Delcath Systems, Inc.

Good morning, ladies and gentlemen, and welcome to the Delcat Systems Second Quarter 2026 Earnings Conference Call. At this time, online is in listen-only mode. Following the presentation, we will conduct a question-and-answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded on Thursday, August 6, 2026. I would like to turn the conference over to Mr. David Hoffman, Delcat General Counsel. Please go ahead, sir.

Thank you, and welcome to Delcath Systems' second quarter 2026 earnings call. With me on the call are Gerard Michel, Chief Executive Officer, Sandra Pennell, Chief Financial Officer, Kevin Muir, Chief Commercial Officer, Bojo Vukovic, Chief Medical Officer, and Martha Rook, Chief Operating Officer. This statement is made pursuant to the safe harbor for forward-looking statements described in the Private Securities Litigation Reform Act of 1995. Statements made on this call with the exception of historical facts may be considered forward-looking statements within the meaning of Section 27A, the Securities Act 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 in a material manner 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 and 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 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 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. Press release with our second quarter 2026 results is available on our website under the Investors section and includes additional details. Our website also has our latest SBC filings, which we encourage you to review. Recording of today's call will be available on our website. Now, I would like to turn the call over to Gerard Michel. Gerard, please proceed.

Thank you for joining us today, now well into our third year of commercial launch. to continue to deliver revenue growth and operate as a profitable business, supported by a platform with the potential to address larger patient populations well beyond metastatic uveal melanoma. We delivered a strong second quarter, driven by $27.2 million in Hepsado kit revenue, up 21% over the second quarter of 2025, a significant achievement given the introduction of 340B pricing in July of 2025. We activated two new treatment centers, bringing our total to 31, and sustained a healthy flow of new patients into our existing sites. Our commercial execution in metastatic uveal melanoma is now self-funding the investment needed to extend our liver-directed platform into other cancers where the liver is a dominant site of disease. We remain on track to activate approximately six additional centers by year-end, which would bring us to 37 active centers. We are not simply opening more centers, we are opening the right centers. Most of our targets are part of one of two overlapping groups of institutions. The first is National Comprehensive Cancer Network Member Institutions, or NCNN, an alliance of 34 leading cancer centers that help define oncology standards of care. The second is the National Cancer Institute's Comprehensive Care Centers, 58 institutions federally designated for excellence in cancer research, clinical trials, and multidisciplinary patient care. Today, approximately 80% of our active treatment centers hold NCI comprehensive designation. Nationally, we are now represented at 41% of the 58 NCI comprehensive care centers and approximately half of the 34 NCCN member institutions. Our 2026 activations continued that pattern. This year, we added MD Anderson, UT Southwestern, Mayo Clinic Scottsdale, the Knight Cancer Institute at OHSU, and the Herbert Irving Comprehensive Care Center at Columbia, all NCI comprehensive cancer centers, with MD Anderson, UT Southwestern, and Mayo Clinic also NCCN member institutions. These are among the nation's leading referral destinations for complex oncology care and liver-directed therapy. By adding institutions with this level of academic influence and referral reach, we are building a network that supports both near-term growth and long-term leadership in metastatic QV melanoma and in the additional indications we intend to pursue. Beyond activating new centers, we are focused on increasing physician awareness and consideration of PHP for appropriate patients through targeted medical education, peer-to-peer engagement, and continued evidence generation. New patient starts remain solid in the second quarter, averaging approximately 0.5 new patients per site per month. Because patients typically receive a series of hep cytotreatments over up to three quarters, second quarter starts generate volume that flows into the back half of the year and support our full year revenue outlook. The data from the Chopin trial, a randomized Phase II study published in the Lancet of Oncology earlier this year, continues to accelerate broader adoption of combination approaches at leading centers. And at ASCO this year, investigators from Moppa Cancer Center presented a trials-in-progress abstract describing an ongoing Phase II study of Hepsado, followed by Keventfust in HLA-A2 positive patients with metastatic uveal melanoma. We believe this and future plan combination therapy trials will be critical to moving hep-sido more consistently to a co-first-line setting. Turning to clinical development beyond metastatic eulia melanoma, we remain confident in hep-sido kits potential in other liver-dominant cancers, and we continue to work with investigators to generate supporting data. At ESMO Breast Cancer in May 2026, independent investigators presented a retrospective analysis of 15 heavily pretreated patients with liver-dominant metastatic breast cancer treated with percutaneous hepatic perfusion. Nine of the 15 patients showed a hepatic partial response, supporting further evaluation of this approach in that setting. Turning to our sponsored trials, in our sponsored Phase 2 trial in metastatic colorectal cancer, we now have 13 centers actively screening. Consistent with the acceleration we anticipated on our last call, recruitment has improved as we have added sites and applied specialized training and streamlined onboarding. We estimate that approximately 6,000 to 10,000 U.S. patients annually have liver-dominant disease in the third-line setting. In HER2 negative metastatic breast cancer, we recently dosed the first patient at the European Institute of Oncology in Milan. Six sites are activated in screening with additional sites in the activation process. We estimate a similar size addressable population in this indication. Beyond these two programs, we continue to evaluate additional liver dominant indications through our scientific advisory board and physician feedback. and we are preparing for pre-IND meetings with the FDA later this year to discuss new potential indications. Based on our first half of results and trends early in the third quarter, we are raising our full-year revenue guidance. Sandra will take you through the numbers and our updated outlook. Sandra?

