As filed with the Securities and Exchange Commission on April 15, 2005
Registration No. 333-121681
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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AMENDMENT NO. 2
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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DELCATH SYSTEMS, INC.
(Exact name of Issuer as specified in its charter)
1100 Summer Street
3rd Floor
Stamford, Connecticut 06905
(203) 323-8668
(Address, Including Zip Code, and Telephone Number, Including Area Code of
Registrant's Principal Executive Office)
M. S. Koly
President and Chief Executive Officer
Delcath Systems, Inc.
1100 Summer Street
3rd Floor
Stamford, Connecticut 06905
(203) 323-8668
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Copies to:
Paul G. Hughes
Murtha Cullina LLP
Two Whitney Avenue
P.O. Box 704
New Haven, Connecticut 06503-0704
(203) 772-7726
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, please check the following box. [X]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier registration. If the delivery
of the prospectus is expected to be made pursuant to Rule 434, please check the
following box. [ ]
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a)
MAY DETERMINE.
Subject to Completion. Dated April 15, 2005
DELCATH SYSTEMS, INC.
Up to 3,397,909 Shares of Common Stock
This prospectus relates to the offering for resale of up to 3,397,909
shares of our common stock by the selling shareholders named herein (including
2,091,422 shares that we may issue upon exercise of warrants held by such
shareholders).
If any of the shares offered hereby are resold, we will not receive any
of the proceeds which will go to the person who sells the shares.
Our common stock is currently traded on the Nasdaq SmallCap Market and
the Boston Stock Exchange under the symbols "DCTH" and "DCT," respectively. On
April 13, 2005, our common stock had a closing price of $2.40 per share.
We also have outstanding warrants that we issued in connection with our public
offering in 2000 that trade on the Nasdaq SmallCap Market under the symbol
"DCTHW"; on 12, 2005, these warrants had a closing price of $0.30.
Investing in our securities involves a high degree of risk. See "Risk Factors"
beginning on page 1 for factors you should consider before investing in our
securities.
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Neither the Securities and Exchange Commission nor any
state securities commission has approved or disapproved
of these securities or passed upon the adequacy or
accuracy of this prospectus. Any representation
to the contrary is a criminal offense.
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The date of this prospectus is __________________, 2005.
The information in this prospectus is not complete and may be changed. Neither
we nor the selling shareholders may sell these securities until the registration
statement filed with the Securities and Exchange Commission is effective. This
prospectus is not an offer to sell these securities and it is not soliciting an
offer to buy these securities in any state where the offer or sale is not
permitted.
FOR CALIFORNIA INVESTORS
The offering of our Common Stock in 2003 was approved in California on
the basis of a limited offering qualification. Investors who are residents of
California must meet a "super suitability" standard of not less than $250,000
liquid net worth (exclusive of home, home furnishings and automobiles), plus
$65,000 gross annual income or $500,000 liquid net worth of $1,000,000 net worth
(inclusive of home, home furnishings and automobiles) or $200,000 gross annual
income. We did not have to demonstrate compliance with some or all of the merit
regulations of the California Department of Corporations, as found in Title 10,
California Code of Regulations, Rule 260.140 et seq.
Residents of the State of California will be unable to sell shares of
common stock they purchase in this offering, and investors residing in all other
states will be unable to sell shares of common stock they purchase in this
offering to California residents, pursuant to exemptions for secondary trading
available under California Corporations Code Section 25104(h), as such
exemptions have been withheld. However, secondary sales may be made to
purchasers who meet the "super suitability" standards or there may be other
exemptions to cover private sales by the bona fide owners of our securities for
such owners' own account without advertising and without being effected by or
through a broker-dealer in a public offering.
TABLE OF CONTENTS
Page
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RISK FACTORS................................................................1
Risks Related to Our Business and Financial Condition....................1
Risks Related to FDA and Foreign Regulatory Approval.....................2
Risks Related to Manufacturing, Commercialization and Market
Acceptance of the Delcath System....................................3
Risks Related to Patents, Trade Secrets and Proprietary Rights...........5
Risks Related to Products Liability......................................5
Risks Related to an Investment in Our Securities.........................6
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS...........................8
OUR BUSINESS................................................................9
General..................................................................9
Corporate Information....................................................9
THE OFFERING................................................................9
Terms of our Common Stock................................................9
Terms of the Warrants Issued in November and December 2004..............10
Transfer Agent..........................................................11
USE OF PROCEEDS............................................................11
SELLING SHAREHOLDERS.......................................................11
PLAN OF DISTRIBUTION.......................................................15
LEGAL MATTERS..............................................................16
EXPERTS....................................................................16
WHERE CAN YOU FIND MORE INFORMATION........................................17
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE............................17
DISCLOSURE OF THE SEC'S POSITION ON INDEMNIFICATION
FOR SECURITIES ACT LIABILITIES.....................................18
No dealer, salesman or other person has been authorized to give any
information or to make any representations other than those contained or
incorporated in this prospectus. If given or made, such information or
representations must not be relied upon as having been authorized by Delcath
Systems, Inc., by the selling security holders or by any other person deemed to
be an underwriter. Neither the delivery of this prospectus nor any sale made
hereunder shall under any circumstances create an implication that the
information contained herein is correct as of any time subsequent to the date
hereof or that there has been no change in the affairs of Delcath Systems, Inc.
since the date hereof. This prospectus does not constitute an offer to sell or a
solicitation of an offer to buy the common stock covered by this prospectus by
anyone in any jurisdiction in which such offer or solicitation is not authorized
or in which the person making such offer or solicitation is not qualified to do
so or to anyone to whom it is unlawful to make such offer or solicitation.
In this prospectus, "Delcath," "we," "us" and "our" refer in each case to
Delcath Systems, Inc.
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RISK FACTORS
You should consider carefully the following factors, as well as the other
information set forth in this prospectus, prior to making an investment in our
securities. If any of the following risks and uncertainties actually occur, our
business, financial condition or operating results may be materially and
adversely affected. In this event, the trading price of our securities may
decline and you may lose part or all of your investment.
Risks Related to Our Business and Financial Condition
The following factors relate to risks that are material to our business and
financial condition. If any of the possible events we describe below turns out
to be the case, our business may be adversely affected and we may be forced to
cease or curtail our operations which may result in the loss of your entire
investment.
Our entire focus has been the development and commercialization of the
Delcath system. If we are not successful in that development and
commercialization, or if we are unable to market and sell the product,
we will not generate operating revenue or become profitable.
The Delcath system, an enabling technology for the isolation of various
organs in the body to permit the delivery of otherwise unacceptably toxic doses
of drugs, is our only product. If the Delcath system fails as a commercial
product, we have no other products to sell.
Continuing losses may exhaust our capital resources. We have no revenue to
date, a substantial accumulated deficit, recurring operating losses and negative
cash flow.
We expect to incur significant and increasing losses while generating
minimal revenues over the next few years. From our inception on August 5, 1988
through December 31, 2004, we have incurred cumulative losses of $21.5 million
which were principally incurred in connection with our product development
efforts. For the years ended December 31, 2003 and December 31, 2004, we
incurred net losses of $2.3 million and $3.3 million, respectively.
We have funded our operations through a combination of private placements
of our securities and through the proceeds of our public offerings in 2000 and
2003. Please see the detailed discussion of our various sales of securities
described in Note 2 to our 2004 financial statements that are included in our
Annual Report on Form 10-KSB for the year ended December 31, 2004. In addition,
we received net proceeds of approximately $5.4 million from private placements
we completed in 2004 and approximately $2.2 on exercise of warrants and options
in 2004.
If we continue to incur losses we may exhaust our capital resources
resulting in our being unable to complete the development and commercialization
of our product. As we incur additional losses, our accumulated deficit will
further increase. As of December 31, 2004, we had cash and cash equivalents and
short term investments of $7.3 million.
We will likely need additional funding to complete the required
clinical trials and our efforts to raise additional financing may be
unsuccessful.
Before we can obtain approval to sell our product commercially, we will
need premarket approval from the FDA which, in turn, requires that we complete
clinical trials to establish the effectiveness of our system. We will likely
need additional funding to complete the required clinical trials, and we may not
be able to raise additional funds on reasonable terms or at all. Many of the
costs incurred in conducting clinical trials are not within our control,
including additional trials that the FDA may require; we are unable, therefore,
to provide an estimate of the costs we will incur in completing the clinical
trials. In addition,
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completion of the clinical trials does not guarantee that the FDA will give us
the required approvals in a timely manner or will give them to us at all.
If we do not raise any additional capital that may be required to
commercialize the Delcath system, our potential to generate future
revenues will be significantly limited even if we receive FDA
premarket approval.
Our current resources may not be sufficient to complete Phase III clinical
trials using doxorubicin or to complete clinical trials using melphalan and will
be insufficient to fund the costs of commercializing the Delcath system which
will be significant. We have no commitments for any additional financing. If we
are unable to obtain additional financing as needed, we will not be able to sell
the system commercially.
