Good morning, ladies and gentlemen. And welcome to the Delcath’s First Quarter 2021 Earnings Event. [Operator Instructions] It is now my pleasure to turn the floor over to your host James Carbonara of Investor Relations. Sir, the floor is your.

Thank you. And once again welcome to Delcath Systems first quarter 2021 earnings call. With me on the call are Gerard Michel, Chief Executive Officer; John Purpura, Chief Operating Officer; Dr. Johnny John, VP Medical Affairs; Christine Padula, Interim Principal Accounting Officer and Kevin Muir, Vice President, Commercial Operations. I’d like to begin the call by reading the Safe Harbor statement. This statement is made pursuant to the Safe Harbor for forward-looking statements described in the Private Securities Litigation Reform Act of 1995. All statements made on this call with the exception of historical facts maybe considered forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Although the company believes that expectations and assumptions reflected in these forward-looking statements are reasonable, it makes no assurances that such expectations will prove to have been correct. Actual results may differ materially from those expressed or implied in forward-looking statements due to various risks and uncertainties. For a discussion of such risks and uncertainties which could cause actual results to differ from those expressed or implied in the forward-looking statements, please see risk factors detailed in the company’s annual report on Form 10-K, those contained in subsequently filed quarterly reports on Form 10-Q as well as in other reports that the company files from time to time with the Securities and Exchange Commission. Any forward-looking statements included in this earnings call are made only as of the date of this call. We do not undertake any obligation to update or supplement any forward-looking statements to reflect subsequent knowledge, events or circumstances. Now I would like to turn the call over to Gerard Michel. Gerard, please proceed.

Thank you everyone for joining today. Our last quarterly call was just over a month ago, given the typical compressed timeframe between filing the annual 10-K and the first quarter 10-Q. The focus of that recent call was the release of the preliminary results from the FOCUS trial. Given the importance of those data, and frankly in the misinterpretation by some investors regarding the results; I believe a recap of the data is warranted on this call. Most importantly, the preliminary FOCUS trial results are unambiguously positive. The primary endpoint, overall response rate as determined by the independent review committee exceeded the pre specified threshold for success by a very wide margin. We powered the study to demonstrate superiority over checkpoint inhibitors used to treat metastatic ocular melanoma. To demonstrate superiority the lower bound of the overall response rate in the ITT population needed to exceed 8.3%. We reported an overall response rate of 29.2%, the lower bound of which was just over 20%, greatly exceeding the pre-specified 8.3% threshold for success. While the data is based on 87% of treated patients, it is mathematically impossible to have the lower bound of our efficacy calculation fall below the pre-specified Success Criterion of 8.3% regardless of the response outcome of the remaining patients. We can unequivocally state, we have met the pre-specified overall response rate end point base based on these data, and that this cannot change regardless of results for the few remaining patients. Additionally, pre-specified comparative analyses against the best alternative care arm, including overall response rate, disease control rate, and progression free survival, all demonstrated clinically meaningful and statistically significant improvements. This was not expected given the small m and the best alternative care arm. In the per protocol population, the overall response rate was 32.9% in the…

Thank you, Gerard and good morning to everyone. Our product revenue for the first three months ended March 31, 2021, was approximately $389,000 compared to the $293,000 for the prior year period of our sales of CHEMOSAT procedures in Europe. Selling, general and administrative expenses were approximately $3.3 million compared to $2.3 million in the prior year quarter. Our research and development expenses for the quarter were $3.7 million, compared to $3 million in the prior year quarter. Total operating expenses for the quarter were $7 million compared to $5.3 million in the prior year quarter. We recorded approximately $2.2 million of stock option expense in the first quarter 2021 versus no material expense recorded in the prior year quarter. We recorded a net loss for the three months ended March 31, 2021 of $6.8 million, compared to a net loss of $7.9 million in the same period in 2020. At March 31, we had cash, cash equivalents and restricted cash totaling $26.7 compared to $4.7 million of total cash at March 31, 2020, and $28.8 million at December 31, 2020. During the three months ended March 31, 2021, and 2020, we use $4.6 million and $5.2 million, respectively of cash in our operating activities. That concludes my financial remarks. And I now ask the operator to open the phone lines for Q&A. Operator can you please pull for questions?

