Delcath Systems, following weeks of anticipation, announced earlier today that the FDA has accepted the company’s review application for the CHEMOSAT hepatic chemosaturation system. The application was filed on August 15. Unfortunately for Delcath, it was not granted a priority review as many investors and insiders believed would be the case. This standard review process will now take up to 10 months as opposed to a priority review that can take less than six months.
This announcement led to an early morning sell off with Delcath finishing the day down over 18%. Delcath had closed last week’s trading at $2.09 before opening today at $1.90. The stock began its day quite ordinarily before 10:07 AM came around, leaving the stock to begin a half-hour-long free fall from $1.80 to $1.64. However, 11 AM saw the stock recovering and seemingly nearing levels prior to the company’s announcement. This was not to be as the stock began once again losing its value and falling t0 $1.65. Midday saw the stock return to $1.70. While the stock moved above and below this mark, there were no more significant movements of any size for the remainder of the day with the stock finally closing at $1.70.
As a cash flow negative company, this announcement means Delcath will miss out on four crucial months of potential revenue. If CHEMOSAT is approved, Delcath is now looking at the second half of 2013 before it can begin gaining from this potential game changer.
“FDA acceptance of our NDA is a significant milestone for the Company, and we look forward to working closely with the Agency throughout the review process with the goal of securing approval of our application,” said Eamonn P. Hobbs, President and CEO of Delcath Systems. He added, “We believe that the standard review period will provide both Delcath and the FDA a manageable timeframe to thoroughly review the combination product submission. Our most important objective is to be able to provide patients with unresectable metastatic melanoma in the liver a new option for treating their disease.”
While that is the friendly face Delcath is offering, it is difficult to imagine that Delcath was not gutted when it heard the news, just as its stock was upon acknowledging this decision by the FDA in its announcement to stockholders.
Though CHEMOSTAT is already approved in Europe, which nearly makes approval by the FDA a given, it will require huge sales across the ocean in early 2013 to offset today’s setback.
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