Risks Related to FDA and Foreign Regulatory Approval
The following factors relate to risks that are material to obtaining FDA
and foreign regulatory approval. If any of the events we describe below turns
out to be the case, our business may be adversely affected and we may be forced
to cease or curtail our operations which may result in the loss of your entire
investment.
Even if the FDA grants premarked approval for use of the Delcath
system for the treatment of melanoma that has metastasized to the
liver with doxorubicin, our ability to market the device would be
limited to that use. Separate FDA approval would be needed to market
the system for use with other drugs or to treat other diseases. Lack
of such specific approvals will limit our ability to market our
product.
If the FDA grants premarket approval for use of the Delcath system in the
treatment of melanoma that has metastasized to the liver with doxorubicin, our
ability to market the system would be limited to its use with that drug in
treating that disease. Thereafter, physicians could use the system for the
treatment of other cancers or using other drugs ("off label" use), but we could
not market it for such uses. This would limit our ability to market our product
and could result in substantially reduced sales.
If we do not obtain FDA premarket approval, we may not be able to
export the Delcath system to foreign markets, which will limit our
sales opportunities.
If the FDA does not approve our application for premarket approval for the
Delcath system, we will not be able to export the Delcath system from the United
States for marketing abroad unless approval has been obtained from one of a
number of developed nations. If we do not have such approval, we will not be
eligible to use a simplified registration process for the Delcath system in a
number of countries including the members of the European Union, Great Britain
and Australia. We have not begun to seek foreign regulatory approval and may not
be able to obtain approval from one or more countries where we would like to
sell the Delcath system. If we are unable to market the Delcath system
internationally because we are not able to obtain required approvals, our
international market opportunity will be materially limited.
Because of our limited experience, conduct of clinical trials and
obtaining FDA premarket approval could be delayed.
We have experienced and may continue to experience delays in conducting and
completing required clinical trials, caused by many factors, including our
limited experience:
o in arranging for clinical trials;
o in evaluating and submitting the data gathered from clinical
trials;
o in designing trials to conform to the trial protocols
authorized by the FDA;
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o in complying with the requirements of institutional review
boards at the sites where the trials may be conducted; and
o in identifying clinical test sites and sponsoring
physicians.
Completion of our clinical trials will also depend on the ability of the
clinical test sites to identify patients to enroll in the clinical trials since
the population of appropriate subjects (i.e., patients with melanoma that has
metastized to the liver) is limited. The trials may also take longer to complete
because of difficulties we may encounter in entering into agreements with
clinical testing sites to conduct the trials. Any significant delay in
completing clinical trials or in the FDA's responding to our submission or a
requirement by the FDA for us to conduct additional trials would delay the
commercialization of the Delcath system and our ability to generate revenues.
Third-party reimbursement may not be available to purchasers of the
Delcath system or may be inadequate, resulting in lower sales even if
FDA premarket approval is granted.
Physicians, hospitals and other health care providers may be reluctant to
purchase our system if they do not receive substantial reimbursement for the
cost of the procedures using our products from third-party payors, including
Medicare, Medicaid and private health insurance plans.
Because the Delcath system currently is characterized by the FDA as an
experimental device, Medicare, Medicaid and private health insurance plans will
not reimburse its use in the United States. We will not begin to seek to have
third-party payors reimburse the cost of the Delcath system until after its use
is approved by the FDA. Each third-party payor independently determines whether
and to what extent it will reimburse for a medical procedure or product.
Third-party payors in the United States or abroad may decide not to cover
procedures using the Delcath system. Further, third-party payors may deny
reimbursement if they determine that the Delcath system is not used in
accordance with established payor protocols regarding cost effective treatment
methods or is used for forms of cancer or with drugs not specifically approved
by the FDA.
New products are under increased scrutiny as to whether or not they will be
covered by the various healthcare plans and the level of reimbursement which
will be applicable to respective covered products and procedures. A third-party
payor may deny reimbursement for the treatment and medical costs associated with
the Delcath system, notwithstanding FDA or other regulatory approval, if that
payor determines that the Delcath system is unnecessary, inappropriate, not cost
effective, experimental or is used for a non-approved indication.
Risks Related to Manufacturing, Commercialization and Market Acceptance of the
Delcath System
We obtain necessary components for the Delcath system from sole-source
suppliers. Because manufacturers must demonstrate compliance with FDA
requirements, if our present suppliers fail to meet such requirements
or if we change any supplier, the successful completion of the
clinical trials and/or the commercialization of the Delcath system
could be jeopardized.
We must ensure that the components of the Delcath system are manufactured
in accordance with manufacturing and performance specifications of the Delcath
system on file with the FDA and with drug and device good manufacturing practice
requirements. Many of the components of the Delcath system are manufactured by
sole source suppliers. If any of our suppliers fails to meet our needs, or if we
need to seek an alternate source of supply, we may be forced to suspend or
terminate our clinical trials. Further, if we need a new source of supply after
commercial introduction of the Delcath system, we may face long interruptions in
obtaining necessary components, which could jeopardize our ability to supply the
Delcath system to the market.
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Currently the Delcath system kit is being manufactured domestically by the
OEM division of B. Braun Medical, Inc. of Germany which also supplies the other
catheters and accessories and assembles the Delcath system kit. Medtronic USA,
Inc. currently manufactures the components of the blood filtration circuit
located outside of the body, including the medical tubing through which the
patient's blood flows and various connectors and the blood filtration pump head.
Historically, the Company purchased activated charcoal filters used in the
Delcath system from Asahi Medical Products of Japan. Because Asahi has
discontinued manufacturing these filters, we are currently testing an
alternative filter from a domestic manufacturer.
We do not have any contracts with suppliers for the manufacture of
components for the Delcath system. If we are unable to obtain an
adequate supply of the necessary components, we may not be able timely
to complete our clinical trials.
We do not have any contracts with suppliers for the manufacture of
components for the Delcath system. Certain components are available from only a
limited number of sources. To date, we have only had components of the Delcath
system manufactured for us in small quantities for use in pre-clinical studies
and clinical trials. We will require significantly greater quantities to
commercialize the product. Notwithstranding our best efforts, we may not be able
to find an alternate source of comparable components. If we are unable to obtain
adequate supplies of components from our existing suppliers or need to switch to
an alternate supplier, commercialization of the Delcath system could be delayed.
Because of our limited experience in marketing products and our lack of
adequate personnel to market and sell products, we may not be successful in
marketing and selling the Delcath system even if we receive FDA premarket
approval.
We have not previously sold, marketed or distributed any products and
currently do not have the personnel, resources, experience or other capabilities
to market the Delcath system adequately. Our success will depend upon our
ability to attract and retain skilled sales and marketing personnel. Competition
for sales and marketing personnel is intense, and we may not be successful in
attracting or retaining such personnel. Our inability to attract and retain
skilled sales and marketing personnel could adversely affect our business,
financial condition and results of operations.
Market acceptance of the Delcath system will depend on substantial
efforts and expenditures in an area with which we have limited
experience.
Market acceptance of the Delcath system will depend upon a variety of
factors including whether our clinical trials demonstrate a significant
reduction in the mortality rate for the kinds of cancers treated on a
cost-effective basis, our ability to educate physicians on the use of the
Delcath system and our ability to convince healthcare payors that use of the
Delcath system results in reduced treatment costs to patients. We have only
limited experience in these areas and we may not be successful in achieving
these goals. Moreover, the Delcath system replaces treatment methods in which
many hospitals have made a significant investment. Hospitals may be unwilling to
replace their existing technology in light of their investment and experience
with competing technologies. Many doctors and hospitals are reluctant to use a
new medical technology until its value has been demonstrated. As a result, the
Delcath system may not gain significant market acceptance among physicians,
hospitals, patients and healthcare payors.
Rapid technological developments in treatment methods for liver cancer
and competition with other forms of liver cancer treatments could
result in a short product life cycle for the Delcath system.
Competition in the cancer treatment industry, particularly in the markets
for systems and devices to improve the outcome of chemotherapy treatment, is
intense. The Delcath system competes with all forms of liver cancer treatments
that are alternatives to the "gold standard" treatment of surgical resection.
Many of
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our competitors have substantially greater resources, especially financial and
technological. In addition, some of our competitors have considerable experience
in conducting clinical trials and other regulatory procedures. These competitors
are developing systems and devices to improve the outcome of chemotherapy
treatment for liver cancer. If these competitors develop more effective or more
affordable products or treatment methods, our profitability will be
substantially reduced and the Delcath system could have a short product life
cycle.
We have employment agreements with our President and Chief Executive
Officer and our Chief Technical Officer whom we believe are important
to our efforts to commercialize the Delcath system. The unavailability
of the services of either of them could delay our successful
commercial introduction of the Delcath system.
We have entered into employment agreements with M. S. Koly, our President
and Chief Executive Officer, and Samuel Herschkowitz, M.D., our Chief Technical
Officer, each of whom has played an important role in our efforts to obtain FDA
premarket approval of our product. We maintain a life insurance policy on Mr.
