Delcath Systems, Inc.

Good morning and welcome to the DELCAD Systems second quarter fiscal 2022 financial results conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask a question. To ask a question, you may press star then one on your touchtone phone. To withdraw your question, please press star then 2. Please note this event is being recorded. I would now like to turn the conference over to David Hoffman, General Counsel of DELCAS System. Please go ahead.

Thank you. And once again, welcome to DELCAS System's second quarter 2022 earnings call. With me on the call are Gerard Michel, Chief Executive Officer, Dr. Johnny John, Senior Vice President of Medical Affairs and Clinical Development, Kevin Muir, Vice President of Commercial Operations, John Papora, Chief Operating Officer, and Anthony Diaz, Vice President of Finance. 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, may be 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 assurance 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 and Michelle. Gerard, please proceed.

Thank you, everyone, for joining today. Belcab has had a very productive second quarter of 2022 and year-to-date. For both the Hepzido kit, the company's investigational product candidate with the United States, and ChemoSat, the company's marketed product in Europe. In the U.S., we continue to move forward towards the resubmission of a new drug application for the Hesato kit late this quarter. As previously reported, in late April, we completed a pre-NDA meeting with FDA, and based on that interaction and subsequent meeting minutes provided by FDA, which incorporated feedback and recommendations, we see no barriers to a resubmission of the NDA with the current data in hand. For purposes of the NDA submission, all queries have been resolved and are considered complete, and the focus trial database has been locked. While the database is locked for purposes of the submission, I want to remind listeners that certain time-to-event endpoints, such as overall survival, will continue to mature through mid-2023. DELCAP expects to provide FDA with routine periodic updates of the additional data in future submissions. Within 30 days after the resubmission, we expect the FDA will confirm receipt of the submission, and if they agree the submission is sufficiently complete to warrant review, which we fully expect they will, establish a producer date six months from the submission date. While we do not know whether the FDA will convene an advisory committee, we are preparing for one and look forward to the opportunity to highlight the status of efficacy and safety. The foundation of the NDA resubmission is the focus trial results. for which Dr. Jonathan Zager, Global Lead Investigator, provided an update during ASCO's annual meeting in June. I won't take the time to review those data here, since I have covered that many times in various forums, and the updated data was largely consistent with the early data release. I will simply reiterate that we believe the totality of the efficacy data demonstrates that Hepsado produces clinically meaningful benefits to patients suffering from liver-dominant metastatic acromelanomas and that its safety profile is in line with other traditional cytotoxics. Taken together, we believe the data supports a very positive benefit-risk profile for patients. In an effort to ensure suitable patients have access to the Hensato kit during the NDA preparation and FDA review, we have started opening expanded access program, or EAP, sites. The first site opened has completed three treatments to date and has another three treatments scheduled for this month. The pace of treatments will increase as more patients are referred to the treating site. A second site has started to screen patients but may not start treating until October due to clinical trial coordinator staffing issues. We will be judicious in our pace of opening EAP sites to ensure the treating sites are well qualified and prepared. Although investigators at clinical trial sites are interested in participating, clinical staffing turnover and shortages that have occurred over the last year at many of the clinical sites make it imperative to that we are certain that a well-trained team is in place before we allow treatments to go forward. To this end, we have recently hired a dedicated medical device procedural trainer who will work with potential EAP site treatments. The procedural trainer will also complete the development of Roblox training program needed for commercial launch and lead our overall training effort. Based on the ongoing usage of Chemoset in Europe, during the second quarter, additional European office publications supported of Chemosat, and by extension, Hepcet or Kit, were published. I'll cover just two of them now. At ASCO, researchers from the Leiden University Medical Center in the Netherlands presented additional data on the Yango and Chopin trial. The goal of this investigator-initiated combined Phase 1B randomized Phase 2 trial is to study the safety and potential synergistic effects of systemic immunotherapy, ipilimumab plus nivolumab, or ipinivo, when combined with DELF-CAS proprietary liver-targeted treatment in metastatic uveal melanoma patients. The primary objective of Phase B was to determine the safety and toxicity of the combined products, and last summer at the 2021 cardiovascular interventional radiological society of Europe conference, the investigators reported that there were no dose-limiting toxicities and that the Phase 2 randomized course to the trial comparing PHP alone to PHP with the epinephrine had commenced. In total, 79 to 88 patients will be treated in Phases 1B and 2 combined, and we understand that to date, 28 patients have been enrolled. While the primary purpose of the first phase of the trial was safety, efficacy results on seven patients treated with combination PHP with ipinevo were reported this past quarter at ASCO, and the results were noteworthy. The poster reported an objective response rate of 85.7% and a disease control rate of 100%. At a median follow-up time of 20.2 months, four patients have an ongoing response according to RESIST criteria. The presentation reported a median progression-free survival of 22.4 months, and all patients were still alive. If similar results are seen in the current larger randomized phase two portion of the trial, and the combination continues to be well-tolerated, it could represent a significant improvement over current standard of care, including PHP alone. It is important to take a moment to explain why this investigator-initiated trial is of great interest to DELCAP. Combination therapy is a rational approach, since while liver failure due to hepatic mets is the leading direct cause of deaths for metastatic ocular melanoma patients, as many other types of cancer cells, such as colorectal, extrahepatic mets do occur, and treatment with PHP alone cannot effectively treat these, while systemic immunotherapy has very limited efficacy on liver mets. Logically, companion therapies may lead to better control of both hepatic and extrahepatic disease. Beyond these additive effects, there are compelling reasons to believe the combination could have synergistic effects. First, tumor license induced by PHP treatment could provoke antigen release that may lead to enhanced antigen presentation and increased efficacy of immunotherapy. Secondly, a related but distinct possible