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What Happens Now At Delcath Systems, Inc. (NASDAQ:DCTH)

What Happens Now At Delcath Systems, Inc. (NASDAQ:DCTH)
Written by
Chris Sandburg
Published on
September 14, 2017
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What happens now for Delcath Systems, Inc. (NASDAQ:DCTH)?That's a question being bounced back and forth in the small biotechnology space hundreds of times a day right now and it's one that, on the face of it, is incredibly tough to answer.This is a company that rocketed early on in the year on news that shareholders had voted down a reverse split.Fast forward a few months, and shareholders once again vote down reverse split but – this time around – the impact is completely different. The vote took place on September 7, management quickly realized that they didn't have enough votes to action a reverse split, but didn't make an announcement to that effect (at least not through the standard communication channels). DCTH Daily ChartThe company traded sideways for a few days and, on September 13, Delcath reported that it was voluntarily delisting to become an over-the-counter (OTC) stock and has applied to trade on the OTCQB.The general consensus is that this isn't really a management decision, instead, the company is being forced into a delisting because shareholders won't allow a reverse split. As far as the logic behind not allowing a split is concerned, it seems to make perfect sense. This is a base of shareholders that has been beaten around by the company for the better part of the last 12 months and – to put it plainly – said base isn't happy with management.Management aside, however, this is a company with a portfolio of really promising development assets one that, as we have mentioned on numerous occasions in the past, would make a nice addition to the portfolio of a bigger entity, one with deeper pockets and one that could manage the company through to commercial success without having to rely on shareholder intervention (read: equity raises and the dilution that they bring).As far as what happens going forward is concerned, there are only really a handful of possible outcomes.Delcath could delist, restructure and then apply for a fresh NASDAQ listing at the start next year. That's a possibility and one that could potentially put the company in a stronger position heading into a depression NASDAQ listing than it is in right now given that it will likely be able to shake off a large portion of the short interest in the stock as and when it restructures.We think that's unlikely, however.We think is more likely is that is that the company is going to sell part or all of itself to one of the above-mentioned deep-pocketed entities that it has been crying out for so long. We have said it before and we will say it again, a buyout is by far the most attractive exit for shareholders right now. This is a company that has fallen foul of mismanagement and one for which the quality of its portfolio of assets isn't having a proportionately representative impact on share price and, by proxy, market capitalization.To be in this position as a shareholder, or as the company, is disappointing and an unattractive prospect.To be looking at a company that is in this position, however, as a potential buyer of the company in its entirety or of one or more of its assets, Delcath is in a very attractive position. Imagine you are a buyer and you were thinking of acquiring Delcath three weeks ago. Your biggest fear would be that it wouldn’t be able to conduct a reverse split and would run (as we saw earlier in the year) on the announcement that shareholders had voted down the proposal.Instead, what happened was that no announcement came and the delisting has put a dampener on any bullish sentiment surrounding the development. What could've been a real upside driver turned into some downside pressure and the company is now far cheaper than it was when you first looked at it.This is speculative, of course, but it's far from unrealistic.Check out our previous coverage of this one here. We will be updating our subscribers as soon as we know more. For the latest updates on DCTH, sign up below!Image courtesy of Oregon Department of Transportation via FlickrDisclosure: We have no position in DCTH and have not been compensated for this article.

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