Koly. The loss of the services of either of them could delay our completing the
clinical trials, our obtaining FDA premarket approval, our introducing the
Delcath system commercially and our generating revenues and profits.
Risks Related to Patents, Trade Secrets and Proprietary Rights
Our success depends in large part on our ability to obtain patents,
maintain trade secret protection and operate without infringing on the
proprietary rights of third parties.
Because of the length of time and expense associated with bringing new
medical devices to the market, the healthcare industry has traditionally placed
considerable emphasis on patent and trade secret protection for significant new
technologies. Litigation may be necessary to enforce any patents issued or
assigned to us or to determine the scope and validity of third-party proprietary
rights. Litigation could be costly and could divert our attention from our
business. If others file patent applications with respect to inventions for
which we already have patents issued to us or have patent applications pending,
we may be forced to participate in interference proceedings declared by the
United States Patent and Trademark Office to determine priority of invention,
which could also be costly and could divert our attention from our business. If
a third party violates our intellectual property rights, we may be unable to
enforce our rights because of our limited resources. Use of our limited funds to
defend our intellectual property rights may also affect our financial condition
adversely.
Risks Related to Products Liability
We do not currently carry products liability insurance and we may not be
able to acquire sufficient coverage in the future to cover large claims.
Clinical trials, manufacturing and product sales may expose us to liability
claims from the use of the Delcath system. Though participants in clinical
trials are generally required to execute consents and waivers of liability, a
court might find such consents and waivers of liability to be ineffective or
invalid. Were such a claim asserted and even if we prevail on the merits, we
would likely incur substantial legal and related expenses. In connection with
our clinical trials in Australia, we have obtained a liability policy providing
both an aggregate limit and a per occurrence limit of $5 million coverage for
claims that might be asserted by participants in those trials. Claims for
damages, whether or not successful, could cause delays in the clinical trials
and result in the loss of physician endorsement. A successful products liability
claim or recall would have a material adverse effect on our business, financial
condition and results of operations.
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Risks Related to an Investment in Our Securities
The following factors relate to risks that are material to an investment in
our common stock. Any of these factors could result in lowering the market value
of our common stock and our warrants.
There is a relatively limited public float of our common stock and of our
publicly-traded warrants. Because of this, trades of relatively small amounts of
our common stock can have a disproportionate effect on the market price for our
common stock. The market price of our common stock has historically been
volatile. During the three years ended December 31, 2004, the range of the high
and low sales prices of our common stock have ranged from a high of $4.37
(during the quarter ended March 31, 2004) to a low of $0.31 (during the quarter
ended December 31, 2002).
Of our outstanding common stock, approximately 90% (including the shares
that could be sold by the selling security holders named herein and in other
registration statements we have filed under the Securities Act of 1933 covering
the resale of shares of our common stock) can be considered to be in the public
float. The term "public float" refers to shares freely and actively tradeable on
the Nasdaq Small Cap Market and/or the Boston Stock Exchange and not
beneficially owned by officers, directors or affiliates, as such term is defined
under the Securities Act. However, because of the relatively significant number
of shares held by the investors in our private placements in 2004, the sale of
shares by one or more of such investors could have a disproportionate effect on
the market price for our common stock. As a result, the market price of our
common stock can be volatile.
The number of shares eligible for future sale by a limited number of
institutional investors may cause the market price of our common stock
to be below the level it otherwise would be.
The Company sold approximately 2.8 million shares and issued warrants to
purchase approximately 2.5 million additional shares in private placements in
2004 to 11 institutional investors. All of these shares are eligible for resale
either pursuant to the registration statement of which this Prospectus is a part
or pursuant to another effective registration statement filed with the SEC. The
sales of substantial amounts of our common stock by such investors or the
perception that such sales could occur, often called "equity overhang," could
adversely affect the market price of our common stock.
In addition, we may issue substantial amounts of common stock upon exercise
of options outstanding under our stock option plans which are designed
principally to retain the services of our key employees. As of December 31,
2004, there were options to purchase approximately 1.0 million shares
outstanding under our option plans and an additional 3.0 million shares reserved
for issuance under our 2004 Stock Incentive Plan. As of that date, there were
also outstanding warrants to purchase approximately 4.4 million shares.
Sales of substantial amounts of common stock or the perception that such
sales could occur, could have an adverse effect on prevailing market prices for
our common stock and our publicly-traded warrants.
Anti-takeover provisions in our certificate of incorporation and
by-laws and under Delaware law and our stockholder rights agreement
may reduce the liklihood of a potential change of control, and certain
provisions of our certificate of incorporation and by-laws and of our
stockholders rights plan could make it more difficult for the
Company's stockholders to replace management.
Provisions of our certificate of incorporation, by-laws and Delaware law
and of our stockholders rights agreement may have the effect of discouraging,
delaying or preventing a change in control of us or unsolicited acquisition
proposals that a stockholder might consider favorable. Certain provisions of our
certificate of incorporation and by-laws and of our stockholders rights
agreement could have the effect of making it more difficult for the Company's
stockholders to replace management at a time when a substantial number of our
stockholders would favor a change in management. These include provisions:
-6-
o providing for a classified board and permitting the removal of a
director only for cause;
o authorizing the board of directors to fill vacant directorships
or increase the size of our board of directors; and
o subjecting us to the provisions of Section 203 of the Delaware
General Corporate Law, which provides that a Delaware corporation
may not engage in any of a broad range of business combinations
with a person or entity who owns 15% or more of the outstanding
voting stock of that company for a period of three years from the
date the person or entity became an interested stockholder unless
(a) prior to such time the board of directors of the corporation
approved either the business combination or the transaction which
resulted in the stockholder's becoming an interested stockholder
or (b) upon consummation of the transaction which resulted in the
stockholder's becoming an interested stockholder, the interested
stockholder owned at least 85% of the voting stock of the
corporation outstanding at the time the transaction commenced or
(c) at or subsequent to such time the business combination is
approved by the board of directors and authorized at an annual or
special meeting of stockholders by the affirmative vote of at
least 66 2/3% of the outstanding voting stock not owned by the
interested stockholder.
Furthermore, our board of directors has the authority to issue shares of
preferred stock in one or more series and to fix the rights and preferences of
the shares of any such series without stockholder approval. Any series of
preferred stock is likely to be senior to the common stock with respect to
dividends, liquidation rights and, possibly, voting rights. Our board's ability
to issue preferred stock may have the effect of discouraging unsolicited
acquisition proposals, thus adversely affecting the market price of our common
stock and warrants.
We also have a stockholder rights agreement which could have the effect of
substantially increasing the cost of acquiring us unless our board of directors
supports the transaction even if the holders of a majority of our common stock
are in favor of the transaction.
Our common stock is listed on the Nasdaq SmallCap Market. If we fail
to meet the requirements of the Nasdaq Stock Market for continued
listing, our common stock could be delisted.
Our common stock is currently listed on the Nasdaq SmallCap Market. To keep
such listing, we are required to maintain: (i) a minimum bid price of $1.00 per
share, (ii) a certain public float, (iii) a certain number of round lot
shareholders and (iv) one of the following: a net income from continuing
operations (in the latest fiscal year or two of the three last fiscal years ) of
at least $500,000, a market value of listed securities of at least $35 million
or a stockholders' equity of at least $2.5 million. We were notified by the
Nasdaq SmallCap Market on one occasion that we failed to meet the minimum bid
price requirement and on two occasions that we did not meet the requirement that
we meet one of the following conditions: that the market value of our common
stock be at least $35 million; that we have stockholders' equity of not less
than $2.5 million; or that we meet certain income tests. If we do not meet all
of the applicable criteria, our common stock could be delisted from the Nasdaq
SmallCap Market.
If our common stock is delisted from the Nasdaq SmallCap Market, we
may be subject to the risks relating to penny stocks.
If our common stock were to be delisted from trading on the Nasdaq SmallCap
Market and the trading price of the common stock remains below $5.00 per share
on the date the common stock were delisted, trading in our common stock would
also be subject to the requirements of certain rules promulgated under the
Exchange Act. These rules require additional disclosure by broker-dealers in
connection with any trades involving a stock defined as a penny stock and impose
various sales practice requirements on broker-dealers who sell penny stocks to
persons other than established customers and accredited investors, generally
institutions. The additional burdens imposed upon broker-dealers by such
requirements may discourage
-7-
broker-dealers from effecting transactions in securities that are classified as
penny stocks, which could severely limit the market price and liquidity of such
securities and the ability of purchasers to sell such securities in the
secondary market.
A penny stock is defined generally as any non-exchange listed equity
security that has a market price of less than $5.00 per share, subject to
certain exceptions.
California investors may not be able to resell the securities.
Our public offering in 2003 was approved in California on the basis of a
limited offering qualification. Investors who are residents of California must
meet a "super suitability" standard of not less than $250,000 liquid net worth
(exclusive of home, home furnishings and automobiles), plus $65,000 gross annual
income or $500,000 liquid net worth or $1,000,000 net worth (inclusive of home,
home furnishings and automobiles) or $200,000 gross annual income. We did not
have to demonstrate compliance with some or all of the merit regulations of the
California Department of Corporations, as found in Title 10, California Code of
Regulations, Rule 260.140 et seq.
