Good day and welcome to the Delcath Systems Reports First Quarter Fiscal 2023 Financial Results Call. All participants will be in listen-only mode, and 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 questions. Please note this event is being recorded. I would now like to turn the conference over to David Hoffman, General Counsel. Please go ahead.

Thank you, and once again welcome to Delcath Systems’ 2023 first quarter 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, General Manager of U.S. Interventional Oncology, John Purpura, Chief Operating Officer, and Anthony Dias, 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 27(a) of the Securities Act of 1933 and Section 21(e) 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 Michel. Gerard, please proceed.

Thank you everyone for joining today. Since filing the NDA resubmission on February 14 and receiving a notice on March 20 that FDA determined resubmissions constituted a complete Class 2 response, the company has been working with the agency on the review process as the August 14 PDUFA date approaches. This primarily entails the routine information requests that would be expected during an NDA review. Since I know the question will be asked, at this time we have received no indication about whether the agency will schedule an advisory committee meeting. Of course, until we hear otherwise, we will continue to assume one will be scheduled. Given the recent financing and the approaching PDUFA date, we are accelerating our preparation for the commercial launch of Hepzato, if approved. Our commercial model is comprised of referring oncologists and treating centers, therefore a core part of that preparation is the identification of potential commercial treating sites, which are sites that are either trained and treating patients in the expanded access protocol prior to launch or committed to becoming trained within a few months after approval. As we have mentioned before, Delcath currently has three sites enrolled in the expanded access program with four more sites undergoing start-up activities. In addition, approximately five other sites have expressed their intention in becoming treating sites if the Hepzato kit is approved, so in total we believe there are over 10 sites with the potential to become treating sites in a relatively short time frame post launch. While we will continue to seek additional treating sites, we believe this number of identified sites will ensure that we do not have treatment bottlenecks as referrals build from medical oncologists post launch. A second key component to a successful launch is outreach to medical oncologists. Recall that the…

Thank you Gerard. As stated in our earnings release, we’re in the process of completing our customary year-end close and review procedures, including certain valuation work associated with the issuance of the warrants and preferred stock in Delcath’s previously announced private placement that closed on March 29, 2023, and as of the quarter end March 31, 2023. Delcath’s full first quarter 2023 financial results are reflected in the quarterly report on Form 10-Q, which will be filed no later than May 22, 2023. Revenue is expected to be approximately $600,000 for the three months ended March 31, 2023 compared to $378,000 for the three months ended March 31, 2022. The estimated increase in product revenue was due to the transition to direct sales in Europe which occurred in March 2022, as well as the approximately 37% increase in unit volume. For the three months ended March 31, 2023, research and development expense is expected to be relatively flat as compared to $4.5 million for both periods compared to the three months ended March 31, 2022. As of March 31, 2023, the company had cash, cash equivalents and restricted cash totaling $24.3 million as compared to cash, cash equivalents and restricted cash totaling $11.8 million as of December 31, 2022. The increase in cash of $12.5 million was due to proceeds from the private placement which closed on March 29, 2023 offset by the use of $4.3 million of cash in operating activities and $6.3 million of principal payments towards the company’s existing loan with Avenue. That concludes my financial remarks. I’ll ask the Operator to open the phone lines for Q&A. Can you please check for questions?

Thank you. We will now begin the question and answer session. [Operator instructions] Our first question comes from Yale Jen from Laidlaw & Company. Please go ahead.

Good morning and thanks for taking the questions, and congrats on all the progress. I’ve got two here. One is that given you guys already have--will have more cash, any thoughts or any plans in the pipeline development, and then I have follow-up questions.

Yes Yale, we’re going to restrict our pipeline activities to probably advisory committee meetings for the time being. I think our primary focus is a successful launch. With that said, there will be activity in parallel going on to prepare, but I don’t see any significant actual clinical dosing patients probably until sometime next year. Now with that said, we are prepared to support investigator-initiated trials as they are put in front of us by interested oncologists, and we’re hopeful that we’ll have a number of those starting probably later this year, whether it’s additional combination trials with immuno-oncology agents or trials in other indications. But next year without a doubt we will be running trials in other indications, both other tumor types and likely other indications combined with immuno-oncology agents.

Okay, great. That’s very, very helpful. Then maybe one more question here. One of the competitors I think recently reported that there are studies in the ocular melanoma in the first line as well as in broad lines. Any thoughts, any comments on what type of possible competition may happen or not happen? Any color would--thanks.

Yes, I think you’re referring to IDEAS [ph] data, which I thought looked quite good myself. Their ORR and duration of response looks more like in the realm of what we’re seeing with our product. I think what’s important to note is two things. One, patients, most patients go through more than one line of therapy. The second thing is most medical oncologists that treat this disease believe patients should get both a systemic therapy as well as a local regional therapy. The latter, of course, is what we are, so I don’t see additional systemic therapies coming out as being a direct competitor with us. I think the question is what goes first, systemic or a local regional therapy, and I think more data needs to be generated to determine really what’s best for the patient. I would note that most of these patients, when they do succumb to the disease, it is usually due to liver failure from liver mets, so I know there will be a place for us at some point for most of these patients.

Okay, great. That’s very helpful, and appreciate that. Congrats on the progress.

Thank you Yale.

Our next question comes from Swayampakula Ramakanth from HC Wainwright. Please go ahead.

Good morning. This is RK from HC Wainwright. Good morning Gerard. A couple of quick questions from me too. In terms of the EAP program that’s being run, could you give us an idea of how many patients have been treated so far or are being treated under this program, and also any commentary on the experience so far from both physicians and the patients?

