Delcath Systems Inc (NASDAQ:DCTH) Just Confirmed A Clear Pathway To Approval

Delcath Systems, Inc. (NASDAQ:DCTH) has had a pretty tough start to 2017, with the company down a little shy of 90% on its January open. It's one that we’ve taken a look at a few times in the past, and highlighted as being a company to watch based on the spate of catalysts set to hit press over the next twenty-four months or so.Well, we just got word on one of these catalysts, and we're finally seeing some upside momentum in the stock. Here's what just happened and what it means for Delcath and its shareholders.This one's a biotechnology company with a primary focus on the development of drugs targeting cancer of the liver. More specifically, it's developed a delivery system which technically classes as a medical device as opposed to a drug, and it's developing drugs in parallel that are designed to be administered using said delivery system, and bringing the combined drug/delivery method to market through a combination development pathway.The lead application of this drug/device development run is called Melphalan/HDS, with the Melphalan here referring to a chemotherapy agent called Melphalan Hydrochloride and the HDS referring to the device delivery method, called the Hepatic Delivery System.The idea is pretty simple. Standard chemotherapy agent delivery is systemic, meaning it has to reach the liver (in the case of liver cancer, that is) through the bloodstream. The agent being delivered is highly toxic to cancer cells, and that's the root of its MOA, but it's also not particularly selective, meaning it causes considerable damage to healthy cells.Using the HDS delivery method, the company can deliver a high dose administration of the chemo agent in question, the Melphalan, but can also limit its impact on the healthy non cancerous cells that the current SOC admin methods harm. Less healthy cell damage means less overall toxicity, meaning less side effects and an improved QoL for the patients undergoing treatment. And that's not the only justification for this type of treatment. The primary SOC is surgical resection. In patients with intrahepatic cholangiocarcinoma (ICC), which is the type of liver cancer the company is targeting in the trial we're focusing on in this discussion, resection isn’t possible. This type represents around 10-20% of new liver cancer cases, amounting to a little over 3,100 a year in the US.The latest news details the accepting of what's called a special protocol assessment (SPA) for a registration trial investigating the efficacy of the drug in the above mentioned ICC. There's already a phase III ongoing in ocular melanoma (OM) and this one is set to kick off at some point during the third quarter of this year. For those new to SPAs, it's basically a pre defined confirmation from the FDA on a study design. In other words, the FDA has said "do this, and show the drug can do this and this, and we'll give you a green light for commercialization".The importance of this is that we should pretty much know whether the drug's going to get approved at study end, bringing any potential revaluation forward by the eight months that the company would generally otherwise have to wait to get a decision post submission.A key element of this protocol is that the study is a two-part type study, whereby patients are going to receive SOC before transferring to either active compound or a continuation of SOC. This means that while the study starts before the end of the year, the capital outlay to Delcath isn’t really going to start before mid first quarter next.This removes some of the dilution concern, as it gives the currently ongoing phase III chance to mature before the company has to double up on its costs. In other words, there's still a dilution risk, but it's delayed somewhat, and we could see some strong upside revaluation before it arrives.We will be updating our subscribers as soon as we know more. For the latest updates on DCTH, sign up below!Disclosure: We have no position in DCTH and have not been compensated for this article.