[Operator Instructions] Our first question today is coming from Scott Henry at ROTH Capital.

Thank you and good morning. I did just have a couple questions. Christine, perhaps starting with you since you just spoke. Could you talk about how you expect spending trends in the rest of the year? And as far as stock comp, I know you there was a big chunk in Q1, how should we think about stock comp going for the rest of the year?

Christine, you may be on mute.

Sorry about that. Yes, I did mute myself. Sorry. Yes, stock option expense will continue through the rest of this year and next year. It is only accelerated methods. So we'll see it gradually come down. But if we do new additional grants, we'll see it picked back up again. But I would see roughly about the same level.

Okay, great. Thank you. That's helpful. And then when we think about the changes to the NICE guidelines, would you expect impact on the revenue line? I mean obviously, it would take some time. But just curious if we should expect that revenue stream to be increasing over time as this changes?

Yes, I think there's probably a good year lead time, before we have an answer as to whether or not we'll end up getting covered by the NHS. So that's obviously as a binary outcome. I do believe that we'll see a modest uptake in the UK over the, maybe not immediately, but within let's say, three to six months. As private insurance starts, we hope starts covering this. And there's access to some regional funding. But I think it'll be a pretty gradual uptake increase until we see the outcome of the national reimbursement decision.

Okay, great. Thank you for that color. And then just the final question. I really appreciated you going over the data. That was helpful. The one piece of data we're still waiting for, which isn't available yet is overall survival. Any thoughts on that endpoint as far as trends you've seen to date?

Yes, we did, we knew that would be obviously a key metric that investors would be interested in to allay any concerns that we are holding back because it was trending against us, we did say there's about a four month advantage when we did the analysis. But roughly maybe even roughly about half the patients, we didn't have the date of death for and therefore censoring the analysis. So therefore the data could be construed as fairly, almost meaningless at this point in time. We don't expect it to achieve statistical significance to that, that's a much harder metric to do that with such a small comparative arm of 32 patients. We expect to release that data, those data by the end of the summer, and again, probably roughly around the ESMO timeframe whether or not we release it there or beforehand [that involved] but recognize the importance, it's not trending against us at the moment. But with that said a lot of data missing.

Our next question today is coming from Yale Jen at Laidlaw & Company.

Good morning and thanks for taking the questions. Gerard I know that you spoke before, there are the three main goals of your SEO, you start with the data, clinical data, and also to the pipeline development. Lastly, the personnel to build the teams. You talk a little bit about the pipeline earlier in your prepared remarks. Could you elaborate a bit more in terms of where you think the things are? Is that ahead of your expectation or planning? Or what should we anticipate for the rest of the year?

