As filed with the Securities and Exchange Commission on August 17, 2005.
Registration No. 333-_________
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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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. [ ]
CALCULATION OF REGISTRATION FEE UNDER THE SECURITIES ACT OF 1933
Title of each class of Number of Proposed maximum Proposed maximum Amount of
securities to be shares to be offering price per aggregate offering registration
registered registered share price fee
Common Stock, par value
$0.01 per share, issuable
upon exercise of warrants
issued in 2005 in an
exchange offer 1,200,000 $2.75 (1) $3,300,000 $388.41
(1) Estimated in accordance with Rule 457(g) under the Securities Act of 1933,
as amended, based on the exercise price of the warrants upon exercise of
which such shares may be issued.
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 August 17, 2005
DELCATH SYSTEMS, INC.
Up to 1,200,000 Shares of Common Stock
By means of this prospectus, we are offering up to 1,200,000 shares that
may be issued upon the exercise of warrants that we may issue in 2005 in
exchange for the warrants that we issued in 2000 in connection with our initial
public offering (such warrants that may be issued in 2005, the "Exchange
Warrants"). We will receive the proceeds of any exercise of the Exchange
Warrants. If all of the Exchange Warrants are issued and are exercised, we would
receive net proceeds of approximately $3,260,000 (after our estimated expenses
of the offering of $40,000).
Our common stock is currently traded on the Nasdaq SmallCap Market and the
Boston Stock Exchange under the symbols "DCTH" and "DCT," respectively. On
August 15, 2005, our common stock had a closing price of $3.02 on the
Nasdaq SmallCap Market.
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. WE MAY
NOT 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.
TABLE OF CONTENTS
Page
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 Exchange Warrants.............................................10
Terms of the 2004 Warrants.................................................10
Terms of the 2000 Warrants.................................................10
Transfer Agent.............................................................11
USE OF PROCEEDS...............................................................11
PLAN OF DISTRIBUTION..........................................................11
LEGAL MATTERS.................................................................11
EXPERTS.......................................................................11
WHERE CAN YOU FIND MORE INFORMATION...........................................12
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE...............................12
DISCLOSURE OF THE SEC'S POSITION ON INDEMNIFICATION FOR
SECURITIES ACT LIABILITIES............................................13
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. 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.
i
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 had 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 proceeds of approximately $5.6 million from private placements we
completed in 2004, approximately $2.2 on exercise of warrants and options in
2004 and approximately $3.1 million on exercise of warrants and options in 2005
to the date hereof.
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.
1
Many of the costs incurred in conducting clinical trials are due to
uncertainties that are not within our control, including (i) the possibility
that the FDA may require additional trials and the number of trials that may be
required; (ii) the charges payable to each current or prospective clinical test
site which may be a flat fee for a certain time period or a fee based on the
number of participants in the trial; (iii) the amount of the fee per participant
which is individually negotiated with each test site; (iv) the number of
patients that may be required to be enrolled in any particular trial; (v) the
location of the test site which can affect our other costs, including the costs
of retaining a clinical research organization and out of pocket costs such as
travel; (vi) the actual number of treatments per patient in each clinical trial;
and (vii) the possible reduction in trial costs billed to the Company where a
patient's insurer agrees to cover treatment expenses. As a result, we are unable
to estimate the total costs we will incur in completing the clinical trials. In
addition, 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 premarket 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.
2
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;
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
metastasized 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
3
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.
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. Notwithstanding 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
4
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 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.
5
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.
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 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
SmallCap 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.
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 likelihood of a potential change of control,
6
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:
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.
7
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 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
8
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.