Residents of the State of California may be unable to sell shares of common
stock they purchase in this offering, and investors residing in all other states
may be unable to sell shares of common stock they purchase in this offering to
California residents, pursuant to exemptions for secondary trading available
under California Corporations Code Section 25104(h), as such exemptions have
been withheld. However, secondary sales may be made to purchasers who meet the
"super suitability" standards or there may be other exemptions to cover private
sales by the bona fide owners of our securities for such owners' own account
without advertising and without being effected by or through a broker-dealer in
a public offering.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements in this prospectus and in the documents incorporated
herein by reference, including statements of our expectations, intentions,
plans, objectives and beliefs, are "forward-looking statements," within the
meaning of Section 21E of the Securities Exchange Act of 1934, that are subject
to certain events, risks and uncertainties that may be outside our control.
These forward-looking statements may be identified by the use of words such as
"expects," "anticipates," "intends," "plans" and similar expressions. They
include statements of our future plans and objectives for our future operations
and statements of future economic performance, information regarding our
expected growth, our capital budget and future capital requirements, the
availability of funds and our ability to meet future capital needs, the
realization of our deferred tax assets and the assumptions described in this
prospectus and in the documents incorporated herein by reference underlying such
forward-looking statements. Actual results and developments could differ
materially from those expressed in or implied by such statements due to a number
of factors, including those described in the context of such forward-looking
statements, our ability to achieve operating efficiencies, industry pricing and
technology trends, evolving industry standards, domestic and international
regulatory matters, general economic and business conditions, the strength and
financial resources of our competitors, our ability to find and retain skilled
personnel, the political and economic climate in which we conduct operations,
the risks discussed in "Risk Factors" and other risk factors described from time
to time in our other documents and reports filed with the Securities and
Exchange Commission. We do not assume any responsibility to update any of our
forward-looking statements regardless of whether factors change as a result of
new information, future events or for any other reason. We advise you to review
any additional disclosures we make in our Form 10-KSB, Form 10-QSB and Form 8-K
reports filed with the SEC.
-8-
OUR BUSINESS
General
Since our founding in 1988, we have been a development stage company
engaged primarily in developing a drug-delivery system which is designed to
isolate the liver from the general circulatory system and to administer
chemotherapy and other therapeutic agents directly to the liver. Our objectives
are to establish the use of the Delcath system as the standard technique for
delivering chemotherapy agents to the liver and to expand the Delcath technology
so that it may be used in the treatment of other liver diseases and of cancers
in other parts of the body.
A more complete description of our business is contained in our Annual
Report on Form 10-KSB for the year ended December 31, 2004. See "Incorporation
of Certain Documents by Reference."
Corporate Information
Our executive offices are located at 1100 Summer Street, Stamford,
Connecticut 06905. Our telephone number at this location is (203) 323-8668. We
maintain a corporate website located at http://www.delcathsystems.com. The
contents of our website are not included as part of this prospectus.
THE OFFERING
Common stock offered by the Selling o 3,326,412 shares issued in connection with private placements
Shareholders in November and December 2004 to accredited investors or issuable
upon exercise of warrants issued to such investors; and
o 71,497 shares issuable upon exercise of outstanding warrants
issued to the placement agent in connection with our November 2004
private placement to accredited investors.
Shares outstanding at February 28, o 15,391,765 shares
2005
Trading symbols of our publicly traded o Our common stock is traded on the Nasdaq SmallCap Market and
securities the Boston Stock Exchange under the symbols "DCTH" and "DCT,"
respectively.
o The warrants we issued in connection with our public offering
in 2000 are traded on the Nasdaq SmallCap Market and the Boston
Stock Exchange under the symbols "DCTHW" and "DCT," respectively.
Terms of our Common Stock
As of February 28, 2005, there were 15,391,765 shares of our common stock
outstanding. Assuming all outstanding warrants (including the warrants issued in
connection with our private placements in November and December 2004) are
exercised for the issuance of 4,417,748 shares of common stock, there would be
19,809513 shares of common stock outstanding.
Holders of common stock are entitled to one vote for each share on all
matters submitted to a stockholder vote. Holders of common stock do not have
cumulative voting rights. Therefore, holders of a majority of the shares of
common stock voting for the election of directors can elect all of the
directors.
-9-
Holders of common stock are entitled to share in all dividends that the board of
directors, in its discretion, declares from legally available funds. In any
liquidation, dissolution or winding up of Delcath, each outstanding share
entitles its holder to participate pro rata in all assets that remain after
payment of liabilities and after providing for each class of stock, if any,
having preference over the common stock.
Holders of common stock have no conversion, preemptive or other
subscription rights and there are no redemption provisions applicable to the
common stock. The rights of the holders of common stock are subject to any
rights that may be fixed for holders of preferred stock, when and if any
preferred stock is issued. All outstanding shares of common stock are, and the
shares underlying all options and warrants will be, duly authorized, validly
issued, fully paid and non-assessable upon our issuance of these shares.
Terms of the Warrants Issued in November and December 2004
As of the date hereof, there were 2,091,422 outstanding warrants issued in
connection with our private placements in November and December 2004 (including
those issued to the placement agent in connection with the private placement in
November).
In connection with our private placement in November 2004, we issued three
series of warrants referred to as the Series A warrants, the Series B warrants
and the Series C warrants. In connection with our private placement in December
2004, we issued Series D warrants.
As of the date hereof, there are outstanding 499,306 Series A warrants.
Each Series A warrant entitles the holder thereof to purchase one share of
common stock at a price of $2.78, subject to adjustment, at any time up to
November 24, 2009. Commencing one year from the effective date of the
registration statement of which this prospectus is a part, our Series A warrants
may be redeemed at our option at a redemption price of $0.10 per warrant
provided (i) the average per share market value of our common stock for the 20
trading days prior to the date of notice of redemption is at least 150% of the
warrant exercise price, (ii) such registration statement is then in effect and
has been in effect for at least 60 consecutive calendar days and (iii) trading
in our common stock has not been suspended by the SEC or the Nasdaq SmallCap
Market.
As of the date hereof, there are outstanding 1,069,520 Series B warrants.
Each Series B warrant entitles the holder thereof to purchase one share of
common stock at a price of $2.60, subject to adjustment, at any time beginning
on the date the registration statement of which this prospectus is a part is
declared effective and ending on the date that is ninety trading days following
such date. At any time after the date the registration statement of which this
prospectus is a part is declared effective, our Series B warrants may be
redeemed at our option at a redemption price of $0.10 per warrant provided (i)
the average per share market value of our common stock for the 20 trading days
prior to the date of notice of redemption is greater than $2.60, (ii) such
registration statement is then effective and has been in effect for at least 20
consecutive calendar days and (iii) trading in our common stock has not been
suspended by the SEC or the Nasdaq SmallCap Market.
As of the date hereof, there are outstanding 427,809 Series C warrants.
Each Series C warrant entitles the holder thereof to purchase one share of
common stock at a price of $2.78, subject to adjustment. The Series C warrants
are exercisable at any time between November 24, 2004 and the earlier of (i) the
date that is ninety trading days following the effective date of the
registration statement of which this prospectus is a part if the holder does not
exercise its Series B warrant and (ii) November 24, 2009 if the holder does
exercise its Series B warrant. Commencing one year from the effective date of
the registration statement of which this prospectus is a part, our Series C
warrants may be redeemed at our option at a redemption price of $0.10 per
warrant provided (i) the average per share market value of our common stock for
the 20 trading days prior to the date of notice of redemption is at least 150%
of the warrant exercise price, (ii) such registration statement is then in
effect and has been in effect for at least 60 consecutive calendar days and
(iii) trading in our common stock has not been suspended by the SEC or the
Nasdaq SmallCap Market.
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As of the date hereof, there are outstanding 94,787 Series D warrants. Each
Series D warrant entitles the holder thereof to purchase one share of common
stock at a price of $3.26, subject to adjustment, at any time up to December 7,
2009. Commencing one year from the effective date of the registration statement
of which this prospectus is a part, our Series D warrants may be redeemed at our
option at a redemption price of $0.10 per warrant provided (i) the average per
share market value of our common stock for the 20 trading days prior to the date
of notice of redemption is at least 150% of the warrant exercise price, (ii)
such registration statement is then in effect and has been in effect for at
least 60 consecutive calendar days and (iii) trading in our common stock has not
been suspended by the SEC or the Nasdaq SmallCap Market.
Transfer Agent
The transfer agent for our common stock is American Stock Transfer & Trust
Company.
USE OF PROCEEDS
We will not receive any proceeds from the sale of the shares offered
hereby. All proceeds will be retained by the Selling Shareholder who sells the
shares.
