As filed with the Securities and Exchange Commission on December 27, 2004.
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 (1) price fee
Common Stock, par value
$0.01 per share,
registered for resale by
selling shareholders 3,397,909 $2.60 (1) $8,834,564 $1,120
(1) Estimated in accordance with Rule 457(c) under the Securities Act of 1933,
as amended, solely for the purpose of calculating the registration fee. The
price shown is the closing price of the Common Stock on December 20, 2004,
as reported by the Nasdaq SmallCap Market.
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.
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.
Subject to Completion. Dated December 27, 2004
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 up on 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
December 14, 2004, our common stock had a closing price of $2.90 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 December 14, these warrants had a closing price of $0.71.
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 __________________.
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.
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TABLE OF CONTENTS
Page
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TABLE OF CONTENTS.........................................................................................i
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.........................................4
Risks Related to Products Liability....................................................................5
Risks Related to an Investment in Our Securities.......................................................5
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS.........................................................7
OUR BUSINESS..............................................................................................8
General................................................................................................8
Corporate Information..................................................................................8
THE OFFERING..............................................................................................8
Terms of our Common Stock..............................................................................9
Terms of the Warrants Issued in November and December 2004.............................................9
Transfer Agent........................................................................................10
USE OF PROCEEDS..........................................................................................10
SELLING SHAREHOLDERS.....................................................................................10
PLAN OF DISTRIBUTION.....................................................................................12
LEGAL MATTERS............................................................................................14
EXPERTS..................................................................................................14
WHERE CAN YOU FIND MORE INFORMATION......................................................................14
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE..........................................................15
DISCLOSURE OF THE SEC'S POSITION ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES.......................16
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.
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, 2003, we have incurred cumulative losses of $18.2 million
which were principally incurred in connection with our product development
efforts. For the years ended December 31, 2002 and December 31, 2003, we
incurred net losses of $1.8 million and $2.3 million, respectively, and for the
nine months ended September 30, 2003 and September 30, 2004, we incurred net
losses of $1.7 million and $2.4 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 2003 financial statements that are included in our
Annual Report on Form 10-KSB for the year ended December 31, 2003. In addition,
we received net proceeds of approximately $5.6 million from private placements
we completed in 2004 and approximately $2.1 on exercise of warrants and options
in 2004 through December 15, 2004.
If we continue to incur losses we may exhaust our capital resources. As of
December 15, 2004, we had cash and cash equivalents and short term investments
of $7.4 million.
We will likely need additional funding to complete our planned clinical
trials and our efforts to raise additional financing may be unsuccessful.
Our resources may not be sufficient to enable us to complete our Phase III
clinical trials and obtain FDA premarket approval for the use of doxorubicin
with our Delcath system because of unanticipated delays or expenses, increased
regulatory requirements by the FDA or other factors which we cannot foresee or
control. If we do not obtain any financing that we may require, we will not be
able to complete Phase III clinical trials or obtain FDA premarket approval for
the use of doxorubicin with the Delcath system. Our ability to complete the
Phase III clinical trials could be lessened to the extent we devote assets to
clinical trials using melphalan with the Delcath system.
-1-
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.
If the FDA refuses to grant premarket approval or limits the circumstances
under which the Delcath system may be used, our ability to market the
Delcath system will be greatly reduced.
Premarket approval requires a determination by the FDA that the data
developed by our clinical trials show that the use of doxorubicin or melphalan
in our system is safe and effective in the treatment of primary liver cancer and
melanoma which has spread to the liver. The FDA requires that we demonstrate,
for each of primary liver cancer and metastatic melanoma, in a statistically
rigorous manner, increased patient survival times against a control group before
it will approve our application for premarket approval. Even if regulatory
approval is granted, the approval may limit the uses for which the Delcath
system may be marketed. If we fail to obtain FDA premarket approval, we will not
be able to market the Delcath system. Additionally, if we obtain FDA premarket
approval with substantial limitations on uses of the Delcath system, our ability
to market the system could be significantly reduced.
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. 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 in arranging for clinical trials and in evaluating and
submitting the data gathered from clinical trials, in designing trials to
conform to the trial protocols authorized by the FDA, in complying with the
requirements of institutional review boards at the sites where the trials may be
conducted and 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. 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.
-2-
Third-party reimbursement may not be available to purchasers of the Delcath
system or may be inadequate.
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.
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. 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.
-3-
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 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.
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
-4-
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, they
may still be able to assert products liability claims against us. In connection
with our clinical trials in Australia, we have obtained a liability policy
providing $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.