Thank you, Gerard. Total revenue in the second quarter of 2026 is $29.1 million compared with $24.2 million in the second quarter of 2025. This includes $27.1 million of Hepsado kit revenue and $2 million of chemostat revenue. This represents 17% sequential Hepsado volume growth over the first quarter and 30% volume growth versus the same period in 2025. Now, turning to 2026 guidance, we are increasing our full-year revenue guidance to range from $104 million to $108 million, which reflects at least a 28% growth in Hepsado kit volume over 2025. Our decision to raise guidance is driven primarily by first-half performance, particularly the pace of new patient starts. We've also modestly reduced the seasonal step-down we had assumed for the third and fourth quarters. A part of last year's seasonality came from centers operating with a single REM-certified treatment team where staff absences translated directly into lost treatment capacity. We have since worked with centers to train backup teams, including some of our highest volume sites, which should ease that constraint. In addition, enrollment in ongoing clinical trials during 2025 reduced the number of patients available for our treatment. Growth margin for the quarter was 90% compared to 86% in the second quarter of 2025. We are guiding to full-year 2026 growth margin between 86% to 89%, and we also expect to report positive adjusted EBITDA for the full year. Research and development expense in the second quarter was $10.4 million compared to $6.9 million in the prior year quarter, driven primarily by continued investment in our clinical organization and ongoing Phase II trials. Selling general and administrative expense in the second quarter was $13.4 million compared to $11.4 million in the prior year quarter, reflecting our investment into continued commercial expansion and increasing marketing activities. Net income for the second quarter in both 2026 and 2025 was $2.7 million. On a non-GAAP basis, adjusted EBITDA for the quarter was $7.6 million compared to $9.8 million in the second quarter of 2025. We ended the quarter with cash investments of $95.9 million, cash provided by operations with $5.7 million in the quarter, and we purchased a small amount of common shares in the second quarter under the company's approved $25 million shareback buyback program. To date, we have purchased approximately $9 million worth of common shares. I want to thank you all for participating today and I'll ask the operator to open the line for Q&A. Thank you.

Thank you. Ladies and gentlemen, we now begin the question and answer session. If you'd like to ask a question, please press star followed by number one on your telephone keypad. If your question has been answered, you would like to withdraw from the queue. Please press star followed by the number two. And if you're using a speakerphone, please lift your hands up before pressing any keys. One moment, please, while we compile the roster. The first question comes from Mary Thibault with Bancorp BTIC. Please go ahead.