SELLING SHAREHOLDERS
The following table sets forth the number and percentage of shares that are
being registered by this Prospectus for the account of the entities listed below
(the "Selling Shareholders"). The shares to which this prospectus relates were
originally acquired by the Selling Shareholders in private placements in the
Fall of 2004 or are shares that may be acquired upon exercise of warrants
acquired in connection with such placements. These sales were exempt from
registration pursuant o Rule 506 under the Securities Act as sales made only to
"accredited investors." The shares may be sold by the Selling Shareholders, or
any of their assigns, from time to time in the public marketplace. The Selling
Shareholders are not obligated to exercise any of their warrants. All
information contained in the table below is based on information provided to us
by the Selling Shareholders, and we have not independently verified this
information. The Selling Shareholders are not making any representation that the
shares covered by this prospectus will be offered for sale. The Selling
Shareholders may from time to time offer and sell pursuant to this prospectus
any or all of the shares being registered for resale.
The applicable percentages of ownership are based on an aggregate of
15,391,765 shares of our common stock issued and outstanding as of February 28,
2005 plus, in the case of each Selling Shareholder, the number of shares such
Selling Shareholder could acquire within 60 days on exercise of warrants. None
of the Selling Shareholders has had a material relationship with us, or with our
predecessors or affiliates, at any time during the past three years.
Shares
Beneficially Shares Beneficialy
Owned Prior to Shares Being Owned After the Offering
Shareholder the Offering(1) Offered(2) Number Percent (%)
----------- --------------- ---------- ------ -----------
Iroquois Capital LP 1,601,063 (3) 1,497,328 (4) 103,735 (4) *%
Omicron Master Trust 1,180,734 (5) 973,264 (6) 207,470 (6) 1.3%
Cranshire Capital LP 524,066 (7) 524,066 0 0%
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Shares
Beneficially Shares Beneficialy
Owned Prior to Shares Being Owned After the Offering
Shareholder the Offering(1) Offered(2) Number Percent (%)
----------- --------------- ---------- ------ -----------
H.C. Wainwright & Co., Inc. 65,674 (8) 35,784 (9) 29,92 (10) *%
John R. Clarke 26,241 (11) 16,981 (12) 9,260 (13) *%
Scott F. Koch 26,241 (14) 16,981 (15) 9,260 (16) *%
Ari J. Fuchs 3,287 (17) 1,787 (18) 1,500 (19) *%
New England Partners Capital
L.P. 331,754 (20) 331,754 0 0%
- --------
* Less than 1%.
(1) Unless otherwise noted, all of the shares shown are held by individuals or
entities possessing sole voting and investment power with respect to such
shares. Shares not outstanding but deemed beneficially owned by virtue of
the right of a person to acquire them within 60 days, by the exercise of
options or warrants are deemed outstanding in determining the number of
shares beneficially owned by such person. Because the Selling Shareholders
may choose not to sell any of the shares offered by this prospectus, and
because there are currently no agreements, arrangements or undertakings
with respect to the sale of any of the shares of common stock, we cannot
estimate the number of shares that the Selling Shareholders will hold after
completion of the offering. For purposes of this table, we have assumed
that the Selling Shareholders will have sold all of the shares covered by
this prospectus upon the completion of the offering.
(2) Assumes the sale of all shares of common stock issuable upon the exercise
of the warrants issued to certain of the Selling Shareholders in connection
with our private placement in November 2004 (including the warrants issued
to the placement agent) and the warrants issued to one of the Selling
Shareholders in connection with our private placement in December 2004.
(3) Includes 1,066,303 shares that could be purchased on exercise of warrants
issued in connection with our private placement in November 2004 and 20,747
shares that could be purchased on exercise of warrants issued in connection
with our private placement in early 2004.
Joshua Silverman has voting control and investment decision over securities
held by Iroquois Capital, LP. Mr. Silverman disclaims beneficial ownership
of the shares held by Iroquois Capital, LP.
(4) Includes 20,747 shares that could be purchased on exercise of warrants
issued in connection with our private placement in early 2004.
(5) Includes 625,670 shares that could be purchased on exercise of warrants
issued in connection with our private placement in November 2004 and 41,494
shares that could be purchased on exercise of warrants issued in connection
with our private placement in early 2004.
Omicron Capital, L.P., a Delaware limited partnership ("Omicron Capital"),
serves as investment manager to Omicron Master Trust, a trust formed under
the laws of Bermuda ("Omicron"), Omicron Capital, Inc., a Delaware
corporation ("OCI"), serves as general partner of Omicron Capital, and
Winchester Global Trust Company Limited ("Winchester") serves as the
trustee of Omicron. By reason of such relationships, Omicron Capital and
OCI may be deemed to share dispositive power over the shares of our common
stock owned by Omicron, and Winchester may be deemed to share voting and
dispositive power
-12-
over the shares of our common stock owned by Omicron. Omicron Capital, OCI
and Winchester disclaim beneficial ownership of such shares of our common
stock. Omicron Capital has delegated authority from the board of directors
of Winchester regarding the portfolio management decisions with respect to
the shares of common stock owned by Omicron and, as of the date hereof, Mr.
Olivier H. Morali and Mr. Bruce T. Bernstein, officers of OCI, have
delegated authority from the board of directors of OCI regarding the
portfolio management decisions of Omicron Capital with respect to the
shares of common stock owned by Omicron. By reason of such delegated
authority, Messrs. Morali and Bernstein may be deemed to share voting and
dispositive power over the shares of our common stock owned by Omicron.
Messrs. Morali and Bernstein disclaim beneficial ownership of such shares
of our common stock and neither of such persons has any legal right to
maintain such delegated authority. No other person has sole or shared
voting or dispositive power with respect to the shares of our common stock
being offered by Omicron, as those terms are used for purposes under
Regulation 13D-G of the Securities Exchange Act of 1934, as amended.
Omicron and Winchester are not "affiliates" of one another, as that term is
used for purposes of the Securities Exchange Act of 1934, as amended, or of
any other person named in this prospectus as a selling stockholder. No
person or "group" (as that term is used in Section 13(d) of the Securities
Exchange Act of 1934, as amended, or the SEC's Regulation 13D-G) controls
Omicron and Winchester.
(6) Includes 41,494 shares that could be purchased on exercise of warrants
issued in connection with our private placement in early 2004.
(7) Includes 336,900 shares that could be purchased on exercise of warrants
issued in connection with our private placement in November 2004.
Mitchell P. Kopin, the president of Downview Capital, Inc., the general
partner of Cranshire Capital, LP, has sole voting control and investment
discretion over securities held by Cranshire Capital, LP. Each of Mitchell
P. Kopin and Downview Capital, Inc. disclaims beneficial ownership of the
shares held by Cranshire Capital, LP.
(8) Includes 35,748 shares that could be purchased on exercise of warrants
issued in connection with our private placement in November 2004,.and
29,926 shares that could be purchased on exercise of warrants issued in
connection with our private placement in early 2004.
(9) Consists of shares that could be purchased on exercise of warrants issued
in connection with our private placement in November 2004.
H. C. Wainwright & Co, Inc. ("HCW") is a registered broker-dealer. We
issued these warrants to HCW as partial compensation for HCW's services as
placement agent in connection with our private placement in November 2004.
HCW acquired these warrants in the ordinary course of business. Michael
Bradford exercises sole dispositive and voting control over all of the
securities owned by HCW. By virtue of such control, Michael Bradford may be
deemed to own beneficially the outstanding common stock and warrants
beneficially owned by HCW.
(10) Consists of shares that could be purchased on exercise of warrants issued
in connection with our private placement in early 2004. H.C. Wainwright &
Co., Inc. received these securities as compensation for its services as
placement agent in connection with our private placement in early 2004.
See also, Note 9.
-13-
(11) Includes 16,981 shares that could be purchased on exercise of warrants
issued in connection with our private placement in November 2004 and 9,260
shares that could be purchased on exercise of warrants issued in connection
with our private placement in early 2004.
(12) Consists of shares that could be purchased upon exercise of warrants issued
in connection with our private placement in November 2004. Mr. Clarke,
President of HCW, received these warrants from HCW in the ordinary course
of business and at the time of receiving the securities had no agreements
or understandings, directly or indirectly, with any person to distribute
them. HCW had received these securities as compensation for its services as
placement agent in the ordinary course of business and at the time of
receiving the securities had no agreements or understandings, directly or
indirectly, with any person to distribute them.
(13) Consists of shares that could be purchased on exercise of warrants issued
in connection with our private placement in early 2004.
(14) Includes 16,981 shares that could be purchased on exercise of warrants
issued in connection with our private placement in November 2004 and 9,260
shares that could be purchased on exercise of warrants issued in connection
with our private placement in early 2004.
(15) Consists of shares that could be purchased upon exercise of warrants issued
in connection with our private placement in November 2004. Mr. Koch, a
Managing Director of HCW, received these warrants from HCW in the ordinary
course of business and at the time of receiving the securities had no
agreements or understandings, directly or indirectly, with any person to
distribute them. HCW had received these securities as compensation for its
services as placement agent in the ordinary course of business and at the
time of receiving the securities had no agreements or understandings,
directly or indirectly, with any person to distribute them.
(16) Consists of shares that could be purchased on exercise of warrants issued
in connection with our private placement in early 2004.
