DCTH Q1 2025: Adds 4 New Centers, Eyes 30 by Year-End, 30% EBITDA
- Robust Center Activation: Executives highlighted consistent center additions—averaging roughly 4 per quarter and targeting 30 active centers by year-end—which is expected to drive predictable revenue growth and increased treatment volumes.
- Expanding Clinical Pipeline: The Q&A emphasized progress on Phase II trials in metastatic colorectal and breast cancer with plans to activate more than 20 trial sites. These trials tap into markets approximately 7x larger than the current uveal melanoma segment, enhancing long‑term growth prospects.
- Pricing Power & Market Adoption: The company successfully raised the unit price—from $182.5 to $187.5—and noted strong referral activity with about 30%-40% of patients organically sourced, demonstrating robust market acceptance and pricing leverage.
- Uncertainty in Center Activations: Management highlighted a “less than perfect track record” in predicting center activations, noting that unpredictable hospital timing and potential barriers could delay or reduce planned growth.
- Rising OpEx and R&D Expenses: The company expects SG&A to increase by 60% and R&D expenses by around 150% over the prior year, which may pressure margins and pose risks to profitability as clinical trials and expansion initiatives ramp up.
- European Market Challenges: Europe faces limited reimbursement (only in Germany so far) and pricing constraints—potentially generating only about 1/7 of U.S. pricing—which could constrain international revenue growth.
| Metric | Period | Previous Guidance | Current Guidance | Change |
|---|---|---|---|---|
Center Activations | FY 2025 | no prior guidance | 3 to 5 centers per quarter; 30 active centers by year-end 2025 | no prior guidance |
Treatment Frequency | FY 2025 | no prior guidance | just under 2 treatments per month | no prior guidance |
SG&A expenses | FY 2025 | no prior guidance | increase by 60% over 2024 with stock compensation comprising about 35% | no prior guidance |
R&D expenses | FY 2025 | no prior guidance | increase by 150% over 2024 with stock compensation comprising about 20% | no prior guidance |
EBITDA | FY 2025 | no prior guidance | remain EBITDA positive | no prior guidance |
European Market | FY 2025 | no prior guidance | hopes to secure reimbursement approval in the U.K. this year, with funding potentially next year | no prior guidance |
| Topic | Previous Mentions | Current Period | Trend |
|---|---|---|---|
Center Activation & Network Expansion | In Q4 2024, new centers were activated with noted execution uncertainties. In Q3 2024, progress was marked by having 12 centers active and a robust pipeline amid challenges such as scheduling and site-specific delays. In Q2 2024, there were 7–8 active centers with a detailed discussion on activation pipelines and scheduling difficulties. | Q1 2025 discussed new activations (University of Kansas, Cleveland Clinic, Providence St. John's) and further network expansion into 6 territories, while reaffirming ongoing execution uncertainties and the challenge of unpredictable hospital timelines. | Consistent focus on expanding treatment centers with persistent execution uncertainties. |
Clinical Pipeline & Pivotal Trial Data | Q4 2024 detailed CHOPIN results, the SCANDIUM 3 trial, and Phase II trials for CRC and breast cancer. Q3 2024 reiterated plans for Phase II trials and highlighted CHOPIN and SCANDIUM III progress with imminent data readouts. Q2 2024 focused on FOCUS trial publication, CHOPIN enrollment, new IITs, and plans for additional studies. | Q1 2025 provided updates on Phase II trials for metastatic colorectal and breast cancer (with respective FDA clearances) and detailed timelines for CHOPIN trial data expected later in 2025, including enrollment specifics. | A robust and evolving clinical pipeline with clearer trial timelines and expanded indications, underscoring significant future growth potential. |
Pricing Power & Reimbursement Dynamics | Q4 2024 emphasized a price increase to about $187,500 along with challenges in European reimbursement—where only Germany had coverage and other markets were limited by regulatory constraints. Q2 2024 noted U.S. reimbursement via J-code and NTAP status, while European markets remained at breakeven due to lower pricing and delayed UK reviews. | Q1 2025 reiterated the recent U.S. price increase (from $182,500 to $187,500) and highlighted that, outside Germany, there remains no reimbursement in Europe with the UK application submitted for future approval. | Recurring pricing strength in the U.S. with incremental increases; international reimbursement hurdles persist, prompting a continued cautious yet strategic approach. |
Operating Expenses & Margin Pressure | Q4 2024 reported rising SG&A and planned higher R&D expenses next year, but with improved gross margins (86%) and positive EBITDA in Q4. Q3 2024 described modest SG&A increases, lower R&D expenses due to reduced Expanded Access Program costs, and strong gross margins (85%) alongside reduced operating cash burn. Q2 2024 focused on increased SG&A and disciplined R&D spending while maintaining efficiency. | Q1 2025 noted that SG&A is projected to rise about 60% and R&D by 150% over 2024 levels, yet Q1 achieved a 30% EBITDA margin, converted a net loss into a net income, and improved gross margins significantly (86% vs 71% previously). | Higher operating expenses are being managed through efficiency improvements, resulting in better margins and positive cash flow, despite increased investment in growth initiatives. |
