Delcath (DCTH) Q4 2025 Earnings Call Transcript

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DATE

Thursday, Feb. 26, 2026 at 8:30 a.m. ET

CALL PARTICIPANTS

• Chief Executive Officer — Gerard Michel
• Chief Financial Officer — Sandra Pennell
• General Manager, Interventional Oncology — Kevin Muir
• Chief Medical Officer — Vojislav Vukovic
• Chief Operating Officer — Martha Rook
• Host — David Hoffman

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TAKEAWAYS

• Annual Revenue -- $85,200,000, representing a volume growth exceeding 40% with record levels for the company.
• Number of Active Treatment Centers -- 28 REMS-certified sites, with a target of 40 by year-end 2026.
• Quarterly Segment Revenue -- Hepzato sales reached $19,000,000 and ChemoSAT $1,700,000 in the quarter.
• Full-Year Segment Revenue -- Hepzato contributed $78,800,000 and ChemoSAT $6,400,000 to 2025 revenue.
• Gross Margin -- 85% for the quarter and 86% for the full year, with 2026 guidance at 84%-87%.
• Adjusted EBITDA -- $25,100,000 for the year, compared to a loss of $2,500,000 in 2024.
• Net Income -- Full-year net income of $2,700,000 versus a prior-year loss of $26,400,000.
• Operating Cash Flow -- Positive $8,300,000 in the quarter and $22,500,000 for the full year.
• Cash Position -- $91,000,000 in cash and investments at year-end with no outstanding debt or warrants.
• Share Repurchase -- 628,572 shares bought back for $6,000,000 through December 31, 2025.
• R&D and SG&A Spending -- 2025 R&D expenses at $29,200,000 (up from $13,900,000), SG&A at $43,000,000 (up from $29,600,000), with guidance for nearly 90% R&D growth and 50% SG&A increase in 2026.
• Guidance for 2026 -- Total revenue projected at least $100,000,000, with Hepzato Kit procedure volume growth above 20% and ChemoSAT over 10%.
• Average Selling Price -- Expected Hepzato Kit ASP of ~$175,000 in 2026, reflecting an average 10% discount from list due to 340B eligibility.
• Average Treatments per Patient -- Approximately four, holding steady with historical trends.
• New Patient Start Rate -- Approximately 0.75 new patients per site per month for early 2026, following a 2025 average of 0.5 with high seasonality.
• CHOPIN Trial Results -- Demonstrated statistically significant improvements in one-year progression-free survival, overall survival, and objective response rates for PHP sequenced with ipilimumab and nivolumab versus PHP alone.
• Commercial Team Expansion -- U.S. commercial regions increased from six to nine and medical affairs refreshed with new MSLs to support growth.
• Metastatic CRC and mBC Clinical Programs -- Nearly all 26 CRC trial sites targeted to be activated by mid-2026 with interim data expected in late 2027; mBC trial targeting 15 sites by late 2026.
• Site Activation Pace -- Three centers newly activated early in 2026 (MD Anderson, UT Southwestern, Mayo Clinic Scottsdale); more activations expected in the second half of 2026.
• Seasonality -- Revenue growth in Q3 may be flat or only modest versus Q2 due to physician and patient scheduling, with expected rebound in Q4.

SUMMARY

Management emphasized three commercial priorities: expanding treatment capacity, changing prescribing patterns toward earlier intervention and combined regimens, and building upstream referral networks. CHOPIN trial results are slated for imminent publication, expected to increase center activations and support Hepzato preference in treatment guidelines. Ongoing expansion of the commercial and medical affairs teams and the targeting of additional clinical indications in metastatic colorectal and breast cancer reflect a focus on both immediate and longer-term growth levers.

• CEO Michel said, "we are targeting 40 active treatment centers by 2026," signaling a measurable growth target for investors tracking geographic expansion.
• Pennell highlighted, "We do expect our R&D expenses to increase in 2026 by nearly 90%, primarily due to CRC," illustrating a significant investment commitment to clinical development.
• Michel confirmed seasonality effect, stating, "we expect only modest growth, perhaps even flat, given the seasonality we saw last year," providing clear context for quarterly modeling.
• Pennell noted, "Forecast for 2026 gross margins are between 84% and 87%," and suggested potential for further improvement beyond 2026.
• Management identified the "340B pricing impact" as a driver for the $175,000 average Hepzato Kit price, clarifying input for revenue forecasting.
• Pennell stated, "Q1 alone will probably go up nearly 30% to 40% over Q4," when discussing 2026 SG&A expectations.
• Clinical pipeline expansion includes possible future combination immune checkpoint inhibitor trials, with build plans to be finalized in three to six months.

