Delcath's Q3 2025: Contradictions Emerge on Site Activations, 340B Program, European Strategy, and NDRA Impact

Date of Call: November 4, 2025

Financials Results

• Revenue: $20.6M total ($19.3M HEPZATO, $1.3M CHEMOSAT) in Q3 2025, up ~84% YOY vs $11.2M (HEPZATO $10.0M, CHEMOSAT $1.2M) in Q3 2024
• Gross Margin: 87% in Q3 2025, compared to 85% in Q3 2024

Guidance:

• 2025 annual revenue guidance narrowed to $83 million to $85 million.
• 2025 gross margin expected between 85% and 87%.
• Continue to expect positive non-GAAP adjusted EBITDA and positive operating cash flow for the rest of 2025.
• Total HEPZATO treatment volume in 2025 projected to increase nearly 150% vs 2024.
• Target 26–28 active treating centers by end of 2025 and ~40 centers by end of 2026.

Business Commentary:

• Earnings and Revenue Trends:
• Delcath Systems' revenue for the third quarter of 2025 was $20.6 million, with HEPZATO contributing $19.3 million and CHEMOSAT contributing $1.3 million.
• This represented a significant improvement compared to the same period in 2024, with HEPZATO revenue increasing from $10 million to $19.3 million.

• The growth was partially driven by increased treatment volume despite challenges like a 13% reduction in average revenue per kit due to 340B pricing issues.

• Site Activation and Expansion:

• The company activated 4 new sites in the past 2 months, bringing the total to 25 REMS-certified treatment sites.
• Delcath is planning to have 26 to 28 active treating centers by the end of 2025 and aims for 40 centers by the end of 2026.

• The expansion was supported by increasing the U.S. sales force and focusing on building referral networks, despite seasonal factors and competitive clinical trials.

• CHOPIN Trial Impact:

• The compelling results from the CHOPIN trial, which showed a significant improvement in PFS, OS, and overall response rates, are expected to influence physician opinions and treatment protocols.
• These trial results are anticipated to lessen competitive impact from other trials and increase adoption of Delcath's technology.

• The increased flexibility in scheduling due to the combination of systemic therapy and liver-directed therapy is expected to facilitate patient treatment and enhance the product's value proposition.

• Clinical Trial and R&D Update:

• Delcath is advancing trials in liver-dominant metastatic colorectal cancer and breast cancer, with patient dosing for CRC beginning in August 2025.
• The company is also exploring other indications like intrahepatic cholangiocarcinoma and non-small cell lung cancer, targeting large patient populations with unmet clinical needs.
• Despite increased R&D expenses, Delcath is maintaining positive adjusted EBITDA and positive cash flow, with a focus on strategic capital allocation for future growth.

Sentiment Analysis:

Overall Tone: Positive

• Management highlighted strong clinical momentum (CHOPIN results described as potentially practice-changing) and raised commercial targets (25 sites now; 26–28 by year-end, 40 by end-2026). CFO reported Q3 gross margin 87% and positive adjusted EBITDA, and CEO reiterated ample cash and no immediate need to raise capital.

Q&A:

• Question from Marie Thibault (BTIG, LLC): I wanted to understand what's built into your Q4 expectations in terms of clinical trial competition and seasonality, are you expecting any seasonality from the winter holidays? Any granularity for Q4?
  Response: Guidance assumes a modest Q4 seasonality and factors in the same midyear level of clinical-trial competition.

• Question from John Newman (Canaccord Genuity Corp.): How do you expect site additions to roll out into 2026? Is the current pace through the balance of 2025 a good indicator?
  Response: Expect site additions to accelerate in the back half of 2026 as the sales footprint expands to nine regions; roughly a 40/60 early/late split is reasonable.

• Question from Jake Soucheray (Craig-Hallum Capital Group): As you get up to those 9 sales territories, are there steps to improve utilization on some of the lower volume accounts?
  Response: Primary levers are building referral networks, expanding sales and medical affairs, and changing physician prescribing behavior via dissemination of CHOPIN data; also manage capacity by scheduling adjustments.

• Question from Jake Soucheray (Craig-Hallum Capital Group): Do you expect CHOPIN to start impacting utilization sometime in '26, mid-'26?
  Response: Yes — expect meaningful impact through 2026 (not an immediate Q4 step change); timing tied to investigator publication and broader data dissemination.

• Question from Kesav Chandrasekhar (Stephens Inc.): Since neutropenia is common with trifluridine/tipiracil and bevacizumab, how are investigators addressing this in the Phase II HEPZATO combo trial — G-CSF usage or dosing adjustments?
  Response: Managed per protocol with standard supportive care including G-CSF and dose delays/adjustments (drug holidays) as needed.

• Question from Swayampakula Ramakanth (H.C. Wainwright & Co.): How should we think about NDRA participation's influence on profitability and revenue growth over 2026 and beyond; long-term plan to sustain growth against NDRA?
  Response: NDRA produced a one-time step-down in average price (CFO noted ~13% impact quarter-over-quarter); participation is variable so the average discount likely persists, volume impact uncertain; gross margins expected ~85–80% into 2026 and potentially high‑80s thereafter, with strong cash coverage reducing near-term capital needs.

• Question from Swayampakula Ramakanth (H.C. Wainwright & Co.): You moved from 24 to 25 active centers and guided adding ~3 more by year-end — chance to overshoot 28?
  Response: Highly unlikely to overshoot; management expects 1–3 additional sites by year-end, not more.