Yes, so the planning there really, because the activities right now are phone calls and desk research. And video calls being the new age. I think we're right on track as to what we wanted to do. The first step of that was to try to dig into the available desk, paper research or electronic research, ranging from looking at our own records and interviews, docs of use, PHP, notice CHEMOSAT in Europe, and trying to get their sense of what they've seen, as well as looking at published data. Whether it's with melphalan systemically or melphalan used in isolated hepatic profusion that I mentioned before, and then a set of interviews with expert oncologists to get a sense of where we should focus. And right now what we're at, right now is planning, broader a tumor specific advisory boards, with the number of cancer, types of cancers that we're looking at, focused at, and trying to understand what setting would make sense of what protocol would make sense. I believe by the end of the summer, we'll have protocols mapped out. Maybe not yet to the point where we'll start site recruitment, but I'm hopeful by the end of the summer, we'll be able to say, hey, look, as an example, we're going to continue to go after ICC here are the protocol changes we're going to make, here the number of sites we want to enroll. And perhaps, again, as an example, we're going to go after colorectal in second line for metastatic disease, and over time, we have to move up the chain, et cetera, et cetera. Yes, those are kind of more illustrative examples. I'm not saying that's exactly what's going to happen in terms of the setting and the disease state. But if I were a betting man, I'd say ICC is probably going to be one of them in some form. And the same with colorectal given the existing data and IHP. And that data is really is fascinating. I don't think we've made enough of it in the past, but there are 8 studies out there that have well over 400 patients treated with melphalan, where they've essentially done what we do, but done it with a surgical procedure. Keep in mind that the two docs that came up with this idea, I think over two decades ago, or roughly two decades ago, what they were trying to do was replace that IHP surgical procedure with a percutaneous method. So the data out there for IHP really has direct bearing the likelihood of efficacy for CHEMOSAT or HEPZATO in the patients, and again, the largest body of data is in colorectal cancer, advanced colorectal cancer, where they're saying -- where they published some really compelling results in terms of overall response rate.

Okay, great. That's very helpful. And maybe just one question here, which is that you mentioned a little earlier that an open label extension study could start at CERN, and maybe a little bit more color in terms of the probably the timing as well as the scope as you planned it at this moment. And thanks.

Sure. So it's an expanded access protocol that's used for patients, where there is the research, clinical COVID is stopped and there's no available treatment for the patients. We'll be submitting the protocol to the FDA shortly for their approval. Johnny, maybe you can comment a little bit on the sites you plan on approaching and how many you have hoped to have up and going by the end of the year.

Sure, Gerard. Thank you. So we have already started our discussions with sites to have this up and running. We have been working on the protocol. The case report forms on the database for this expanded access program. Currently, we have initiated negotiations and discussions to get it open at Moffitt Cancer Center in Tampa, Florida, Duke University in North Carolina, Emory University in Atlanta, Georgia, and The University of Tennessee. Subsequent to that we have a number of sites that will come up in the second phase of this. But our plan is to have these sites open in the next coming months for where the ability to enroll patients into the program.

Yes, and the importance of this, I just want to comment for the importance of this is that, there aren't a large number of sites that we need to cover when we commercializes to get the bulk with the patients. But we want to make sure is that there are a large number of sites trained and actively using the product. So we can get rapid uptake with metastatic ocular melanoma. The beauty of this first indication is that it does not require a significant salesforce or commercial expense, the thing we really need to focus on, though, is making sure there are multiple sites trained and running. So my hope is we have roughly 10 sites give or take when we launch this, that are already using the product and that would have enabled rapid uptake. The rapid uptake, combined with a likely high price point, could allow us hopefully very quickly to become cash flow positive, after launch, which help fund these additional indications I'm talking about.

Okay, great. That's very helpful and I agreed that increased awareness in all parties. That's a very helpful things going forward. And thanks.

Our next question today is coming from Marie Thibault at BTIG.

Hi, good morning. Thank you for taking the questions. One quick one here, I saw that you have an oral presentation slated for ASCO next month. Congrats on that just curious if we'll be seeing any additional patients added to that data, anything incremental to look for in that presentation.

There will be some modest incremental data; it won't be the number of patients that will be incremental. We'll have some additional analyses in terms of best overall response rate. So that'll be helpful. But I don't want to say too loudly because ASCO doesn't love it when you release most of what you're going to present. But that is the case here. But there'll be one incremental, there'll be a few incremental analyses regarding best overall response rate.

Okay, we'll look out for that. That's great. And then maybe a two parter here on reimbursement, nice to see the NICE guidance update. Curious if we should be looking for other European reimbursement progress in various countries now that some of the FOCUS data is out. And then here in the US, maybe you can walk us through some of the steps you need to take to work toward outpatient codes in the meantime as we wait for FDA. Thanks.