International Market Challenges | Q4 2024 highlighted reimbursement being limited to Germany with the Netherlands self-funding and the UK on private pay, leading to modest growth expectations. Q2 2024 discussed delays in UK reimbursement reviews and maintaining Europe at breakeven due to low pricing, while also strategically leveraging the region for clinical trials. Q3 2024 noted Europe’s breakeven status and early expansion in new markets as part of the clinical strategy. | Q1 2025 reiterated that outside Germany, there is no reimbursement in Europe; the UK application has been submitted with anticipated funding next year, and overall, Europe is managed on a breakeven basis while focusing on generating clinical evidence. | Ongoing international challenges centered on reimbursement persist, with a strategic emphasis on data generation over revenue growth until regulatory hurdles are resolved. |
Real-World Efficacy & Treatment Metrics | Q4 2024 discussed average treatments of about 4.1 per patient from the FOCUS trial and noted stable treatment cycles with encouraging anecdotal outcomes. Q3 2024 reported treatment intervals (6–8 weeks) and positive physician feedback indicating higher real-world responses compared to trial data. Q2 2024 shared that anecdotal evidence showed patients received 2–5 treatments, with promising referral patterns emerging. | Q1 2025 mentioned that European centers have used CHEMOSAT across various indications, although current anecdotal data (with 2–3 patients per indication) is insufficient for robust real-world evidence, prompting plans to bolster data through further studies and publications. | Consistently promising real-world efficacy signals, with steady treatment metrics and physician enthusiasm; ongoing efforts aim to transition anecdotal insights into statistically robust evidence. |
Seasonality & Scheduling Risks | Q2 2024 pointed out variability in center activations and treatment pacing (including effects of summer vacations and scheduling pauses for evaluation). Q3 2024 observed a reduction of 1.5–2 weeks in treatment days during the holiday season, along with flexible treatment intervals, but noted that these factors are temporary. | Q1 2025 reported minimal impacts from insurance resets and acknowledged inherent month-to-month variability due to treatment intervals of 6–8 weeks, describing such fluctuations as noise rather than material risks. | Seasonality and scheduling risks remain transient factors that affect treatment volume timing, but their overall impact is viewed as non-material and manageable. |
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EBITDA & OpEx
Q: How will OpEx and EBITDA trend?
A: Management noted that SG&A is expected to increase by about 60% and R&D expenses by roughly 150% over last year, while continuing to deliver EBITDA positivity with Q1 margins around 30%. -
Trial Launch
Q: When will trial enrollment start?
A: After FDA clearance, initiating patient enrollment will take between 6 to 12 months due to detailed site contracting and training processes. -
CHOPIN Data
Q: What PFS benefit is expected?
A: Management indicated that a patient benefit of around an additional 4 months in progression-free survival would be considered very meaningful. -
Center Expansion
Q: Are more centers being added?
A: The company is adding about 4 centers per quarter, aiming to ramp up to roughly 30 active centers by year-end. -
Territory Capacity
Q: Do current territories support 40 sites?
A: With its existing 6 territories, the team believes it can support up to 40 sites, with the option to add more boots-on-the-ground if necessary. -
Treatment Volume
Q: Why expect slightly fewer treatments?
A: Although Q1 saw roughly 2 treatments per center, management anticipates a modest drop to just under 2 per month as centers gradually build up higher volumes. -
European Strategy
Q: What is the European reimbursement status?
A: Reimbursement is currently available only in Germany with a submission pending in the U.K.; pricing is expected to be around 1/7th of the U.S. level. -
In-Licensing Strategy
Q: Will you in-license additional assets?
A: Management is not actively pursuing in-licensing for companion diagnostics or therapeutics, preferring to focus on its profitable core product. -
Patient Access Program
Q: Were there hurdles that led to the access program?
A: The program was instituted mainly to assist with co-pays and help those without coverage, and aside from a few initial billing issues, there have been no major hurdles. -
Patient Referral Mix
Q: What share of patients are organic referrals?
A: Approximately 30-40% of patients come into centers organically, with the balance generated through proactive referral efforts. -
Repeat Procedures
Q: Are repeat treatments common?
A: The observed treatment frequency aligns with trial averages of roughly 4 treatments per patient, confirming steady repeat procedures over time. -
CRC Trial Sites
Q: How many sites are set for the CRC trial?
A: The Phase II colorectal cancer trial is expected to involve more than 20 sites across the U.S. and Europe. -
Price Increase Impact
Q: What was the price update for HEPZATO?
A: The HEPZATO price was raised from $182.5 on January 1 to $187.5 on February 1, reflecting a modest mid-quarter adjustment. -
Additional Indications
Q: Are additional indications under exploration in Europe?
A: Some centers have experimented with other indications such as breast cancer and cutaneous melanoma, though these remain too limited to drive significant revenue at this time. -
Revenue Stability
Q: Is revenue steady month-to-month?
A: Management described month-to-month revenue as generally stable with minor variations due to the small patient volumes and natural treatment scheduling cycles. -
Quarterly Revenue Trend
Q: What drove Q1 revenue growth?
A: The sequential revenue increase was primarily driven by steady center activations of about 3–5 new centers each quarter. -
Year-End Outlook
Q: Can you project year-end revenue?
A: Management declined to provide an extrapolation for year-end revenue at this time.
Research analysts covering DELCATH SYSTEMS.