Delcath Systems Is Still a Great Buy: Thoughts on Q3, So Far

Nov. 3.10 | About: Delcath Systems, (DCTH)

I first wrote about Delcath Systems (NASDAQ:DCTH) on August 21 (Delcath Systems: A Great Buy At These Prices) and estimated a $38.10 price if FDA approval is granted and full commercialization is utilized.

Tuesday at 4:30 p.m. DCTH held a brief conference call to update investors on achievements in the 3rd quarter and expectations for the future.

The main catalyst behind the stock gaining +6.26% yesterday was the 10Q released Tuesday morning stating that in addition to the phase III results that will be submitted to the FDA in this 4th quarter, they will also be submitting a recently completed phase II four arm trial.

From the 10Q:

Phase II clinical trial of the Delcath system for chemosaturation therapy with melphalan in patients with primary and metastatic liver cancer, stratified into four arms: neuroendocrine tumors (carcinoid and islet cell tumors), hepatocellular carcinoma (primary liver cancer), ocular or cutaneous melanoma (eye or skin cancer who have been previously treated with regional therapy using melphalan), and metastatic adenocarcinoma (glandular cancer). We intend to include the results of our Phase II clinical trial in our NDA submission to the FDA, which we expect to file during the fourth quarter of 2010.

An important arm of the phase II trial included how Melphalan's (chemo drug) effectiveness would have on patients with HCC (primary liver cancer). The top line results of the phase II trial will be released after the NDA (new drug application) has been submitted to the FDA which is scheduled in the fourth quarter.

HCC is a major disease highly concentrated in Asia. Perhaps an Asia partnership could emerge if the FDA approves the PHP system for Ocular and Cutaneous Melanoma to the liver and possibly expanded use for other indications such as neuroendocrine cancer or HCC (primary liver cancer).

Other housekeeping issues included having 51.8 million in cash and no debt on the books. They also now have 44 employees and have expanded in every department.

Bottom line: This was a positive conference call that included a very important element, the added submission of the recently completed phase II trial in addition to the phase III data that will be submitted to the FDA during this fourth quarter. I continue to believe that this is one of the best securities to own from a risk to reward perspective that I have seen in many years.

Disclosure: Long DCTH