious enough to accommodate that. Literally, the day before ODAC where we specifically went into details on what we recommended for additional clinical data. And we suggested that we utilize both the U.S. EAP and compassionate use data, as well as the European retrospective and prospective safety data collection. And we ended that meeting with the FDA saying that they would opine and get back to us in due course. So until they do get back to us, we really are in a wait-and-see posture. So now that the Q&A is over, I would like to thank everyone for joining us today, and thank you for your interest and your support.

Ladies and gentleman, that concludes today's conference. We thank you for your participation. You may now disconnect. Everyone, have a great day.