Hi, thank you for taking the questions. I wanted to ask a question here just sort of on the referral pathway and some of the efforts I know that you've been making on the commercial side. So I wanted to understand how the referral network efforts have been progressing. I know you've been working on for a few quarters. Are there ways to sort of describe the outreach that you've been making to the medical oncologists that is translating into incremental new patient starts? And then second, I'll just ask my follow-up here. I wanted to follow up. I think there was an effort to try to mitigate summer seasonality, get second treatment teams trained at various centers. Just an update on how that has been progressing as well. Thanks for taking the questions.

Sure, Marie. Good to hear from you. In terms of the referral network, I would say about a third of the referral network is A static network, and that is within the institutions we are currently part of. Any oncology networks that are, you know, are part of that. So there, you know, we know who the oncologists are. They have, you know, a meaningful number of patients. Meaningful could be two, three, four, but on a relatively consistent basis. The other part of the referral network, and probably should be kind of called a just-in-time referral, are the many, many doctors who just get one patient. Now, many of those patients eventually make their way to one of our treating sites or one of our targeted sites that will open in the next one month to two years as we continue to expand. But many of those are not. And what we have to do is find them in real time if we want to get them first in line, if we don't want to lose patients who progress too quickly. Our efforts there right now are multifaceted.

Jeremy, can everyone hear me?

We lost you for a while, Gerard. We lost you for a minute.

Okay. All right. So where did you lose me? The perils of cell phones.

We were just past kind of talking about those folks that only see one patient. We got a little bit past that.

Right. So what we need to do is get a just-in-time network. That's kind of the term I'm using internally with the team. Now, right now, we're using claims data that lags, but we generally know patients who've been recently diagnosed. Recently could be anywhere from a month to six months given claims lags. And we try to get in front of those doctors a number of different ways. We'd like to do better than that. We're investigating the use of other forms of data that are refreshed more frequently. That's not in place yet, but we will get it in place. We recognize that we have, you know, a higher health decline in terms of execution than something like an Immunocore in that, you know, community oncologists can't use our products. but we have definitive plan. We are definitely working that right now. So we are actively finding patients who've had a recent biopsy and stuff and we're working to improve that over time. It is and will be a core part of our strategy. Now your second question was about training additional docs at centers. We've had several centers but I think our efforts led to backup teams and at least one or more of those are very high volume centers that it was critical to do that in. I wouldn't say that we have backup teams everywhere we would like to but a meaningful percentage of our volume now is covered by centers of backup teams.

Thank you so much.

Thank you. Your next question comes from John Newman with Canaccord Genuity. Please go ahead.

Hey, guys. Thanks for taking my question. Really nice execution on the quarter. I had a couple of questions here. So I'm curious as to how much of the increased guidance for the year could be related to better uptake, excuse me, due to the SHOPAN data. I'm also wondering if you can discuss your enrollment expectations for both colorectal and the breast cancer studies and I'm wondering with those two studies if you're able to utilize overlap between existing centers that are already using hep-saddle for liver mets due to uveal melanoma. Thank you.

All right, so first part of your question in terms of how much of the increase is from Chopin. It's all anecdotal. The claims data is rather thin. For some reason, our claims data comes in very slow relative to other treatments. But our anecdotal experience is that more and more of these patients are getting combination therapy, and that's undoubtedly a result of the Chopin data. In terms of site recruitment, which I think was your third question, we're not going to give guidance on that. I think the only guidance we're going to give is that we expect an interim readout for colorectal sometime late next year, and we're not providing guidance on breast. But we are encouraged by both an uptick in both trials in terms of site activation enrollment. And there was a second question there. I'm embarrassed to say I lost it. Could you remind me, John, what it was?

Sure, just curious if you're able to utilize existing centers that are using Hepstado in terms of also signing them up for enrollment with breast and colorectal cancer.

Yeah, I would say the majority of centers in the U.S. already were part of, you know, already REMS activated for MUM. In Europe, it's a lower percentage. We're actually activating some new centers

Can you guys hear me? I got another message that audio dropped.

