Delcath Systems, Inc. (Nasdaq:DCTH), a developer of percutaneous perfusion technology for organ or region-specific delivery of therapeutic and chemotherapeutic agents, today announced that President and Chief Executive Officer, Richard L. Taney, has released a letter to shareholders in which he reviews the Company's strategic developments, including the recent five year extension to the Cooperative Research and Development Agreement ("CRADA") with the National Cancer Institute. The following letter accompanied the recently released proxy statement:
Dear Shareholders:
2006 was a year of challenge, transition and change for Delcath Systems ("Delcath" or the "Company"), but we entered 2007 with a renewed focus on completing our clinical trials and bringing the Delcath System to the market for the benefit of cancer patients.
The new management team, with the guidance and support of your Board of Directors, has been working tirelessly to lay the foundation for a company with a clear business vision, increased transparency, and the highest standards of corporate governance. We understand what is required to transform Delcath from a development stage medical device company to the leading provider of technological solutions in the field of regional cancer treatments here in the U.S. and abroad.
The litigation between Laddcap Value Partners and Delcath was a costly distraction for the Company in 2006, but has since been resolved by a series of actions. Most recently, Delcath and Laddcap entered into a Modification Agreement to the October 8, 2006 Settlement Agreement between the two parties. The Modification Agreement allows Laddcap to increase its position in Delcath to just under 20%, via open market purchases, and removes the requirement that the company elect two directors nominated by Laddcap. The Board of Directors of Delcath also voted to increase the threshold level for triggering the Shareholder Rights Plan from 15% to 20%.
In the last several months, we have already achieved a number of significant clinical milestones. In March, we were especially pleased to announce the five year extension to the Company's original Cooperative Research and Development Agreement ("CRADA") with the National Cancer Institute ("NCI"). This expanded agreement allows for the continued development of the Delcath System under the support and auspices of the NCI, where they continue to work towards completion of Delcath Systems' pivotal ongoing Phase III trial for patients with metastatic melanoma in the liver using the drug, Melphalan. Under Delcath's Special Protocol Assessment with the U.S. Food and Drug Administration, this Phase III trial can be expanded into a multi-center trial which can be conducted at up to 15 clinical centers. Currently, we are awaiting the NCI's Institutional Review Board decision to declare the trial a multi-center trial with the NCI serving as the coordinating center for this trial once it expands to other clinical sites. We have met with clinicians at a number of leading centers that are ideal for inclusion in this expanded trial and we will be reporting our progress on this front throughout the year.
Earlier this year, clinical investigators from the NCI reported very encouraging interim data from our ongoing Phase II multi-histology trial at the Second International Symposium on Regional Cancer Therapies in San Juan, Puerto Rico. William Burns, M.D., presented data from the completed Phase I trial and the neuroendocrine arm of the Phase II multi-histology trial in a session entitled, "Percutaneous Liver Perfusion for Patients with Metastatic Neuroendocrine Tumors." The presentation reported that objective tumor responses, including partial and complete responses, were observed in nine of the 12 evaluable patients (75%) treated using the Delcath System with the drug, Melphalan. Furthermore, James F. Pingpank, M.D., NCI Surgery Branch and the Principal Investigator of the clinical study, reported that a significant and durable tumor response was observed in patients with large volume, unresectable hepatic metastases. As a result of these exciting results, the neuroendocrine arm of the Phase II study was expanded to full enrollment, or 25 patients.
Under the expanded CRADA agreement, the NCI will continue conducting the Phase II clinical study of Melphalan in patients with primary and metastatic hepatic malignancies using the Delcath System. The NCI also will conduct pharmacokinetic analyses of patient samples in the Phase II and Phase III clinical trials to characterize the pharmacokinetic advantage of Melphalan delivered to the liver using the Delcath System, will provide and perform primary database management and statistical analysis for the Melphalan trials, and will conduct ongoing hematological biocompatibility and extraction testing of Melphalan in human plasma and whole blood.
In addition, the NCI may perform preclinical animal and filter testing to provide the basis for supporting Phase I trials for additional chemotherapeutics. Investigating different chemotherapeutic agents such as Oxaliplatin, along with development of additional protocols utilizing the Delcath System for the isolated treatment of cancers in other body regions (such as limb, kidney and pancreatic), may be conducted by mutual agreement of Delcath and the NCI. We are very fortunate to have the NCI researchers participating in our clinical trials and supporting our expanded research efforts. The NCI's long-term commitment to the Delcath System underscores our own enthusiasm for the potential of our technology for which we have broadened our vision and strategy to advance the long-term growth of Delcath.
Toward that end, one of our goals this year is to add new members to the Board of Directors with the relevant clinical and business experience to advise this growing medical technology company. We also plan to create a new Scientific Advisory Board of leading clinicians that will offer insight into new clinical indications and applications for Delcath's technology. The Scientific Advisory board also will provide strategic advice on data publication and presentation, potential trial centers, and patient referrals as we move toward completion of the clinical phase and expand market awareness ahead of commercialization.
We are also forming a Technology and Intellectual Property ("IP") focus group. This group includes some of the original developers of the Delcath System, together with additional members possessing expertise in oncology, pharmacology, bio-engineering and patents. This group will pool their specialized knowledge and experience to explore and develop improvements to various facets of Delcath's technology with an eye towards simplifying use of the Delcath System, identifying new applications for the technology and strengthening our overall IP position.
Our activities in the year ahead will also be focused on raising Delcath's profile and visibility among key constituents in the healthcare, patient advocacy and investment communities. One initial step toward that goal has been to engage Lippert/Heilshorn and Associates ("LHA") as our investor relations firm. Through LHA we have started to reach out to the financial community for investment support. LHA will also serve as a communications resource to current and future Delcath investors as we seek to deliver on our promises to shareholders. Additionally, we will soon embark upon a public relations campaign to create awareness of the Delcath System among regional cancer therapists, surgical oncologists, patient advocacy groups and the patients suffering with untreatable cancers. These initiatives are beginning with a reconstruction of the company's website which will soon be an information-rich resource for physicians, patients, and investors wanting to learn more about Delcath Systems and our unique technology for high dose percutaneous isolated perfusion.
A number of exciting initiatives are underway and we expect 2007 to be a pivotal year of achievement for Delcath Systems. We thank you, our loyal shareholders, our dedicated staff, and especially our clinicians, for your support and encouragement as we advance clinical testing of Delcath Systems' regional cancer therapy and accelerate our efforts to help cancer patients worldwide.
Sincerely,
Richard Taney President and Chief Executive Officer
About Delcath Systems, Inc. Delcath Systems is a developer of percutaneous perfusion technology for organ or region-specific delivery of therapeutic and chemotherapeutic agents. The Company's intellectual property portfolio currently consists of 12 patents on a worldwide basis, including the United States, Europe, Asia and Canada. For more information, please visit the Company's website, www.delcath.com.
This release contains forward-looking statements, which are subject to certain risks and uncertainties that can cause actual results to differ materially from those described. Factors that may cause such differences include, but are not limited to, uncertainties relating to our ability to successfully complete Phase III clinical trials and secure regulatory approval of our current or future drug-delivery system and uncertainties regarding our ability to obtain financial and other resources for any research, development and commercialization activities. These factors, and others, are discussed from time to time in our filings with the Securities and Exchange Commission. You should not place undue reliance on these forward-looking statements, which speak only as of the date they are made. We undertake no obligation to publicly update or revise these forward-looking statements to reflect events or circumstances after the date they are made.