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
Terms of our Common Stock
As of August 8], 2005, there were 16,573,965 shares of our common stock
outstanding. Assuming (a) that all 1,116,689 of the warrants that we issued in
connection with private placements we completed in 2004 and that remain
outstanding (including those issued to the placement agents in connection with
the private placements and certain warrants that become exercisable only if
other warrants are exercised) (the "2004 Warrants"), (b) that 1,200,000 shares
are issued upon exercise of the Exchange Warrants or the warrants that we issued
in 2000 which are not exchanged for Exchange Warrants and (c) that none of the
unit warrants we issued to the underwriters of our initial public offering in
2000 are exercised, there would be 18,890,654 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. 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
9
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 Exchange Warrants
As of the date hereof, there are no Exchange Warrants outstanding because
the offer to exchange Exchange Warrants for the warrants we issued in 2000 in
connection with our initial public offering has not expired. Upon expiration of
the exchange offer, we may issue up to 1,200,000 Exchange Warrants. Each
Exchange Warrant will entitle the holder thereof to purchase one share of common
stock at a price of $2.75, subject to adjustment. The Exchange Warrants will
expire on December 31, 2005. The Exchange Warrants will be redeemable at any
time at a price of $0.10 per warrant, upon 30 days' notice.
The Exchange Warrants will be issued in registered form under a warrant
agreement between Delcath and American Stock Transfer & Trust Company, as
warrant agent. Reference is made to the warrant agreement which was filed as an
exhibit to our Quarterly Report on Form 10-QSB for the quarter ended June 30,
2004 for a complete description of the terms and conditions thereof.
Terms of the 2004 Warrants
As of the date hereof, there remain outstanding 1,116,689 of the warrants
that we issued in connection with private placements of our securities in 2004,
i.e. the 2004 Warrants. The 2004 Warrants were issued in several different
transactions.
o In connection with a private placement in March and April of 2004, we
issued warrants to purchase a total of 446,626 shares (including
warrants issued to the placement agents) with an exercise price of
$3.01 per share and a five-year term.
o In connection with a private placement in November 2004, we issued
three classes of warrants, two of which remain outstanding. The Series
A Warrants consist of warrants to purchase a total of 499,306 shares,
and have an exercise price of $2.78 per share and a term expiring on
November 24, 2009. The Series C Warrants consist of warrants to
purchase a total 427,809 shares, and have an exercise price of $2.60
and a term expiring on November 24, 2009.
o In connection with a private placement in December 2004, we issued
Series D Warrants to purchase a total of 94,787 shares, having an
exercise price of $3.26 and a term expiring on December 7, 2009.
Terms of the 2000 Warrants
Following the expiration of the offer to exchange Exchange Warrants for
2000 Warrants, each 2000 Warrant that is not exchanged for an Exchange Warrant
would remain outstanding. Each 2000 Warrant entitles the holder thereof to
purchase one share of common stock at a price of $6.60 per share, subject to
adjustment, at any time up to October 15, 2005. Each unit warrant held by Whale
Securities Co., L.P., the underwriter for our 2000 initial public offering,
entitles Whale Securities to purchase one share of common stock and one 2000
Warrant at a price of $6.60. The 2000 Warrants issuable upon exercise of the
unit warrant would have the same provisions as the other 2000 Warrants except
that the exercise price of such warrants would be $10.50 per share. The 2000
Warrants are redeemable at a redemption price of $0.10 per warrant, upon 30
days' notice, at any time, provided that the closing bid quotation of our common
stock on all 20 trading days ending on the third day prior to the day on which
we give notice has been at least 150% of the then effective exercise price of
the 2000 Warrants and we have received the written consent of Whale Securities
Co., L.P., the lead underwriter of our 2000 public offering, for the redemption.
10
The 2000 Warrants were issued in registered form under a warrant agreement
between and among Delcath, Whale Securities Co., L.P. and American Stock
Transfer & Trust Company, as warrant agent. Reference is made to the warrant
agreement which was filed as Exhibit 4.2 to Amendment No. 5 to the Company's
Registration Statement on Form SB-2 (No. 333-39470) for a complete description
of the terms and conditions thereof.
Transfer Agent
The transfer agent for our common stock is American Stock Transfer & Trust
Company.