(17) Includes 1,787 shares that could be purchased on exercise of warrants
issued in connection with our private placement in November 2004 and 1,500
shares that could be purchased on exercise of warrants issued in connection
with our private placement in early 2004.
(18) Consists of shares that could be purchased upon exercise of warrants issued
in connection with our private placement in November 2004. Mr. Fuchs, an
employee of HCW, received these warrants from HCW in the ordinary course of
business and at the time of receiving the securities had no agreements or
understandings, directly or indirectly, with any person to distribute them.
HCW had received these securities as compensation for its services as
placement agent in the ordinary course of business and at the time of
receiving the securities had no agreements or understandings, directly or
indirectly, with any person to distribute them.
(19) Consists of shares that could be purchased on exercise of warrants issued
in connection with our private placement in early 2004.
(20) Includes 94,787 shares that could be purchased on exercise of warrants
issued in connection with our private placement in December 2004.
NEP Capital, LLC serves as the general partner of New England Partners
Capital L.P. John F. Rousseau, Jr., Edwin Snape, David Dullum and Robert
Hanks (collectively the "NEP Managing Members") are the managing members of
NEP Capital, LLC. By reason of these relationships, each of NEP Capital,
LLC and the NEP Managing Members may be deemed to share voting and
dispositive power over the shares of our common stock owned by New England
Partners Capital
-14-
L.P. Each of NEP Capital, LLC and the NEP Managing Members disclaims
beneficial ownership of the shares held by New England Partners Capital
L.P.
PLAN OF DISTRIBUTION
The Selling Shareholders may, from time to time, sell any or all of their
shares of common stock on any stock exchange, market or trading facility on
which the shares are traded or in private transactions. These sales may be at
fixed or negotiated prices. The Selling Shareholders may use any one or more of
the following methods when selling shares:
o ordinary brokerage transactions and transactions in which the
broker-dealer solicits purchasers;
o block trades in which the broker-dealer will attempt to sell the
shares as agent but may position and resell a portion of the
block as principal to facilitate the transaction;
o purchases by a broker-dealer as principal and resale by the
broker-dealer for its account;
o an exchange distribution in accordance with the rules of the
applicable exchange;
o privately negotiated transactions;
o short sales;
o broker-dealers may agree with the Selling Shareholders to sell a
specified number of such shares at a stipulated price per share;
o a combination of any such methods of sale; and
o any other method permitted pursuant to applicable law.
The Selling Shareholders may also sell shares under Rule 144 under the
Securities Act, if available, rather than under this prospectus.
The Selling Shareholders may also engage in short sales against the box,
puts and calls and other transactions in our securities or derivatives of our
securities and may sell or deliver shares in connection with these trades.
Broker-dealers engaged by the Selling Shareholders may arrange for other
brokers-dealers to participate in sales. Broker-dealers may receive commissions
or discounts from the Selling Shareholders (or, if any broker-dealer acts as
agent for the purchaser of shares, from the purchaser) in amounts to be
negotiated. The Selling Shareholders do not expect these commissions and
discounts to exceed what is customary in the types of transactions involved. Any
profits on the resale of shares of common stock by a broker-dealer acting as
principal might be deemed to be underwriting discounts or commissions under the
Securities Act. Discounts, concessions, commissions and similar selling
expenses, if any, attributable to the sale of shares will be borne by a Selling
Shareholder. The Selling Shareholders may agree to indemnify any agent, dealer
or broker-dealer that participates in transactions involving sales of the shares
if liabilities are imposed on that person under the Securities Act.
The Selling Shareholders may from time to time pledge or grant a
security interest in some or all of the shares of common stock owned by them
and, if they default in the performance of their secured obligations, the
pledgees or secured parties may offer and sell the shares of common stock from
time to time under this prospectus after we have filed an amendment to this
prospectus under Rule 424(b)(3) or other
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applicable provision of the Securities Act amending the list of Selling
Shareholders to include the pledgee, transferee or other successors in interest
as Selling Shareholders under this prospectus.
The Selling Shareholders also may transfer the shares of common stock in
other circumstances, in which case the transferees, pledgees or other successors
in interest will be the selling beneficial owners for purposes of this
prospectus and may sell the shares of common stock from time to time under this
prospectus after we have filed an amendment to this prospectus under Rule
424(b)(3) or other applicable provision of the Securities Act amending the list
of Selling Shareholders to include the pledgee, transferee or other successors
in interest as Selling Shareholders under this prospectus.
The Selling Shareholders may, and in the view of the Securities and
Exchange Commission any broker-dealers or agents that are involved in selling
the shares of common stock will, be deemed to be "underwriters" within the
meaning of the Securities Act in connection with such sales. In such event, any
commissions received by such broker-dealers or agents and any profit on the
resale of the shares of common stock purchased by them may be deemed to be
underwriting commissions or discounts under the Securities Act.
We are required to pay all fees and expenses incident to the registration
of the shares of common stock. We have agreed to indemnify the Selling
Shareholders against certain losses, claims, damages and liabilities, including
liabilities under the Securities Act.
The Selling Shareholders have advised us that they have not entered into
any agreements, understandings or arrangements with any underwriters or
broker-dealers regarding the sale of their shares of common stock, nor is there
an underwriter or coordinating broker acting in connection with a proposed sale
of shares of common stock by any Selling Shareholder. If we are notified by any
Selling Shareholder that any material arrangement has been entered into with a
broker-dealer for the sale of shares of common stock, if required, we will file
a supplement to this prospectus. If the Selling Shareholders use this prospectus
for any sale of the shares of common stock, they will be subject to the
prospectus delivery requirements of the Securities Act.
The anti-manipulation rules of Regulation M under the Securities Exchange
Act of 1934 may apply to sales of our common stock and activities of the Selling
Shareholders.
LEGAL MATTERS
The validity of the common stock offered hereby has been passed upon for
Delcath by Murtha Cullina LLP, New Haven, Connecticut, counsel for Delcath.
EXPERTS
Our financial statements as of December 31, 2004 and for each of the two
years in the period ended December 31, 2004 and cumulative from inception
(August 5, 1988) to December 31, 2004, appearing in our Annual Report on Form
10-KSB for the year ended December 31, 2004 have been audited by Eisner LLP,
independent registered public accounting firm, as set forth in their report
thereon dated February 25, 2005, included therein and incorporated herein by
reference. Such financial statements are incorporated herein by reference in
reliance upon such report given upon the authority of such firm as experts in
accounting and auditing.
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WHERE CAN YOU FIND MORE INFORMATION
We file periodic reports under the Securities Exchange Act of 1934, as
amended, that include information about us. We have also filed with the U.S.
Securities and Exchange Commission in Washington, D.C., a registration statement
on Form S-3 under the Securities Act with the respect to the shares of common
stock offered by this prospectus.
This prospectus does not contain all the information set forth in the
registration statement and the exhibits and schedules thereto. For further
information with respect to us and the common stock, we refer you to the
registration statement, the documents incorporated herein and the exhibits and
schedules filed therewith. The registration statement and the exhibits forming a
part thereof may be inspected without charge at the public reference facilities
maintained by the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549 and
copies of such materials can be obtained from the Public Reference Section of
the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates.
Please call the SEC at 1-800-SEC-0330 for further information regarding the
public reference facilities. In addition, the SEC maintains a website that
contains reports, proxy and information statements and other information
regarding registrants that file electronically with the SEC at
http://www.sec.gov.
Statements made in this prospectus as to the contents of any contract,
agreement or other document referred to are not necessarily complete. With
respect to each such contract, agreement or other document filed as an exhibit
to the registration statement, we refer you to the exhibit to the registration
statement referencing the item for a more complete description of the matter
involved, and each such statement is qualified in its entirety by reference
thereto. You may read and obtain a copy of the registration statement and its
exhibits and schedules from the SEC, as described in the preceding paragraph.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents that we have filed with the Securities and Exchange
Commission are incorporated into this prospectus by reference:
1. Our Annual Report on Form 10-KSB for the fiscal year ended December
31, 2004, filed on March 21, 2005;
2. Our Current Report on Form 8-K dated March 22, 2005, filed on March
23, 2005;
3. Our Current Report on Form 8-K dated April 5, 2005, filed on April 7,
2005; and
4. The description of our common stock contained under the caption
"Description of Our Capital Stock and Other Securities - Units" in the
Prospectus included in the Registrant's Registration Statement on Form
SB-2 (No. 333-101661), declared effective on May 15, 2003.
All documents that we file with the SEC pursuant to Sections 13(a), 13(c),
14 or 15(d) of the Securities Exchange Act of 1934 after the date of this
prospectus and prior to the filing of a post-effective amendment to the
registration statement of which this prospectus is a part that indicates that
all the common stock offered has been sold, or which deregisters all common
stock then remaining unsold hereunder, shall be incorporated by reference into
this prospectus and to be a part hereof (and of the registration statement) from
the date of filing of such documents. Any statement contained in this prospectus
will be deemed to be modified or superseded for purposes of this prospectus to
the extent that a statement contained in any subsequently filed document which
also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded will not
be deemed, except as so modified or superseded, to constitute a part of this
prospectus.