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 may cause the market price of
our common stock to be below the level it otherwise would.
The potential for sales of substantial amounts of our common stock, or
"equity overhang," could adversely affect the market price of our common stock.
As of December 15, 2004, 15,108,085 shares of our common stock were outstanding.
All of these shares (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) are freely tradable without restriction or further registration under the
Securities Act. However, the shares of our common stock outstanding and held by
our affiliates are subject to certain limitations on resale without registration
under the Securities Act. These shares are eligible for sale in compliance with
Rule 144. Rule 144 provides volume and manner of sale restrictions and holding
periods, which expire after the holder of our common stock ceases to meet the
definitions of affiliate.
-5-
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.
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.
Provisions of our certificate of incorporation, by-laws and Delaware law
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. 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. At times, we have not met
one or more of these criteria. If we do not meet all of the applicable criteria,
our common stock could be delisted from the Nasdaq SmallCap Market.
-6-
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
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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, 2003. 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
Shareholders connection with private placements
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 December 15, o 15,108,085 shares
2004
Trading symbols of our publicly o Our common stock is traded on the
traded securities Nasdaq SmallCap Market and 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 Marker and the Boston
Stock Exchange under the symbols
"DCTHW" and "DCT," respectively.
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Terms of our Common Stock
As of December 15, 2004, there were 15,108,085 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 3,437,748 shares of common stock, there would be
18,545,833 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 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.
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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.
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 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
15,108,085 shares of our common stock issued and outstanding as of December 15,
2004 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.
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Shares
Beneficially
Owned Prior Shares Beneficially
to the Shares Being Owned After the Offering
Shareholder 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) 1.4%
Cranshire Capital LP 524,066 (7) 524,066 0 0%
H.C. Wainwright & Co., Inc.
101,423 (8) 71,497 29,926 (9) *%
New England Partners Capital
L.P. 331,754 (10) 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.
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.
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 over the shares of our common stock owned by Omicron.
Omicron
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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 ofthe 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 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 71,497 shares that could be purchased on exercise of warrants
issued in connection with our private placement in November 2004. H.C.
Wainwright & Co., Inc. received these securities as compensation for its
services as placement agent in connection with our private placement in
November 2004.
(9) 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.
(10) Includes 94,787 shares that could be purchased on exercise of warrants
issued in connection with our private placement in December 2004.
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;
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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 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 and any broker-dealers or agents that are involved
in selling the shares of common stock may 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
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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, 2003 and for each of the two
years in the period ended December 31, 2003 and cumulative from inception
(August 5, 1988) to December 31, 2003, appearing in our Annual Report on Form
10-KSB for the year ended December 31, 2003 have been audited by Eisner LLP,
independent registered public accounting firm, as set forth in their report
thereon dated February 11, 2004 except as to Note 6, the date of which is March
22, 2004, 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.
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
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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,
2003, filed on March 30, 2004;
2. Our definitive Proxy Statement dated April 29, 2004 distributed in
connection with our Annual Meeting of Shareholders held on June 15, 2004;
3. Our Quarterly Report on Form 10-QSB for the quarter ended March 31,
2004, filed on May 17, 2004;
4. Our Quarterly Report on Form 10-QSB for the quarter ended June 30, 2004,
filed on August 12, 2004;
5. Our Current Report on Form 8-K dated September 30, 2004, filed on
September 30, 2004;
6. Our Quarterly Report on Form 10-QSB for the quarter ended September 30,
2004, filed on November 12, 2004;
7. Our Current Report on Form 8-K dated November 24, 2004, filed on
December 1, 2004; and
8. 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.
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
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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.
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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 $ 1,120
Legal fees and expenses 15,000
Accounting fees and expenses 7,500
Printing expenses 1,000
Miscellaneous 380
---------------
Total $25,000
===============
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, 2004 to October
19, 2005 issued by Carolina Casualty Insurance Company covering all our officers
and directors, at an annual expense of $53,000.
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-2
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.
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.
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.
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 Bylaws or
applicable Delaware law, or otherwise, we have been advised that in the opinion
of the
II-3
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-4
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 27th day of
December, 2004.
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: December 27, 2004
)
Mark A. Corigliano Director )
---------------------------------- )
)
Daniel Isdaner Director )
---------------------------------- )
)
Victor Nevins Director )
---------------------------------- )
II-5
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 Warrants 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.
5 Opinion of Murtha Cullina LLP.
Number Description
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.
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.
23.1 Consent of Eisner LLP.
23.2 Consent of Murtha Cullina LLP (included in Exhibit 5).
24 Power of Attorney.