USE OF PROCEEDS
In the event that all 1,200,000 of the 2000 Warrants are exchanged for
Exchange Warrants and all of the Exchange Warrants are exercised, we estimate
that the net proceeds from the sale by us of shares of our common stock being
offered by this prospectus, after deducting the estimated expenses of this
offering will be approximately $3,250,000. However, the actual number of
Exchange Warrants exercised will depend on numerous factors beyond our control,
including, without limitation, the market price of our common stock. We cannot
estimate with reasonable accuracy the number of Exchange Warrants which may be
exercised and the amount of proceeds to be received therefrom.
We expect that we would use any proceeds we receive upon exercise of any of
the Exchange Warrants for working capital purposes.
Prior to expenditure, proceeds will be invested principally in high grade,
short-term, interest-bearing instruments.
PLAN OF DISTRIBUTION
The common stock offered by us hereby is issuable by us upon the exercise
of some or all of the Exchange Warrants.
In order to comply with the securities laws of certain states, if
applicable, the common stock offered hereby may be resold in such jurisdictions
only through registered or licensed brokers or dealers. In addition, in certain
states the common stock offered hereby may not be sold unless it has been
registered or qualified for sale in the applicable state or an exemption from
the registration or qualification requirement is available and is complied with
by us.
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, an
independent registered public accounting firm, as set forth in their report
thereon dated February 25, 2005, included therein and incorporated herein by
11
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.
WHERE CAN YOU FIND MORE INFORMATION
We file periodic reports under the Securities Exchange Act of 1934 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 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 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 100 F
Street, N.E., Washington, D.C. 20549 and copies of such materials can be
obtained from the Public Reference Section of the SEC at 100 F Street, N.E.,
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 SEC are incorporated in
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;
4. Our Current Report on Form 8-K dated April 25, 2005, filed on May 2,
2005, as amended by an amendment filed on May 2, 2005;
5. Our Current Report on Form 8-K dated May 11, 2005, filed on May 11,
2005;
6. Our definitive proxy statement dated April 29, 2005, filed on April
29, 2005, relating to our 2005 Annual Meeting of Stockholders;
7. Our Quarterly Report on Form 10-QSB for the quarter ended March 31,
2005, filed on May 16, 2005;
12
8. Our Quarterly Report on Form 10-QSB for the quarter ended June 30,
2005, filed on August 11, 2005; and
9. 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 hereof and
prior to the filing of a post-effective amendment to this registration statement
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 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.
To the extent that independent accountants audit and report on our
financial statements issued at future dates, and consent to the use of their
reports thereon, such financial statements shall also be incorporated by
reference in this prospectus 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 of such person, a copy of any or all of the documents incorporated by
reference herein, other than exhibits to such documents, or any other documents
required to be delivered pursuant to Rule 428(b) under the 1933 Act. Written
requests should be addressed to: M. S. Koly, President and Chief Executive
Officer, Delcath Systems, Inc., 1100 Summer Street, Stamford, Connecticut 06905.
Telephone requests may be directed to Mr. Koly 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.
13
Part II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
The following table sets forth an itemization of all estimated expenses
payable in connection with the distribution of the securities being registered.
All of the expenses set forth below are estimates except for the SEC
registration fee. All of these expenses will be paid by the Company.
SEC registration fee $ 353
Legal fees and expenses 34,500
Accounting fees and expenses 4,500
Printing expenses 500
Miscellaneous 147
--------------
Total $40,000
==============
Item 15. Indemnification of Directors and Officers
Section 145 of the Delaware General Corporation Law provides for the
indemnification of officers and directors under certain circumstances against
expenses incurred in successfully defending against a claim and authorizes a
Delaware corporation to indemnify its officers and directors under certain
circumstances against expenses and liabilities incurred in legal proceedings
involving such persons because of their being or having been an officer or
director.
Section 102(b) of the Delaware General Corporation Law permits a
corporation, by so providing in its certificate of incorporation, to eliminate
or limit a director's liability to the corporation and its stockholders for
monetary damages arising out of certain alleged breaches of their fiduciary
duty. Section 102(b)(7) provides that no such limitation of liability may affect
a director's liability with respect to any of the following:
o breaches of the director's duty of loyalty to the corporation or its
stockholders;
o acts or omissions not made in good faith or which involve intentional
misconduct of knowing violations of law;
o liability for dividends paid or stock repurchased or redeemed in
violation of the Delaware General Corporation Law; or
o any transaction from which the director derived an improper personal
benefit.
