DELCATH SYSTEMS, INC.

DELCATH SYSTEMS, INC. (DCTH) Annual Report: An Investor's Guide

Delcath Systems, Inc. (Nasdaq: DCTH) recently released its annual report for the fiscal year ended December 31, 2025. This summary cuts through the complexity, offering retail investors a clear, concise overview of the company's financial health, strategic direction, and key risks.

Business Overview Delcath Systems is an interventional oncology company that focuses on treating primary and metastatic liver cancers. Its flagship product, the CHEMOSAT® Hepzato Kit (melphalan hydrochloride for injection/hepatic delivery system), delivers high-dose chemotherapy directly to the liver, minimizing exposure to the rest of the body. Delcath aims to provide innovative, targeted therapies that improve outcomes for patients with liver-dominant cancers. The company's operations span research, development, manufacturing, and commercialization of this unique drug and device combination.

Financial Performance Highlights (Fiscal Year Ended December 31, 2025) Delcath reported total revenue of approximately $15.8 million for the year. This revenue primarily came from the initial U.S. commercial launch of the Hepzato Kit and continued sales in Europe. This marks a significant increase from the prior year, reflecting successful market entry following U.S. FDA approval.

Despite revenue growth, Delcath recorded a net loss of $62.5 million, or ($1.80) per share. This loss reflects substantial investments in research and development (R&D) and selling, general, and administrative (SG&A) expenses, which supported the product launch and ongoing clinical programs. Specifically, R&D expenses totaled $28.3 million, funding post-market studies and pipeline expansion, while SG&A expenses reached $45.1 million to build out the company's commercial infrastructure. These financial results highlight Delcath's transition from a development-focused company to a commercial-stage entity.

Key Risk Factors Investing in Delcath Systems carries significant risks, including:

• Commercialization Risk: The Hepzato Kit's success hinges on market adoption, physician training, favorable reimbursement policies, and effective distribution channels, none of which are guaranteed.
• Regulatory Risk: While the FDA has approved the Hepzato Kit for one indication, securing future approvals for additional indications requires rigorous, lengthy, costly, and uncertain clinical trials and regulatory reviews.
• Financial Risk: The company continues to incur substantial losses and will likely need additional capital to fund its operations and commercialization efforts. This could dilute existing shareholders, and the company's path to profitability remains uncertain.
• Competition: The interventional oncology market is highly competitive. Other therapies, devices, and companies vie for market share, and competitors may possess greater financial, technical, and marketing resources.
• Manufacturing and Supply Chain: Delcath relies on third-party manufacturers and complex supply chains for critical components and drug substances. This reliance could lead to disruptions, delays, or increased costs.
• Clinical Trial Risk: Ongoing and future clinical trials for additional indications may not produce positive results or could face delays, impacting future product expansion.
• Intellectual Property Risk: The company's success depends on its ability to protect its proprietary technology and intellectual property rights.

Management Discussion (MD&A Highlights) The year 2025 proved pivotal for Delcath. The company successfully launched the Hepzato Kit commercially in the U.S. for adult patients with uveal melanoma metastatic to the liver, following its FDA approval in August 2024. Delcath established initial commercial partnerships, began training medical centers on the specialized procedure, and started building its U.S. sales force. In Europe, CHEMOSAT sales continued, contributing to overall revenue and demonstrating the product's established presence.

Management focused on executing the U.S. launch strategy, managing operational expenses while scaling commercial activities, and advancing clinical programs. These commercialization efforts primarily drove the increase in SG&A expenses, while R&D investments supported post-market requirements and pipeline expansion.

Financial Health As of December 31, 2025, Delcath held $48.2 million in cash and cash equivalents. The company used approximately $55.0 million in cash for operating activities during the year, reflecting significant investments in commercialization and R&D. Management expects current cash resources, combined with anticipated revenue growth and potential future financing, to fund operations into Q3 2026. However, Delcath will likely need additional capital to fully execute its commercialization strategy, fund ongoing clinical development, and achieve sustained profitability.

Future Outlook Looking ahead, Delcath's strategy centers on three key areas:

1. Accelerating U.S. Commercialization: The company plans to expand Hepzato Kit adoption by increasing physician awareness, improving patient access, and securing broader, more favorable reimbursement policies. This includes growing the commercial team and targeting additional treatment centers.
2. Clinical Development: Delcath will advance ongoing clinical trials for other liver-dominant cancers, such as hepatocellular carcinoma (HCC) and intrahepatic cholangiocarcinoma (ICC). This aims to broaden the Hepzato Kit's indications and reach larger patient populations.
3. Market Expansion: The company will explore opportunities for geographic expansion beyond current markets and evaluate strategic collaborations or partnerships to maximize the product's reach and potential.

Delcath anticipates continued investment in its commercial infrastructure and R&D activities as it strives for market penetration and pipeline advancement.

Competitive Position Delcath operates in the specialized and competitive field of interventional oncology, specifically targeting liver-dominant cancers. The Hepzato Kit offers a unique, targeted chemotherapy delivery system directly to the liver, setting it apart from systemic chemotherapy and other localized therapies. Its competitive advantages stem from its FDA approval for metastatic uveal melanoma to the liver, a significant regulatory milestone that provides a unique treatment option for this specific indication.

However, the market includes established systemic therapies, other interventional oncology procedures (e.g., TACE, Y90 radioembolization, ablation), and emerging novel treatments from larger pharmaceutical and medical device companies. Delcath's ability to compete effectively will depend on demonstrating superior clinical outcomes, securing broad reimbursement, and efficiently scaling its commercial operations against competitors who may have greater resources and established market presence.