We can hear you.

Okay, all right.

We also have a number of, in Europe, it's a smaller number of percentage of centers that were mums centers. I'd say, you know, maybe 60, 40 existing centers and new centers in the trial.

Okay, great. Thank you.

Thank you. Your next question comes from Chase Knickerbocker with Craig Holland. Please go ahead.

Good morning. Congrats on a really nice quarter and thanks for taking the questions. I just wanted to dig in a little bit more on kind of the implied kind of second half in your guidance. And so if we kind of look at that, It seems a pretty meaningful kind of slowdown still. With that in mind, can you just maybe kind of talk through exactly when you started seeing that softness in kind of new patient starts last year and then kind of what you've seen so far through July, early August? Have you seen any green shoots from some of the programs that you put in place to try to train additional treatment teams, etc.? ?

Without going into specific numbers, I will say, Chase, that the bulk of our increase in guidance is due to an impressive first half of the year. We have tempered the downturn we expect in the second half, partly due to, frankly, less demand from clinical trials. And the second part is really just a two-week lead We really have a two to three week, you know, vision idea of what's going to happen going forward. And it looks reasonably strong. So we've tempered, you know, the overall seasonality as well. But I would say the bulk of our increase in guidance is based on our performance in the first half of the year. And as you well know, new patients starts drive business, you know, over two to three more quarters.

And so fair to say that we haven't seen, you know, to date, you know, the same kind of, you know, softness and new patient starts, you know, at least yet. And then just kind of second follow-up would just be kind of the visibility that you have to kind of center ads in the back half of the year here, you know, kind of in how you're thinking about that year-end target.

Yeah, I'll ask Kevin in a moment to... The comment on how we feel about the additional fixed centers. In terms of it's fair to say we haven't seen the softness yet. This is about when we saw it last year. Kind of a two-week look forward at this point. It dropped dramatically. No, we haven't seen that yet. But again, I think I want to caution listeners that we don't have a very long forward-looking We are looking kind of strong for the number of news sites

were bringing on. We kind of get them in bits and starts when training is completed. So we have a number of sites that are in the queue to get our preceptorship and proctorship. And it's just a matter of time until they open for the remainder of the year. So I feel very strong that we can obtain Gerard's goal of 37. Yeah, our goal of 37, my friend.

I also would say I think we have at least one patient scheduled, maybe two right now, and then one more looking for patients. Now, patients can get scheduled, that one I mentioned, but these are on the cusp. And what we found is the on-the-cusp ones can go in weeks, they can go in months. But there's a healthy on-deck circle here. The 37 is well within our reach. you know fingers crossed a bit as we know it's episodic but it's not a soft pipe calling.

Helpful caller guys, thank you.

Thank you. Your next question comes from Sam Pankula Ramakant with HC Wainwright. Please go ahead.

Thank you. This is RK from HC Wainwright. Good morning Gerard and Sandra. Morning. A couple of quick questions here. You know, I'm trying to bridge the gap between the 30% caps out of volume growth and the 27% revenue growth. So how much of that gap is from 340B or Medicaid or just the site mix? And the second question is on the gross margin. You know, you exited last quarter at 90%, but your guidance asks for a little bit lower than that for the full year. So is that basically coming from the top line, or is there something else that's going on?

Sandra?

Yes, I can answer that. both questions with regard to the Q2 volume as well as the revenue from prior years. So, reminder that 340 pricing which reduced our effective ASP from about 185 or down to about 170, 173,000 per kit this year versus what we recognized last year. Even though revenue is only up 21%, it's actually representative of a 30% volume. So 100% of that difference between those two figures is due to 340B. With regards to gross margin, yes, we had a great quarter in Q2, recognizing 90%, which is up from 86% a year ago and is above our original guidance of 85% to 87% for the full year. Now, the Q2 improvement reflects better overhead absorption, favorable manufacturing performance, and obviously increased HEP-SATO volume. As we go into the remainder of the year, we do have to be a bit conservative around additional manufacturing costs, so the full year is 86% to 89%. We may see a quarter that dips a little bit below that 90% and one that hits 90% again, but that's our current guide.

