Delcath Systems Inc (DCTH)

[guti]

I am going to share some information that I have gathered over the weekend, which makes me think the company is about to be sold.

On August 28, 2016 Delcath (DCTH) informed shareholders of a plan to extinguish their convertible notes from a majority holder. The purpose for that was to allow them to raise money since cash at hand would only last them until end of January 2018. I think it was probably done so investors who own those notes can participate in an acquisition as majority shareholders, but this is just my speculation. First they needed to reduce shares, so they made a reverse split on November 16 with the excuse of increasing share price, while raising money by exiting those convertible notes on December 28. Days prior to that, on November 20, they appointed Dr. Simon Pedder to the board.
Dr. Pedder also works for Athenex where he is Chief Business and Strategy Officer of Proprietary Products. Entering the board of a target company is done when a suitor has intentions of an acquisition. Dr. Pedder has previously worked with Athenex’s CEO and Chairman, Johnson Y.N. Lau, in a company which was founded by Dr. Pedder and sold in 2014. I benefited from that transaction, since I was a shareholder of that company back then. I believe the two decided to work together again and are now planning to take over Delcath at a very low price. Today Athenex closed a $61.2 million offering which they plan to use portion of the money for an acquisition. My guess is that it will be DCTH.
Athenex is a global biopharmaceutical oncology company dedicated to the discovery, development and commercialization of novel therapies for the treatment of cancer. Delcath owns a method to deliver, through a minimally invasive procedure known as percutaneous hepatic perfusion (PHP), directed high dose chemotherapy to the liver. It is approved in Europe and is in Phase 3 study here in the US, which is expected to finish in the beginning of 2019. The FDA should approve it since there are no better alternatives and patients need any help that can extend their lives by months. You can read more about the procedure here: https://doctorlib.info/therapy/embolization-therapy-principles-clinical-applications/42.html

The conclusion to that paper is what’s important to Athenex:
“Collectively, these data provide evidence of clinical benefit for PHP in patients with unresectable metastatic melanoma in the liver, for which there are no suitable alternative therapies for ocular melanoma and emerging therapies of limited effectiveness for cutaneous melanoma. PHP treatment of this patient population is able to alter the disease course, as evidenced by the highly consistent, statistically significant, and clinically meaningful benefits seen with PHP treatment across efficacy end points in the pivotal phase 3 study. The most common grade 3/4 adverse events were thrombocytopenia and anemia. Postprocedure (in-cycle) neutropenia was common but can be mitigated by prophylactic use of growth factors. Recent improvements in the design of the device (Gen 2), procedural technique, and medical management indicate improved safety in European use that needs to be documented through registries and future randomized controlled clinical trials. The periprocedural and postprocedural toxicities associated with melphalan/PHP treatment need to be balanced against the natural course of metastatic melanoma with liver-dominant disease, the large unmet medical need for these patients, and the ability of PHP treatment to potentially alter the disease course.”

In addition to the interest of a future FDA approved therapy for liver cancer, Delcath has intentions to submit application in China as well and has patents for it. Athenex happens to have manufacturing facilities both in US and China. This supports more my reasoning to believe that Delcath will be bought out by Athenex.