Yes, so right now I think they had 40 patients at the start of this year, so they’re probably well past the 40 at this point - I don’t have a precise number. If I had to guess based on the pace, then as an estimate from me, it’s probably somewhere in the range of 50 patients out of the 76 that need to be treated. It is a randomized trial. ORR is the primary end point--well, objective response rate is what we report of the main interim data, and they’re not sharing those results with us as time goes on, of course as is appropriate - they should not share that with us. All I can say is we’re very hopeful that the data, the signal that was seen in the small number of patients, seven patients early on will continue to hold, but we’ll have to wait. If we turn to the seven patients, they tolerated the sequential treatments quite well. I don’t think there were any toxicities that physicians didn’t think they could handle or that would be undue to the patients, so that was a very important issue to start with. Again, as I was talking about before, very, very high response rates, 100% disease control, 86% I think response rate, and 2.5 years roughly of duration of response and PFS at the last data cut, so fingers crossed that that level of response and duration can be held with the larger arm when we get the interim data later this year.

Perfect. Then it’s encouraging that you’re getting more centers lining up for getting ready to adopt when Hepzato becomes approved. At this point, what do you think is the market in terms of number of centers who regularly do liver-directed therapies and which can be--I don’t know if you’re kind of dividing the market into different tiers, as like early adopters and others that you have to work on to gain their confidence and start using Hepzato.

In terms of the number of centers that do liver-directed therapy, I don’t know a precise number - it’s at least in the hundreds if you think about TACE and Y-90, which are the two primary liver-directed therapies. For this particular indication, we have no need, nor would it be prudent to try to get into any meaningful percentage of that. I think if we had 10 centers up and running with three to six months, or within three months, let’s say of launch, that would be fantastic. I can’t see us every going past--and this number might flex down or up, but I can’t see us going much past 20 centers, maybe 25 at peak. The reason for that is we want to keep close tabs on these treating centers, and again recall that it is only about--well, it’s hard to say, some people say we’re conservative, but we’re saying our TAM is 800 patients. I don’t want to have a center doing one of these every three months. I’d like to see centers doing at least two a month just to make sure they’re well trained, the team is up to speed, so again I think 25 at the most of peak. I’m very happy with 10, one to two quarters post launch if we can accomplish that. That will mean a phenomenal launch if we have the referrals up the pipeline to support that, to support those centers.

Very good. Thank you very much for taking my questions.

Again, if you have a question, please press star then one. Our next question comes from Bill Maughan from Canaccord Genuity. Please go ahead.

Good morning and thanks. Of the initial dozen or so sites that are either currently online or have expressed interest, do you have a sense of how many patients they represent? Then second question, are you at the point yet where you can have even preliminary discussion with payors? Do you have any sense of how they’ll on-board payment for Hepzato as it launches, or any sort of timeline on that? Thanks.

Sure, let me handle that first part of the question in terms of how many they represent. Kevin, I’m going to ask you to talk through the dynamics with hospitals and reimbursements in a moment. In terms of the number of patients they represent, shooting from the hip, maybe 30% of those 10, maybe 40%, because we’re [indiscernible] when we focused on centers that already have a set of patients. But that really--you know, that’s only part of the equation. The other part of the equation is going out to medical oncologists where we’re not intending to open sites, and get in to refer to these treating sites. That’s the other part of the equation. Now, the reason--you know, what we have to make sure for both parts of that equation is the treating sites, some sites might not be able to do more than one, two a month, others might be able to do eight a month - it varies. But if we assume that four a month is the average, so if we think about one a week probably will be kind of average per site, if we assume that, then 15, 20 sites is more than enough to generate several hundred million worth of revenue. But the key to that is getting the patients referred to those treating sites, which again as I said before, we don’t want sites that do one every two months. Ideally we’d have a site doing about four a month.

This concludes our question and answer session. I would like to turn the conference--

No, hang on.

I’m sorry.

Kevin, can you chime in on the reimbursement for the hospitals [indiscernible] dynamic?

Yes, I can. Over the past period of time, we have done some significant market research with the payors, and so far through that market research, we’ve found that we think our strategy is prudent. We have a market access team in place and we are prepared to handle the questions that we get. The true outreach to the payors will happen shortly upon approval when we are taking our EAP patients and converting them from clinical patients to commercial payments, so like I said, from a market access--I mean from a market research standpoint, we think we have a sound strategy. We’ve talked to some of the payors, but we’ll see how that--we will--and we’re confident that when we take those payors--or I mean the patients from clinical to commercial, the strategy will prove itself out.

Yes, I think what’s important, Kevin, is the majority of the patients will be outpatients, correct?

Yes.

So the reimbursement will be under a C-code, correct, initially?

Initially we’ll start with the traditional path of a C-code and hopefully go to a J-code shortly after.

Right, so for the majority of patients, it will be a pass-through expense.

Yes.

Given this is an ultra orphan product, for the minority of patients that may end up being treated on an inpatient basis, that need to stay an extra night past a single night, what our hub service has told us is that given the small number of patients here and the fact that these are very sophisticated academic centers they’re working with, they probably--it’s not going to be an issue of bundled payments, they’ll be able to maneuver through that. But again the bulk of these patients will be on an outpatient basis, so it will be a pass-through.

Got it, thank you very much.

Okay.

This concludes our question and answer session. I would like to turn the conference back over to Gerard Michel for any closing remarks.

Yes, I just want to thank everyone for taking the time this morning to listen in. We have a lot of work ahead of us as we prep for our launch, but we’re going to keep our heads down and push forward. Thank you again for the support. Have a great day.

The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.