So in Europe, we'll definitely be taking advantage of the FOCUS trial data, which really when it's fully available, because it's really will be the driver for reimbursement in many markets. The second thing we need for some European markets is quality of life data. And that relies on a registry that we've put in a reinvigorated focus into by for staffing up in Europe, medical teams to try to increase the number of patients in that registry. So European reimbursement will require one the Focus trial data. So by the end of this year, we should have that package up in a way that we can start bringing it in front of the various national payers in Europe. And the second thing would be quality of life data, some countries really are focused on no pun intended, and that will primarily be driven by the registry. So that's as you know is kind of a huge effort that takes a year plus in Europe, but thankfully, we're going to have the data necessary to make that happen. medac is our commercial partner. So they are really charged with working with consultants to get this done. But we do not do they are active. We have regular calls with them. And they're preparing to hire the consultants now that the data is coming close. In terms of US access and such. I'll ask Kevin Muir, our Vice President, Commercial Operations to speak to the work that we're doing in terms of commercial access and the success he anticipates.

Yes, thank you, Gerard. So right now we have a large healthcare consulting firm that is helping us for the market access. And we have done some outreach with not only physicians, but also hospitals and payers, to see what their feelings are about the procedure. So we are -- we have a comprehensive strategy to not only help the hospitals and the payers from an inpatient but also an outpatient. And our indications right now is I hesitate to use the forward consensus, but we've seen the consensus that physicians would plan to use this on an outpatient basis. So, but that doesn't mean there won't be inpatient usage as well. So we have a strategy in place to assist our hospitals and payers on both accounts.

Kevin, it might be worth explaining how this is reimbursed, more like, and a drug in terms of a pass through with the hospitals on an outpatient basis --

Oh, yes. So, after approval, we will apply for DRGICV10 code as well as the HCPCS code. HCPCS code is what will be used as a pass through code for the hospitals, that since this is a drug, they will have a J code. So probably about three months after submission or approval, we will get the access to these codes to our hospitals and payers can use this as a pass through and be fully reimbursed on the cost for the HEPZATO test here in the United States.

What kind of feedback have you gotten, Kevin, in terms of, on an outpatient basis, the willingness of hospitals uses in terms of financial stakeholders?

Yes, so as I mentioned, we've done some outreach, we've done physician interviews, hospital interviews, and payer interviews. And the kind of main concern is in our trial protocol, we have this as a two day or an inpatient procedure, we feel and so do the positions that we've talked to, they feel that that one of those days which we trial protocols would not be needed in a commercial setting, so that we would probably be under the 48 hour rule, or which is considered an inpatient procedure in the hospital. So we would think that these patients would be in the hospital for less than 48 hours or the two night rule, as they call it. So we would anticipate the patient showing up on the day of procedure and being discharged the next day, which would be considered an outpatient procedure, the majority of our physicians feel as if that is how they would treat their patients.

Our next question today is coming from Arlinda Lee at Canaccord.

Hey, guys. Thanks for taking my question. Could you provide an update on how the database update is going and what else is needed to file in the US? And then maybe looking into the future can you talk about maybe how easy it is to add or swap ingredients into HEPZATO mixture or a cocktail? And then lastly, maybe can you talk about your thoughts on partnering either regionally, or by indication? Thank you.

Sure, let's start with just the process of pulling the NDA together. And starting with the database, maybe Johnny you can talk about where we are in terms of data entry and monitoring. And what you're doing to make sure we stay on track there, and then perhaps, jump before you can comment on just the whole process upon the NDA together.