-17-
To the extent that an independent auditor audits and reports on our
financial statements issued at future dates and consents to the use of its
reports thereon, such financial statements shall also be incorporated by
reference in this prospectus (and the registration statement) in reliance upon
their reports and their authority as experts in accounting and auditing.
We will provide without charge to each person, including any beneficial
owner, to whom a copy of this prospectus is delivered, upon written or oral
request, a copy of any and all information that has been incorporated by
reference herein (other than exhibits to such information, unless such exhibits
are specifically incorporated into any such information). Requests should be
directed to us at 1100 Summer Street, Stamford, Connecticut 06905, Attention:
Paul M. Feinstein, Chief Financial Officer. Mr. Feinstein may also be contacted
at (203) 323-8668.
DISCLOSURE OF THE SEC'S POSITION ON INDEMNIFICATION FOR SECURITIES ACT
LIABILITIES
Our certificate of incorporation provides that we must, to the fullest
extent permitted or required by the Delaware General Corporation Law, indemnify
any and all persons whom we have the power to indemnify from and against any and
all of the expenses, liabilities or other matters referred to in or covered by
the Delaware General Corporation Law. The indemnification provided for in our
certificate of incorporation is not exclusive of any other rights to which those
indemnified may be entitled under any law, agreement, vote of shareholders or
disinterested directors or otherwise.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to our directors, officers and controlling persons pursuant to
the foregoing provisions or otherwise, we have been advised that in the opinion
of the SEC such indemnification is against public policy as expressed in the
Securities Act of 1933 and is, therefore, unenforceable.
-18-
Part II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 16. Exhibits
Number Description
3.1 Amended and Restated Certificate of Incorporation of Delcath Systems,
Inc. (incorporated by reference to Exhibit 3.1 to Registrant's
Quarterly Report on Form 10-QSB for the quarter ended June 30, 2004
(File No. 001-16133)).
3.2 Amended and Restated By-Laws of Delcath Systems, Inc. (incorporated by
reference to Exhibit 3.2 to Amendment No. 1 to Registrant's
Registration Statement on Form SB-2 (Registration No. 333-39470)).
4.1 Form of Underwriter's Unit Warrant Agreement (incorporated by
reference to Exhibit 4.1 to Amendment No. 1 to Registrant's
Registration Statement on Form SB-2 (Registration No. 333-101661)).
4.2 Form of Warrant Agent Agreement by and between Delcath Systems, Inc.
and American Stock Transfer & Trust Company, as warrant agent with
respect to the 2003 Warrants (incorporated by reference to Exhibit 4.8
to Amendment No. 3 to Registrant's Registration Statement on Form SB-2
(No. 333-101661)).
4.3 Form of Warrant Agreement by and between Delcath Systems, Inc. and
Whale Securities Co., L.P. (incorporated by reference to Exhibit 4.2
to Amendment No. 5 to Registrant's Registration Statement on Form SB-2
(Registration No. 333-39470)).
4.4 Form of Warrant Agreement by and between American Stock Transfer &
Trust Company, as warrant agent, Whale Securities Co., L.P. and
Delcath Systems, Inc. (incorporated by reference to Exhibit 4.3 to
Amendment No. 5 to Registrant's Registration Statement on Form SB-2
(Registration No. 333-39470)).
4.5 Rights Agreement, dated October 30, 2001, by and between Delcath
Systems, Inc. and American Stock Transfer & Trust Company, as Rights
Agent (incorporated by reference to Exhibit 4.7 to Registrant's Form
8-A dated November 12, 2001 (Commission File No. 001-16133)).
4.6 Form of Warrant to Purchase Shares of Common Stock issued pursuant to
the Common Stock Purchase Agreement dated as of March 19, 2004
(incorporated by reference to Exhibit 4 to Registrant's Current Report
on Form 8-K dated March 19, 2004).
4.7 Form of Series A Warrant to Purchase Shares of Common Stock dated as
of November 24, 2004 (incorporated by reference to Exhibit 4.1 to
Registrant's Current Report on Form 8-K dated November 24, 2004).
4.8 Form of Series B Warrant by Purchase Shares of Common Stock dated as
of November 24, 2004 (incorporated by reference to Exhibit 4.2 to
Registrant's Current Report on Form 8-K dated November 24, 2004).
II-1
Number Description
4.9 Form of Series C Warrant to Purchase Shares of Common Stock dated as
of November 24, 2004 (incorporated by reference to Exhibit 4.3 to
Registrant's Current Report on Form 8-K dated November 24, 2004).
4.10 Form of Series D Warrant to Purchase Shares of Common Stock dated as
of December 7, 2004 (incorporated by reference to Exhibit 4.10 to
Registrant's Registration Statement on Form S-3 (Registration No.
333-121681)).
5 Opinion of Murtha Cullina LLP.
10.1 Common Stock Purchase Agreement dated as of March 19, 2004 by and
among Delcath Systems, Inc. and the Purchasers Listed on Exhibit A
thereto (incorporated by reference to Exhibit 10.1 to Registrant's
Current Report on Form 8-K dated March 19, 2004).
10.2 Registration Rights Agreement dated as of March 19, 2004 by and among
Delcath Systems, Inc. and the Purchasers Listed on Schedule I thereto
(incorporated by reference to Exhibit 10.2 to Registrant's Current
Report on Form 8-K dated March 19, 2004).
10.3 Common Stock Purchase Agreement dated as of November 24, 2004 by and
among Delcath Systems, Inc. and the Purchasers listed on Exhibit A
thereto (incorporated by reference to Exhibit 10.1 to Registrant's
Current Report on Form 8-K dated November 24, 2004).
10.4 Registration Rights Agreement dated as of November 24, 2004 by and
among Delcath Systems, Inc. and the Purchasers Listed on Schedule I
thereto (incorporated by reference to Exhibit 10.2 to Registrant's
Current Report on Form 8-K dated November 24, 2004).
10.5 Common Stock Purchase Agreement dated as of December 7, 2004 by and
among Delcath Systems, Inc. and the Purchasers Listed on Exhibit A
thereto (incorporated by reference to Exhibit 10.5 to Registrant's
Registration Statement on Form S-3 (Registration No. 333-121681)).
10.6 Registration Rights Agreement dated as of December 7, 2004 by and
among Delcath Systems, Inc. and the Purchasers Listed on Schedule I
thereto (incorporated by reference to Exhibit 10.6 to Registrant's
Registration Statement on Form S-3 (Registration No. 333-121681)).
23.1 Consent of Eisner LLP.
23.2 Consent of Murtha Cullina LLP (included in Exhibit 5).
24 Power of Attorney (incorporated by reference to Exhibit 24 to
Registrant's Registration Statement on Form S-3 (Registration No.
333-121681)).
II-2
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this amendment to its
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Stamford, State of Connecticut this 15th day of
April, 2005.
Delcath Systems, Inc.
By: /s/ M. S. KOLY
------------------------------------------
Name: M. S Koly
Title: President and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this amendment
to the registration statement has been signed by the following persons in the
capacities and on the date indicated.
Name Title
M. S. Koly President and Chief Executive )
- ---------------------- Officer and Director (Principal )
Executive Officer )
)
Paul M. Feinstein Chief Financial Officer )
- ----------------------- (Principal Financial and )
Accounting Officer) )By: /s/ M. S. KOLY
) -----------------------
) Attorney-in-Fact
Samuel Herschkowitz Director )
- --------------------- )
) Dated: April 15, 2005
)
Mark A. Corigliano Director )
- --------------------- )
)
Daniel Isdaner Director )
- -------------------- )
)
Victor Nevins Director )
- -------------------- )
II-3
EXHIBIT INDEX
Number Description
3.1 Amended and Restated Certificate of Incorporation of Delcath Systems,
Inc. (incorporated by reference to Exhibit 3.1 to Registrant's
Quarterly Report on Form 10-QSB for the quarter ended June 30, 2004
(File No. 001-16133)).
3.2 Amended and Restated By-Laws of Delcath Systems, Inc. (incorporated by
reference to Exhibit 3.2 to Amendment No. 1 to Registrant's
Registration Statement on Form SB-2 (Registration No. 333-39470)).
4.1 Form of Underwriter's Unit Warrant Agreement (incorporated by
reference to Exhibit 4.1 to Amendment No. 1 to Registrant's
Registration Statement on Form SB-2 (Registration No. 333-101661)).
4.2 Form of Warrant Agent Agreement by and between Delcath Systems, Inc.
and American Stock Transfer & Trust Company, as warrant agent with
respect to the 2003 Warrants (incorporated by reference to Exhibit 4.8
to Amendment No. 3 to Registrant's Registration Statement on Form SB-2
(No. 333-101661)).
4.3 Form of Warrant Agreement by and between Delcath Systems, Inc. and
Whale Securities Co., L.P. (incorporated by reference to Exhibit 4.2
to Amendment No. 5 to Registrant's Registration Statement on Form SB-2
(Registration No. 333-39470)).