synergic effect is based on the unique role the liver plays in the systemic immune system. The liver, continuously exposed to food and microbial antigens from the intestine, avoids autoimmune damage through the use of specialized mechanisms of immune tolerance. An extensive body of published literature supports that the liver is an immune-privileged environment and functions as a systemic immune-modulating organ, possibly enhancing tolerance due to tumor antigens outside of the liver. It is well documented that patients with liver mets derive limited benefit from immunotherapy, possibly due to these effects. In pre-clinical models, the elimination of hepatic, of immune cells resident in the liver has been shown to reverse the immunosuppressive effect of hepatic catastrophes. This may be relevant to the HPSADAR kit and chemosat, given high doses of melatonin in the liver may be reducing the local and systemic immunosuppressive effect of hepatic catastrophes, by depleting the various immune cells in the liver responsible for these effects. We look forward to further data coming out of Leiden, both in terms of patient outcomes as well as other analyses which may help elucidate whether a chemo site is actually improving the efficacy of immunotherapy by the elimination or reduction of the immunosuppressive effect of hepatic metastases. While the results will be important in terms of treatment of metastatic doctor melanoma patients, they could have relevance across multiple tumor types where hepatic metastases are present and immunotherapy is an accepted treatment. Last week, a retrospective analysis of patients treated with PHP at three European centers was published in the journal Cardiovascular Interventional Radiology. The study included 101 patients who were treated with a total of 212 PHP procedures between 2014 and 2019. After a medium follow-up time of 15 months, a complete response was reported in five patients, partial response in 55, and stable disease in 30. resulting in an overall response rate of 59.4% and a disease control rate of 89.1%. The median progression-free survival was 9 months, and overall survival was 20 months. The study also found statistically significant differences in overall survival between patients who had complete response, partial response, or stable disease and progressive disease. For example, patients with complete response or partial response, the median overall survival was 27 months. For patients with stable disease, the median overall survival was 21 months, and for patients with progressive disease, the median overall survival was eight months. This correlation between response status and overall survival is critical, since response rates do not always correlate with survival. As overall response rate is the primary endpoint of the focus trial, from a regulatory perspective, any supportive data showing a correlation between overall response rate and survival is helpful. As we have previously reported, we did see the same correlation in the FOCUS trial, and we intend to share the details of that specific analysis at an upcoming medical conference. For the safety analysis in this publication, the most common adverse events for hematological toxicities were grade 1 and 2 and self-limiting in the majority of patients and consistent with previous reports on PHP. Other adverse events were thromboembolic in nature. The adverse events reported in this retrospective study are consistent with other publications and the focus trial results. Turning to the commercial progress of Chemosat in Europe, the second quarter was the first full quarter since we resumed direct responsibility on March 1 for sales, marketing, and distribution activities. Q2 unit volumes were down approximately 10% from Q2 of 2021. but essentially flat if one takes into account that almost all patients being treated with chemo set in the Netherlands are being enrolled and treated in the Chopin trial. In terms of unit performances over Q1 2022, growth was over 75%, but the first quarter and second quarter unit volumes may have been impacted due to the business transition from MEAC back to DELCAP on March 1. While we expect meaningful growth going forward, I would not expect that level of quarter-on-quarter growth. on a regular basis. We are satisfied with this performance since we have a very limited team in place at the moment with only a single account manager in all of Europe. Clearly, the current business is primarily being driven by investigator word of mouth, and we are confident we can drive uptake as we build our commercial infrastructure. Revenue comparisons at this time are not relevant given in prior quarters revenue is comprised of product sales and MEDEC and a share of growth profits. Our primary focus in Europe at the moment is hiring an account representative in Germany to increase referrals, utilizing our medical affairs personnel to foster increased support in larger markets such as Italy and France, where we do not yet have much active commercial business, and developing the submission packages for national coverage in major markets. We anticipate submitting for national coverage in the United Kingdom, Austria, and the Netherlands by the end of this year. In 2023, we'll submit for national coverage in France, Italy, the Scandinavian markets, and other select smaller markets in the EU. We already have reimbursement in Germany under the ZE scheme, but we need to work to increase awareness and subsequent referrals to the trading centers. While it will likely take several years to obtain national coverage in the majority of major markets, we are confident that Europe will become a meaningful revenue contributor to the business, with EU revenues likely growing along with U.S. commercial launch at Pesado, if approved next year. I want to note that given the difficult capital market situation, we have decided to manage the European business on a cash flow neutral basis to maintain adequate capital to support the U.S. submission and launch. At the moment, the European business is self-sustaining, and we continue to continue to be so as revenues grow and are reinvested in the European business. While we continue to plan on expanding the PHP platform to other indications, like many companies in this difficult capital markets environment, we need to prioritize the shorter-term, higher-return activities, which is clearly the submission of the NDA and preparation for a potential U.S. launch. We continue to hold advisory boards to obtain feedback on and review proposed clinical trial protocols, including atriohepatologic carcinoma and colorectal, as well as discuss IITs in various areas, including other combination immunotherapy trials. Although we believe, based on feedback and protocol proposals, that there is real interest from the investigators to expand the usage of Hepsado and ChemoSaf. The timing of the trials may be delayed to ensure the activities most critical to the success of the business are adequately funded. We are confident we can access the capital necessary to fund the business and want to do so in a manner that minimizes dilution to our existing shareholders. Hence, our decision last month to raise $5 million in what was effectively a straight common deal priced at markets versus a larger raise, which may have involved much less favorable terms. I look forward to taking questions, but first we'll turn the call over to Tony to review the financials. Tony?