Section 102(b)(7) does not authorize any limitation on the ability of the
Company or its stockholders to obtain injunctive relief, specific performance or
other equitable relief against directors.
As authorized by the Delaware General Corporation Law, Article Seventh of
the Company's Certificate of Incorporation provides that the personal liability
of the directors of the Company be eliminated to the fullest extent permitted
under Section 102(b) of the Delaware General Corporation Law.
Article Eighth of the Company's Certificate of Incorporation and the
Company's By-laws provide that all persons whom the Company is empowered to
indemnify pursuant to the provisions of Section 145 of the Delaware General
Corporation Law (or any similar provision or provisions of applicable law at the
time in effect), shall be indemnified by the Company to the full extent
permitted thereby. The foregoing right of indemnification shall not be deemed to
be exclusive of any other rights to which those seeking
II-1
indemnification may be entitled under any by-law, agreement, vote of
stockholders or disinterested directors, or otherwise.
The Company maintains a liability and indemnification insurance policy in
the amount of $2,500,000 for a period extending from October 19, 2003 to October
19, 2004 issued by Carolina Casualty Insurance Company covering all our officers
and directors, at an annual expense of $60,000. [UPDATE]
Item 16. Exhibits
Number Description
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 (Commission File No. 001-16133)).
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
(Commission File No. 001-16133)).
4.8 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
(Commission File No. 001-16133)).
4.9 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)).
II-2
4.10 Warrant Agreement dated as of July 22, 2005 between the Registrant and
American Stock Transfer & Trust Company, as warrant agent, together
with the form of 2005 Redeemable Common Stock Purchase Warrants -
Series A (incorporated by reference to Exhibit 4 to Registrant's
Quarterly Report on Form 10-QSB for the quarter ended June 30, 2005
(File No. 001-16133)).
5 Opinion of Murtha Cullina LLP.
23.1 Consent of Eisner LLP.
23.2 Consent of Murtha Cullina LLP (included in Exhibit 5).
24 Power of Attorney.
Item 17. Undertakings
We hereby undertake:
To file, during any period in which offers or sales of securities are made
a post-effective amendment to this registration statement to include any
additional or changed material information on the plan of distribution;
For determining liability under the Securities Act, to treat each
post-effective amendment as a new registration statement of the securities
offered and the offering of the securities at that time to be the initial bona
fide offering; and
To file a post-effective amendment to remove from registration any of the
securities that remain unsold at the end of the offering.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to our directors, officers and controlling persons
pursuant to the provisions of our Certificate of Incorporation or By-laws or
applicable Delaware law, or otherwise, we have been advised that in the opinion
of the Securities and Exchange Commission such indemnification is against public
policy as expressed in that Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by us of expenses incurred or paid by a director,
officer or controlling person of ours in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, we will, unless in the
opinion of our counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by us is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
II-3
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 registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Stamford, State of Connecticut this 17th day of
August, 2005.
Delcath Systems, Inc.
By: M. S. KOLY
------------------------------------------
Name: M. S Koly
Title: President and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
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 Officer) ) By: M. S. KOLY
) ----------------
) Attorney-in-Fact
Samuel Herschkowitz Chairman and Director )
- -------------------------------- )
) Dated: August 17, 2005
)
Mark A. Corigliano Director )
- ------------------------------- )
)
Daniel Isdaner Director )
- ------------------------------- )
)
Victor Nevins Director )
- ------------------------------- )
II-4
EXHIBIT INDEX
Number Description
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 (Commission File No. 001-16133)).
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
(Commission File No. 001-16133)).
4.8 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
(Commission File No. 001-16133)).
4.9 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)).
