Delcath Sees 175% HEPZATO Growth, Aims for 28 Centers by 2025 as Pipeline Expands

Key Highlights from Delcath Systems' Q2 2025 Earnings Call

During the recent earnings call, Delcath Systems (DCTH) shared a detailed overview of its financial performance and strategic initiatives for the second quarter of 2025. The company reported strong revenue growth, with quarterly revenue reaching $24.2 million, marking an increase of over 20% compared to the first quarter of 2025. This growth was primarily driven by U.S. sales of HEPZATO, which totaled $22.5 million, and European sales of CHEMOSAT, amounting to $1.7 million.

The CEO, Gerard J. Michel, emphasized that the company has continued to expand its network of treating sites. By the end of the second quarter, Delcath had 20 operational centers. During the quarter, three new centers were activated: Northwestern Memorial Hospital, University of Miami Hospital, and the University of Virginia Medical Center. Additionally, 10 more centers are in the process of training and approval. Michel noted that based on the current pace, the company expects between 25 and 28 operational centers by the end of the fourth quarter. Although this is slightly lower than previous projections, he highlighted that active centers continue to treat patients consistently.

Michel also announced that due to slower-than-expected U.S. site activations, the full-year revenue guidance has been adjusted to $93 million to $96 million. However, the company remains confident in maintaining gross margins between 83% and 85% for 2025. The projected increase in HEPZATO treatment volume for 2025 is expected to be over 175% compared to 2024. This growth is supported by ongoing clinical trials, including company-sponsored studies in liver-dominant metastatic colorectal cancer and liver-dominant metastatic breast cancer, both of which have received FDA clearance for Phase II trials.

Financial Performance and Outlook

CFO Sandra Pennell provided further details on the financial results. Revenue from HEPZATO sales reached $22.5 million, while CHEMOSAT sales amounted to $1.7 million during the second quarter of 2025. Compared to the same period in 2024, HEPZATO sales increased from $6.6 million to $22.5 million, and CHEMOSAT sales grew from $1.2 million to $1.7 million. The company also saw a significant improvement in gross margins, rising to 86% in the second quarter compared to 80% in the same period last year.

Net income for the quarter was $2.7 million, a stark improvement from the $13.7 million net loss recorded in the second quarter of 2024. Non-GAAP adjusted EBITDA for the quarter was $9.8 million, up from an adjusted EBITDA loss of $0.8 million in the prior year. The company ended the quarter with approximately $81 million in cash and investments and generated a positive operating cash flow of $7.3 million, compared to $2.2 million in the previous quarter. Delcath also reported no outstanding debt or warrants at the end of the quarter.

Looking ahead, management revised full-year revenue guidance to $93 million to $96 million, citing slower U.S. site activations. Gross margin guidance for 2025 remains between 83% and 85%. Michel reiterated expectations for continued positive non-GAAP adjusted EBITDA and positive cash flow for the rest of the year. He also mentioned that the rollout of the NDRA and 340B programs is expected to cause a 10% to 15% reduction in average revenue per HEPZATO kit in the third quarter, though volume growth is anticipated to offset this impact.

Research and Development and Strategic Initiatives

Research and development expenses for the quarter were $6.9 million, while selling, general, and administrative expenses amounted to $11.4 million. The company is ramping up its R&D efforts, particularly in colorectal cancer (CRC) and breast cancer indications. Michel noted that R&D spending increased by about 37% in Q2 compared to Q1, with expectations of another 40% increase in Q3 as the company begins to focus more on these indications. A 25% to 30% increase in R&D spending is anticipated in Q4 over Q3.

Analysts raised several questions during the Q&A session, including the potential impact of the NDRA and 340B programs on volume and revenue. Michel acknowledged that the net effect of these programs would result in a 10% to 15% reduction in revenue per HEPZATO kit in the third quarter, but emphasized that volume growth could offset this impact. He also addressed concerns about the urgency of post-NDRA initiatives and the pace of R&D expansion, noting that the company's primary focus remains on delivering value to patients through physician-led decisions.

Operational Challenges and Future Prospects

Despite the strong financial performance, Delcath continues to face challenges related to site activation. Management cited the "episodic pace of site openings" and the complexities of working with large institutions for a novel product as ongoing hurdles. Site activation bottlenecks, such as perfusion service limitations and administrative barriers, remain key risks. However, the company is actively adapting its onboarding processes to address these issues.

In terms of sentiment, analysts maintained a positive outlook, focusing on sustained growth, execution of strategy, and clarification of new program impacts. Management remained confident in its long-term vision, emphasizing that the company aims to open 40 sites by the end of next year. While the tone of the call was more cautious regarding site activation timing compared to the previous quarter, the overall sentiment remained optimistic.

Conclusion

Delcath Systems delivered strong Q2 2025 results, marked by sustained HEPZATO adoption, improved profitability, and robust cash flow. Despite revised guidance reflecting slower-than-expected site activations, the company remains well-positioned for significant annual revenue growth, high gross margins, and a substantial increase in HEPZATO treatment volume. With a clear focus on clinical expansion and operational adaptation, Delcath is poised for long-term success in both current and pipeline indications.