Thank you. Thank you, Sandra, for taking the questions.

Thank you.

Thank you. Your next question comes from Yael Jin with Leylo and Company. Please go ahead.

Good morning, and thanks for taking questions, and congrats on a good quarter performance. Since we have two here, the first one is that I noticed your recent deck in terms of the type of cancer that to liver you have about eight of them and just curious initially why you choose the breast cancer and the DRC given they are not necessarily the highest volume or other factors. Any thoughts of that when you made that decision?

And then I'll follow up. Yeah, that's a great question. We started the conversations as to those two trials probably a good two years ago. For CRC, there's a large amount of liver-dominant cancer. It's probably the largest outside of primary cancer. The setting we chose, third line, is not the largest. It's actually quite a bit cut down from the overall population of patients with liver-dominant cancer and CRC patients. But the reason we chose that, frankly, was when oncologists and, to a lesser extent, IRs who are fairly unfamiliar with our therapy, when we were having conversations about where to start, that's where we got traction. and so it was largely driven by Doc's willingness to participate. Now, I don't want people to think, well, that's a big negative. This is a very novel procedure. Oncologists generally prefer systemics, but I think the data as we generate it will bear out and oncologists will change their perception first in terms of trials they want to participate in and then eventually, obviously, actual commercial clinical usage. In terms of breast cancer, that one is a bit less, admittedly, but there was real interest in oncologists in terms of participating in that trial. Yes, it's been slow to enroll and get started, but there were a couple of key KOLs who thought there was a real need here. Breast cancer, there's types of breast cancer tumors generally react well to chemotherapy, so that was one reason a number of docs were excited. But these were the starting sets where we could get traction with oncologists being interested. Who knows, if we started now with the level of understanding we have out there, would it be a different set? Yes, but we had to start somewhere. I think these are meaningful markets for us, and there's a real unmet need in these settings. and we'll add more, some orphan type indications and some much larger indications going forward.

Okay, great. That's very helpful. Maybe just a tag on that from the similar themes, which is with the current patient enrollment of those two trials, are they within your expectation or you have different sort of hope in terms of the pace and other factors. And thanks.

Definitely lower than our expectations. There are a number of reasons for that. I think one not so obvious reason is that just as we had to get CITES REM certified and up and running, we had that issue with new centers. We also had to educate the clinical trial teams. And we found that getting the IR teams, which are less set up for clinical trials, to work with the oncology teams, which are very familiar with trials, but they're not familiar with this type of therapy. Getting those teams to work together with a new patient flow, the type of data we need to gather in the IR suite, it was very new to them. Quite frankly, a number of centers that we thought would quickly activate and enroll, we got the disparate teams together. It became an issue. So with the dimension of change in training, we did not anticipate would be a problem in the clinical trial setting. So just as in the commercial setting, there was a hill to climb that we kind of understood we'd have to do when we started. It was a bigger hill than we thought. We finally found the same thing in the clinical trial. Getting the clinical trial teams to work together in this type of trial was a problem. We lost some centers because of it, undoubtedly. The bigger issue is just that it's taking a while to get up and running. So again, interesting product, different type of product, but we're working through the issues just as we have commercially. We're going to work through the issues on the clinical side as well.

Okay, great. This is very helpful and certainly congrats on all the progress and best of luck to you guys.

Thank you. There are no further questions on the phone line. I will turn the call back to Mr. Mitchell for some closing remarks.

Okay. I just want to thank everyone for their support, both the investors as well as the internal team here at DelCap. We're getting a lot done, and it wouldn't be if it wasn't for the employees of the company who are very dedicated to move things forward for patients and to earn the trust of the investors. Thank you very much for your time, and have a great day.

Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines. Have a great day.