One Step Closer to Revenue for Delcath

All that worrying, mostly for nothing. Mostly.

Monday Delcath Systems (Nasdaq: DCTH  ) said that it would take an additional three months to resubmit its chemotherapy system, Chemostat, to the Food and Drug Administration. I worried that it was a sign of more bad things to come and wondered if management had it together.

A little over 24 hours later, it's earned back a little confidence announcing that the Chemostat has gained CE Mark approval in Europe.

The Chemostat is a drug device to treat tumors in the liver. The liver is separated from the body and saturated with chemotherapy at higher levels than would be possible if the chemotherapy was run through the entire body.

What's interesting is that the European regulatory authority classifies the Chemostat as a medical device while the U.S. Food and Drug Administration classifies it as a drug. So while it's certainly good news -- the company turned in the right paperwork and secured an approval from a regulatory body -- it's not necessarily a sign that the FDA will approve the Chemostat.

In fact, the European CE Mark is notoriously easy to get with very little data. Medtronic (NYSE: MDT  ) , for example, gained CE Mark approval for its Endeavor drug-eluting stent in 2005, but didn't gain FDA approval until 2008. It doesn't always take quite that long to gather the necessary extra data to get approved stateside; Boston Scientific (NYSE: BSX  ) is looking at a year between CE Mark and FDA approvals for its Taxus Element stent. But medical-device companies almost always go after the CE Mark approval first because it's so much easier to get.

Even after CE Mark approval, Delcath still has to convince someone to pay for the procedure. In Europe, that's often government single-payer systems that tend to be slow-moving and penny-pinching.

I like Delcath better today than I did earlier in the week, but it's still a risky play. Between getting the Chemostat paid for in Europe and approved stateside, there's still plenty to be worried about.

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Fool contributor Brian Orelli, Ph.D., doesn't own shares of any company mentioned in this article. The Fool owns shares of Medtronic. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


Read/Post Comments (4) | Recommend This Article (3)

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  • Report this Comment On April 14, 2011, at 11:28 PM, Momentum21 wrote:

    Brian,

    You hear about Cramer thumbing his nose at Delcath tonight after recommending it as a spec 1 year ago?

    http://www.cnbc.com/id/36778992

    It was trading at 14.50 or so when he gave it the thumbs up...no revenue then either...

    Interesting that Feuerstein was tweeting about DCTH negatively as well.

    Still plenty to be worried about for sure but I find the recent interest somewhat curious. Another conspiracy theory! : ) thanks for the post

  • Report this Comment On April 15, 2011, at 8:20 AM, robandrenee wrote:

    If you examine the actual data and LISTEN to the oncologists that have used this product you should be blown away by the effectiveness of this procedure. The people that need rhis product have NO where else to turn. Several oncologists stated that this process with melphalan shrinks all tumors in the liver not just metastatic melanoma. If you have primary hepatocellular carcinoma or metastatic colon to liver you will be begging for this procedure. The real crime here is that it is not available to increase the lives of these unfortunate people. It is incredible to me that people will have to travel to Europe to get this done...and those that can afford will travel there in droves. The bottom line it works anf in my oppinion it will be used with Adriamycin and oxaliplatinum for ALL metastatic tumors to the liver. The potential revenue for this product in 5 years is in the billions and there are very few companies out there with this potential. If the author of this article had a relative with inooperable liver cancer they would be calling Hobbs as we speak BEGGING for this procedure. Simply look at the before and after CT scans of tumor shrinkage during the NCI portion of the study(they are amazing even to a laymans eye).

  • Report this Comment On April 15, 2011, at 9:45 AM, jpbones wrote:

    This is a billion dollar device, not drug and has a multitude of potential off-label possibilities. Given that the device isolates an organ and then hits it with high levels of cancer-killing drugs that never reach or adversely affect other parts of the body, it will eventually be used for many different types of cancer in many areas of the body.

    The Delcath device is so revolutionary that the FDA will take its sweet time for approval.... However, the test results to date are excellent.

    In a few years, this procedure will be the standard treatment for many types of cancer and will save many lives.

  • Report this Comment On April 18, 2011, at 10:25 AM, rrtzmd wrote:

    ...it's a device that has been around now 23 years and NO ONE except DCTH has shown ANY interest in it...it's had multiple studies and no one has demonstrated a significant improvement in either mortality ad/or morbidity...it is a device that has basically been available for use in China for something like 10 years and even though they'll try just about anything imaginable, even they have not opted to use it...finally, it's a SIMPLE product -- a couple of double lumen catheters, a pump and some activated charcoal...even if DCTH could show some benefit, ANYONE could assemble a similar kit from products ALREADY available from Henry Schein...the ONLY reason DCTH is in existence is because it provided management and stockbrokers with a "story" that they could pitch to naive investors...commercially, it is a biotech "Edsel"...

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