4.4 Form of Warrant Agreement by and between American Stock Transfer &
Trust Company, as warrant agent, Whale Securities Co., L.P. and
Delcath Systems, Inc. (incorporated by reference to Exhibit 4.3 to
Amendment No. 5 to Registrant's Registration Statement on Form SB-2
(Registration No. 333-39470)).
4.5 Rights Agreement, dated October 30, 2001, by and between Delcath
Systems, Inc. and American Stock Transfer & Trust Company, as Rights
Agent (incorporated by reference to Exhibit 4.7 to Registrant's Form
8-A dated November 12, 2001 (Commission File No. 001-16133)).
4.6 Form of Warrant to Purchase Shares of Common Stock issued pursuant to
the Common Stock Purchase Agreement dated as of March 19, 2004
(incorporated by reference to Exhibit 4 to Registrant's Current Report
on Form 8-K dated March 19, 2004).
4.7 Form of Series A Warrant to Purchase Shares of Common Stock dated as
of November 24, 2004 (incorporated by reference to Exhibit 4.1 to
Registrant's Current Report on Form 8-K dated November 24, 2004).
4.8 Form of Series B Warrant by Purchase Shares of Common Stock dated as
of November 24, 2004 (incorporated by reference to Exhibit 4.2 to
Registrant's Current Report on Form 8-K dated November 24, 2004).
4.9 Form of Series C Warrant to Purchase Shares of Common Stock dated as
of November 24, 2004 (incorporated by reference to Exhibit 4.3 to
Registrant's Current Report on Form 8-K dated November 24, 2004).
4.10 Form of Series D Warrant to Purchase Shares of Common Stock dated as
of December 7, 2004 (incorporated by reference to Exhibit 4.10 to
Registrant's Registration Statement on Form S-3 (Registration No.
333-121681)).
5 Opinion of Murtha Cullina LLP.
10.1 Common Stock Purchase Agreement dated as of March 19, 2004 by and
among Delcath Systems, Inc. and the Purchasers Listed on Exhibit A
thereto (incorporated by reference to Exhibit 10.1 to Registrant's
Current Report on Form 8-K dated March 19, 2004).
10.2 Registration Rights Agreement dated as of March 19, 2004 by and among
Delcath Systems, Inc. and the Purchasers Listed on Schedule I thereto
(incorporated by reference to Exhibit 10.2 to Registrant's Current
Report on Form 8-K dated March 19, 2004).
10.3 Common Stock Purchase Agreement dated as of November 24, 2004 by and
among Delcath Systems, Inc. and the Purchasers listed on Exhibit A
thereto (incorporated by reference to Exhibit 10.1 to Registrant's
Current Report on Form 8-K dated November 24, 2004).
10.4 Registration Rights Agreement dated as of November 24, 2004 by and
among Delcath Systems, Inc. and the Purchasers Listed on Schedule I
thereto (incorporated by reference to Exhibit 10.2 to Registrant's
Current Report on Form 8-K dated November 24, 2004).
10.5 Common Stock Purchase Agreement dated as of December 7, 2004 by and
among Delcath Systems, Inc. and the Purchasers Listed on Exhibit A
thereto (incorporated by reference to Exhibit 10.5 to Registrant's
Registration Statement on Form S-3 (Registration No. 333-121681)).
10.6 Registration Rights Agreement dated as of December 7, 2004 by and
among Delcath Systems, Inc. and the Purchasers Listed on Schedule I
thereto (incorporated by reference to Exhibit 10.6 to Registrant's
Registration Statement on Form S-3 (Registration No. 333-121681)).
23.1 Consent of Eisner LLP. 23.2 Consent of Murtha Cullina LLP
(included in Exhibit 5). 24 Power of Attorney (incorporated by
reference to Exhibit 24 to Registrant's Registration Statement on Form
S-3 (Registration No. 333-121681)).
10.6 Registration Rights Agreement dated as of December 7, 2004 by and
among Delcath Systems, Inc. and the Purchasers Listed on Schedule I
thereto (incorporated by reference to Exhibit 10.6 to Registrant's
Registration Statement on Form S-3 (Registration No. 333-121681)).
23.1 Consent of Eisner LLP.
23.2 Consent of Murtha Cullina LLP (included in Exhibit 5).
24 Power of Attorney (incorporated by reference to Exhibit 24 to
Registrant's Registration Statement on Form S-3 (Registration No.
333-121681)).
[LETTERHEAD OF MURTHA CULLINA LLP]
April 15, 2005
The Board of Directors
Delcath Systems, Inc.
1100 Summer Street
Stamford, Connecticut 06905
Re: Registration Statement on Form S-3 (No. 333-121681)
Dear Sirs:
We have acted as special counsel to Delcath Systems, Inc., a Delaware
corporation (the "Company"), in connection with its Registration Statement on
Form S-3 (No. 333-121681), as filed on the date hereof (the "Registration
Statement"), for the public reoffer by certain selling stockholders of up to
3,397,909 shares (the "Secondary Shares") of Common Stock. The Secondary Shares
consist of (i) 1,306,487 shares issued in connection with private placements to
accredited investors in November and December 2004 (the "2004 Shares"); (ii)
2,019,925 shares (the "2004 Warrant Shares") issuable upon exercise of the
Company's outstanding Series A, Series B, Series C or Series D Redeemable Common
Stock Purchase Warrants issued to such investors in 2004 (the "2004 Warrants");
and (iii) 71,497 shares (the "Placement Agent Warrant Shares") issuable upon
exercise of outstanding warrants issued to the placement agent in connection
with the November 2004 private placement to accredited investors (the "Placement
Agent Warrants").
We have examined originals or copies, certified or otherwise identified to
our satisfaction of the following documents: (a) the Amended and Restated
Certificate of Incorporation of the Company, as amended, in the form filed as
Exhibit 3.1 to the Company's Quarterly Report on Form 10-QSB for the quarter
ended June 30, 2004 (file No. 001-16133); (b) the Amended and Restated Bylaws of
the Company in the form filed as Exhibit 3.2 to Amendment No. 1 to the Company's
Registration Statement on Form SB-2 (No. 333-39470); (c) the resolution adopted
by the Board of Directors of the Company at a meeting held on November 5, 2004;
and (d) such other documents as we have considered necessary to the rendering of
the opinions expressed below.
In our examination of the foregoing, we have assumed that: (a) the factual
statements made therein are accurate and complete; (b) the signatures on
documents and instruments
The Board of Directors
Delcath Systems, Inc.
April 15, 2005
Page 2
submitted to us as originals are authentic; and (c) documents submitted to us as
certified, conformed or photostatic copies of original documents conform with
the originals thereof and the originals thereof are authentic.
Based upon the foregoing, we are of the opinion that:
1. The 2004 Shares have been duly authorized and validly issued and are
fully paid and nonassessable.
2. The 2004 Warrant Shares, when issued upon exercise of the 2004
Warrants in accordance with their terms, will be duly authorized,
validly issued, fully paid and nonassessable.
3. The Placement Agent Warrant Shares, when issued upon exercise of the
Placement Agent Warrants in accordance with their terms, will be duly
authorized, validly issued, fully paid and nonassessable.
The foregoing opinions are limited to the General Corporation Law of the
State of Delaware, and we do not express any opinion herein concerning any other
law. Except to the extent that we have a legal duty to update this opinion based
upon our discovering that facts on which we based this opinion were erroneous as
of the date hereof, we assume no obligation to supplement this opinion, and with
disclaim any obligation to advise you of facts, circumstances, events or
developments which hereafter may be brought to our attention and which may
alter, affect or modify the opinions expressed herein.
This opinion is being furnished to you for filing as an exhibit to the
Registration Statement and, accordingly, may not be relied upon by or quoted in
any manner or delivered to any person or entity other than the Company and its
stockholders without, in each instance, our prior written consent.
We consent to the filing of this opinion as an exhibit to the Registration
Statement, and to the reference to our firm appearing under the caption "Legal
Matters" in the Prospectus forming part of the Registration Statement. In giving
this consent, we do not admit that we are
The Board of Directors
Delcath Systems, Inc.
April 15, 2005
Page 3
within the category of persons whose consent is required under Section 7 of the
Securities Act of 1933, as amended, or the rules and regulations of the
Securities and Exchange Commission thereunder.
Very truly yours,
MURTHA CULLINA LLP
By /s/ PAUL G. HUGHES
--------------------------
Paul G. Hughes
EXHIBIT 23.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference in the Registration Statement on
Form S-3 of our report dated February 25, 2005 on our audits of the financial
statements of Delcath Systems, Inc. as of December 31, 2004 and for each of the
years in the two-year period then ended and for the period from August 5, 1988
(inception) to December 31, 2004, which report appears in the 2004 annual report
on Form 10-KSB of Delcath Systems, Inc. We also consent to the reference to our
firm under the heading "Experts" in the prospectus.
/s/ EISNER LLP
- -----------------------------------
Eisner LLP
New York, NY
April 14, 2005
