Delcath Systems ($DCTH) shared more grim news today. As expected, the FDA rejected its drug-device system for cancer in a complete response letter (CRL), saying that the company needed to do another clinical trial. And the New York company ousted Eamonn Hobbs from the CEO post and put two of his deputies in charge of the struggling operation.
The CRL might have been only a matter of time after FDA advisers this spring unanimously sided against approval of Delcath's Melblez, a product designed to deliver high doses of chemo, as a treatment for a rare form of eye cancer that spreads to the liver. Seven percent of patients in a study of the system died from complications related to the treatment. In the requested new clinical trial for the product, U.S. regulators asked for a controlled, randomized study to gauge safety and efficacy of Melblez with the main efficacy goal of overall survival, the company said on Friday.
Delcath's share price has already tumbled into penny-stock territory this year, falling nearly 70% in 2013 to 37 cents per share as of Thursday's close. Shares were down 2.5 cents in early trading today. Many investors already jettisoned their holdings in the company, which has a market value of $37.6 million.
The company said that Hobbs's tenure as CEO ended on September 10, two days before the CRL arrived on September 12. On an interim basis, Jennifer Simpson, global head of business operations, and Graham Miao, chief financial officer, will serve as co-CEOs and presidents of the company. Hobbs also resigned from the board, with Dr. Harold Koplewicz stepping down from the chairman role and board member Gabriel Leung taking his place. Koplewicz will remain on the board.
The leadership shakeup follows multiple rounds of layoffs at Delcath over the course of this year, as the company sought to conserve funds and seek product revenue in Europe where its anti-cancer product gained a CE mark in 2012.