Delcath: Clinical Results for Melanoma Treatment More Than Skin Deep

May.20.10 | About: Delcath Systems, (DCTH)

From a low of $4.05 in February to the current price of $14.30 (May 19), Delcath Systems, Inc. (Nasdaq: DCTH) has had an enviable run up as the market anticipated positive results in their clinical trials and then celebrated those results.

On April 21, DCTH revealed that their patented technology showed statistically significant results on patients with melanoma that had metastasized to the liver. DCTH announced that their pivotal, phase III study on the treatment with Delcath's Percutaneous Hepatic Perfusion (PHP) system resulted in a 54% reduction in the time-to-tumor progression or death compared to treatment with the best alternative care.

Patients who were treated with the PHP system lived nearly five months longer before their liver tumors progressed. Rare in the annals of clinical expectations, the trial still would have been deemed successful if only a 20% reduction, not the 53% reduction that was observed. The late stage trial evaluated the Delcath PHP System in melanoma patients that started in the skin or the eye and spread to the liver. Delcath said patients who were treated with its system lived for an average of 214 days, or about seven months, before new tumor growth or dying

Patients who received standard protocol drugs survived for an average of 70 days before the cancer progression resumed. Delcath's system delivers high doses of the chemotherapy agent, melphalan, through the hepatic artery and to the liver. Although large doses of the drug could be toxic to patients, the PHP system is designed to mitigate deleterious side effects by filtering the drug out of the blood stream with a catheter and a filtration system after leaving the liver.

Jason White, a research analyst at Cannacord Adams, says that for just use on melanoma, $700 million in annual sales could be realized after FDA approval (DCTH will initiate the process for applying for approval in the next week or two). After the stellar clinical results were announced, White increased his price target three-fold to $21 on the stock. Delcath Systems is presenting its patented treatment system for primary and metastatic cancers to the liver at the American Society of Clinical Oncology (ASCO). The oral presentation of Delcath's Phase III Trial Data comparing percutaneous hepatic perfusion with melphalan (PHP-mel) to the "best alternative care" for patients with hepatic metastases from ocular or cutaneous melanoma for ASCO's 2010 Annual Meeting, will be on June 5, 2010 at 3:30 PM during the Melanoma/Skin Cancer – Oral Abstract Session at McCormick Place in Chicago.

DCTH could see continued strength in its stock going into the ASCO presentation on expectations that more detailed clinical data will be presented. Also, there are currently three boutique firms following the company, but impressive presentations at ASCO are famous for attracting even more attention from investment and money management firms initiating research coverage.

Disclosure: Author holds a long position in DCTH