• Question from Yale Jen (Laidlaw & Company): There's another European investigator‑sponsored combo study (SCANDIUM-3). Can you give color on status and when they might report data?
  Response: SCANDIUM‑3 is recruiting slowly and there is currently no readout timeline.

• Question from Yale Jen (Laidlaw & Company): Given ongoing top-line growth but rising R&D (e.g., starting the breast trial), how are you allocating capital between these programs?
  Response: Capital allocation is decided program-by-program; fixed annual R&D budgets exist, but management expects to fund compelling programs from top-line and cash on hand and will assess on NPV/merit.

• Question from Bill Maughan (Clear Street): How much read-through do you see from CHOPIN into breast and colorectal and is there potential to add a checkpoint inhibitor in those indications?
  Response: CHOPIN supports combining HEPZATO with systemic therapy and suggests IO combos are attractive where IOs are standard (e.g., NSCLC, cutaneous melanoma, ICC); read-through to CRC and some breast subsets depends on existing standards and tumor biology.

• Question from Bill Maughan (Clear Street): You called out Thomas Jefferson running its own trials — can you quantify that?
  Response: Thomas Jefferson's single‑center program enrolls ~109 patients, making it a sizable local competitor for enrollment (other centers run trials of ~20–30 patients).

Contradiction Point 1

Site Activations and Expansion Strategy

It involves the company's strategy and expected timeline for expanding its site network, which directly impacts the potential patient base and revenue growth.

What is the expected timeline for site additions in 2026, and is the current addition rate indicative of future performance? - John Newman (Canaccord Genuity Corp., Research Division)

2025Q3: Site additions are likely to accelerate in the second half of 2026 with the expansion to 9 regions. We expect roughly a 40-60 split between the first half and second half, with more additions expected in the latter half. - Gerard Michel(CEO)

When will the eight centers in queue start treating patients? - Chase Knickerbocker (Craig-Hallum)

2024Q4: I expect most will come on board in the second half of the year as the expanded sales force hits the ground running. I anticipate three centers activating in the first two quarters and five in the back half of the year. - Gerard Michel(CEO)

Contradiction Point 2

340B Program and Revenue Impact

It involves the expected impact of the 340B program on revenue and profitability, which is crucial for financial forecasting.

What is the impact of the NDRA program on profitability and revenue growth in 2026 and beyond? - RK(H.C. Wainwright)

2025Q3: NDRA participation will continue to reduce average revenue per kit, but we expect the discount to remain stable. Profitability-wise, we aim for gross margins of 85%-87% in 2026, with expectations for high 80% or above beyond. - Gerard Michel(CEO)

How much could sales volume grow under the NDRA program, and why is 340B appealing to hospitals? - John Lawrence Newman(Canaccord Genuity)

2025Q2: Half of the volume may take advantage of 340B discounts, reducing per kit value by 10% to 15%. While it's hard to quantify, more volume is expected. Hospitals now make a larger margin, making the product more attractive. - Gerard J. Michel(CEO)

Contradiction Point 3

European Expansion and Strategy

It involves differing expectations and focus on European market expansion, which impacts international growth strategies.

Can you update us on the European investigator-sponsored study with HEPZATO and checkpoint inhibitors? - Yale Jen (Laidlaw & Company Ltd., Research Division)

2025Q3: Europe is a strategic priority for now, with plans for deeper penetration. If we receive broad indications, we may consider expanding to markets with high liver involvement, like Japan. - Gerard Michel(CEO)

What are the revenue expectations for European expansion in 2025? - Yale Jen (Laidlaw)

2024Q4: We don't expect meaningful revenue from Germany this year, although we're starting the process there, too. We expect modest growth, with potential step changes when we get reimbursement, likely in the U.K. or The Netherlands. The strategic value lies in clinical trials and publications, not economic value. - Gerald Michel(CEO)

Contradiction Point 4

Off-Label Use and Trial Activity

It involves differing stances on off-label use and competitive clinical trial activity, which can impact market positioning and revenue expectations.

With more sales territories, how are you improving utilization in low-volume accounts? - Jake Soucheray (Craig-Hallum Capital Group LLC, Research Division)

2025Q3: We have not seen meaningful off-label use yet, and centers have not started. While some centers are interested, we currently are only considering uveal melanoma. - Gerard Michel(CEO)

Are there significant off-label uses in other tumor types? - Bill Maurer (ClearStreet)

2024Q4: We have not seen meaningful off-label use yet, and centers have not started. While some centers are interested, we currently are only considering uveal melanoma. - Gerald Michel(CEO)

Contradiction Point 5

Site Activations and NDRA Program Impact

It involves expectations and progress regarding site activations under the NDRA program, which directly impacts revenue and market penetration.

What factors are considered in Q4 expectations related to competitive clinical trial activity and seasonality? - Marie Thibault(BTIG)

2025Q3: In Q4, we factored in a modest amount of seasonality due to the winter holidays, although exact impacts are difficult to predict. Regarding clinical trial competition, we assume the same level as mid-year, with the Replimune-sponsored trial and the Thomas Jefferson trials contributing to competition. - Gerard Michel(CEO)

What's the rationale for adjusting the year-end active sites target? - Sudan Naveen Loganathan(Stephens)

2025Q2: We are scaling intentionally, targeting world-class cancer centers. The pace of site activations should be about 1 to 1.5 per month for the rest of the year to reach 25 to 28 by the end. - Gerard J. Michel(CEO)