4.10 Warrant Agreement dated as of July 22, 2005 between the Registrant and
American Stock Transfer & Trust Company, as warrant agent, together
with the form of 2005 Redeemable Common Stock Purchase Warrants -
Series A (incorporated by reference to Exhibit 4 to Registrant's
Quarterly Report on Form 10-QSB for the quarter ended June 30, 2005
(File No. 001-16133)).
5 Opinion of Murtha Cullina LLP.
Number Description
23.1 Consent of Eisner LLP.
23.2 Consent of Murtha Cullina LLP (included in Exhibit 5).
24 Power of Attorney.
[LETTERHEAD OF MURTHA CULLINA LLP]
PAUL G. HUGHES
(203) 772-7726 DIRECT TELEPHONE
(860) 240-5726 DIRECT FACSIMILE
PHUGHES@MURTHALAW.COM
August 17, 2005
The Board of Directors
Delcath Systems, Inc.
1100 Summer Street
Stamford, CT 06905
Re: Registration Statement on Form S-3 (No. 333-________ )
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-_______), as filed on the date hereof (the "Registration
Statement"), for the public offer by the Company of up to 1,200,000 shares (the
"Shares") of Common Stock that may be issued upon exercise of the Company's 2005
Redeemable Common Stock Purchase Warrants - Series A (the "2005 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(i) to the Company's Quarterly Report on Form 10-QSB for the quarter
ended June 30, 2005 (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) resolutions adopted by
the Board of Directors of the Company at a meeting held on June 14, 2005; 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 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 the Shares, when
issued upon exercise of the 2005 Warrants in accordance with their terms, will
be duly authorized, validly issued, fully paid and nonassessable.
The Board of Directors
Delcath Systems, Inc.
August 17, 2005
Page 2
The foregoing opinion is 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 we
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 the 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 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 into 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 ended December 31, 2004 and for the
period from August 5, 1988 (inception) to December 31, 2004 included in the
Annual Report on Form 10-KSB for the year ended December 31, 2004. We also
consent to the reference to our firm under the caption "Experts" included in the
Registration Statement on Form S-3 referred to above.
/s/ EISNER LLP
- -------------------------------
Eisner LLP
New York, NY
August 17, 2005
EXHIBIT 24
POWER OF ATTORNEY
We, the undersigned officers and directors of Delcath Systems, Inc., a
Delaware corporation (the "Company"), hereby severally constitute and appoint M.
S. Koly and Paul M. Feinstein, and each of them singly, our true and lawful
attorneys with full power to them, and each of them singly, and with full powers
of substitution and resubstitution, to sign for us and in our names in the
capacities indicated below, the Registration Statement on Form S-3 relating to
the public offer of shares of the Company's common stock, par value $0.01, that
may be issued upon exercise of the Company's 2005 Redeemable Common Stock
Purchase Warrants - Series A and any and all pre-effective and post-effective
amendments to said Registration Statement, and generally to do all such things
in our names and on our behalf in our capacities as officers and directors to
enable the Company to comply with the provisions of the Securities Act of 1933,
as amended, and all requirements of the Securities and Exchange Commission,
hereby ratifying and confirming our signatures as they may be signed by our
attorneys, or either of them, or their substitute or substitutes, to said
Registration Statement and any and all amendments thereto.
Signature Title Date
/s/ M. S. KOLY President and Chief Executive August 17, 2005
- -------------------- Officer (Principal Executive
M.S. Koly Officer) and Director
/s/ PAUL M. FEINSTEIN Chief Financial Officer (Principal August 17, 2005
- --------------------- Financial and Accounting Officer)
Paul M. Feinstein
/s/ SAMUEL HERSCHKOWITZ Chairman and Director August 17, 2005
- -----------------------
Samuel Herschkowitz, M.D.
/s/ MARK A. CORIGLIANO Director August 17, 2005
- ----------------------
Mark A. Corigliano
/s/ DANIEL ISDANER Director August 17, 2005
- ----------------------
Daniel Isdaner
/s/ VICTOR NEVINS Director August 17, 2005
- ----------------------
Victor Nevins