Sure. Thank you, Gerard. So in terms of the database, as in any trial, we had sites that were large enrolling sites and sites that enrolled a fewer number of patients across globally across the trial sites, the sites that enrolled a fewer number of patients were very much caught up both in data entry and data monitoring. Currently, we are still working on the sites that tended to be the larger enrolling sites both in Europe and the US. And the COVID pandemic and the restrictions caused by having less access to these sites for not only the site staff that do the data entry for our trial data patients, but also the access to our monitors has created some issues for us in terms of getting this done. So what remains now for -- in completing the work on the database is to have those remaining larger sites that enrolled patients of the trial complete their data entry and then have access for our monitors to go in and monitor it. As you can imagine, we still have some patients data enter that were still in follow up, we have one patient that is still expected to have their last treatment later on this week of next week, I should say on May 18, so that patient's data has also to be entered. So at these remaining sites that enrolled the last remaining patients on the trial, we have some data entry that has to take place. And then of course, the monitoring. So the answer is the larger sites, larger enrolling sites have data monitoring that has to take place. And we're of course writing the restrictions, especially in Europe, with the lockdown and the restricted access, we have been able to use other methods to continue with monitoring and establish remote monitoring at certain sites. And we have also done remote monitoring phone calls with sites and done zoom calls in order to facilitate and expedite the process of monitoring. But once we complete the larger sites, then the database would be complete.

And John, just briefly go through the overall process, the resources we have placed, et cetera, to get the NDA pulled together.

Sure, Gerard. Thank you. And thank you Johnny for the detailed description of the clinical data compilation. So that the clinical data compilation for the NDA is typically what's known as the module five of the NDA compilation. So there's an enormous quantity of non clinical data, animal studies, toxicology studies, medical device engineering studies that go into module three and four of the NDA. So there's a lot of work that we're parallel passing to construct the NDA resubmission, all while the data gathering on the clinical side for module five is ongoing. So these things aren't happening sequentially. They're happening concurrently. Does that answer your question?

Yes, I think that that does and think Arlinda also asked about various other chemotherapeutic regimes that could be used with percutaneous hepatic perfusion. In other words, can we put something else in besides melphalan and what combinations? The answer is, yes, I think we, and it won't take a lot of tweaking to use other small molecules with the device. And there are actually studies that have been used doxorubicin years ago with a similar device. So we're confident, platinum compounds FOLFOX, there are a number of different regimes could be used with this. I think that is kind of step two for us in terms of development. Step one is other indications using melphalan. Step two is other chemotherapeutic regimes put through this device. As part of the advisory boards that we're currently running, we are asking these oncologists, what other types of chemo regimes do you think makes sense to us with PHP? We're gathering that data, sometime next year, I think we'll formalize a development program to look at other agents, but not this year. But sometime next year, I think we'll kick something off along those lines. Arlinda, your third question. And I'm proud of myself remembering all three was what our partnering strategy is. So right now we have a partnership in Europe with medac. And is not frankly, going quite as well as we'd hoped. But we're working with them to try to improve it. It really does require a very focused effort. The good part of this product is that, especially with the first indication is that really are a finite number of centers that one needs to call on and support. So a large footprint is not required, but it needs to be very specialized type of sales rep, very specialized type of clinical support specialists and MSL team to appropriately commercialize this. So we don't need a large footprint in the US, in Europe and in Asia, eventually, when we get there, it wouldn't require very large footprint. I think what probably makes the most sense is for us to think of this product as a very valuable asset for other strategic players who are already in the interventional oncology space. And I think because of that, it probably makes sense to try not to do too many regional partnerships, because I think I'd like to keep this assets somewhat clean for perhaps an eventual strategic partner who might value and asset with a lot of -- without a lot of entanglements, so for now, we're not driving for major partnerships. If something comes along that makes sense. We will certainly consider it.

Thank you. We have reached the end of the question-and-answer session. Mr. Michel. I would now like to turn the floor back over to you for closing comments.

Thank you. So in closing, we are excited about the prospects for Delcath as we start to continue to analyze the FOCUS trial data, prepare the NDA for metastatic ocular melanoma, and start outlining the development plans for the next indications for HEPZATO. As the year moves on, we look forward to updating you on these developments. Thank you all for taking the time today to join the call.

Thank you, ladies and gentlemen. This does conclude today's event. You may disconnect at this time. And have a wonderful day. Thank you for your participation.