INDUSTRY GLOSSARY

• REMS (Risk Evaluation and Mitigation Strategy): An FDA-mandated program ensuring safe use of certain drugs/devices by certifying and monitoring participating healthcare providers and sites.
• 340B: A U.S. federal drug pricing program granting eligible healthcare entities discounts, affecting average selling prices and patient access.
• PHP (Percutaneous Hepatic Perfusion): A procedure for delivering high-dose chemotherapy directly to the liver, limiting systemic exposure to the drug.
• CHOPIN trial: An investigator-initiated clinical study evaluating efficacy and safety of PHP combined with checkpoint inhibitors in advanced liver tumors, especially uveal melanoma.
• MSL (Medical Science Liaison): Scientific professionals tasked with communicating complex clinical and scientific data to healthcare providers and supporting drug/device adoption.
• CRC (Colorectal Cancer): Clinical trial and pipeline reference for metastatic colorectal carcinoma studies by Delcath.
• mBC: Shorthand for metastatic breast cancer, used in Delcath’s clinical development disclosures.
• ASP (Average Selling Price): The realized average revenue per sale after accounting for discounts and pricing programs, such as 340B.

Full Conference Call Transcript

David Hoffman: With me on the call are Gerard Michel, Chief Executive Officer; Sandra Pennell, Chief Financial Officer; Kevin Muir, General Manager, Interventional Oncology; Vojislav Vukovic, Chief Medical Officer; and Martha Rook, Chief Operating Officer. This statement is made pursuant to the safe harbor for forward-looking statements described in the Private Securities Litigation Reform Act of 1995. All statements made on this call, with the exception of historical facts, may be considered forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Actual results may differ in a material manner from those expressed or implied in forward-looking statements due to various risks and uncertainties.

Although the company believes that expectations and assumptions reflected in these forward-looking statements are reasonable, it makes no assurance that such expectations will prove to have been correct. For a discussion of such risks and uncertainties which could cause actual results to differ from those expressed or implied in the forward-looking statements, please see risk factors detailed in the company's annual report on Form 10-K, those contained in quarterly reports on Form 10-Q, as well as in other reports that the company files from time to time with the Securities and Exchange Commission. Any forward-looking statements included in this call are made only as of the date of this call.

We do not undertake any obligation to update or supplement any forward-looking statements to reflect subsequent events or circumstances. Our press release with our 2025 results is available on our website under the Investor section and includes additional details about our financial results. Our website also has our latest SEC filings, which we encourage you to review. A recording of today's call will be available on our website. 2025 was a pivotal year delivering over 40% volume growth. Gerard, please proceed.

Gerard Michel: Today, we operate 28 active treatment centers and the highly anticipated CHOPIN results demonstrating clear clinical benefit when Hepzato PHP is sequenced with checkpoint inhibitors is slated for publication. Entering our third year of launch with strong momentum, we are confident that continued site activations and commercial expansion, and the CHOPIN results will drive meaningful revenue acceleration and create substantial shareholder value. 2025 was a pivotal year in which we achieved over 40% volume growth and achieved record annual revenue of $85,200,000. We currently have—excuse me for that little bit of a glitch on the screen here. We have organized our commercial strategy around three priorities: expanding site capacity, changing prescribing patterns, and building referral networks.

We track our progress against these priorities through three internal KPIs: number of site activations, rate of new patient starts per site per month, and the average number of treatments per patient. Capacity is a function of the number of active sites and the volume of patients our sites can treat. As expected in the launch phase of any product, the first two KPIs have shown significant variability where small changes in patient numbers can have a large impact, especially when treating an ultra-orphan patient population. Despite this variability, we are very encouraged by the trends we are seeing. Treatment number per patient has remained consistent at approximately four cycles per patient.

We use these KPIs internally to model our projections and set guidance. The first strategic priority, expanding site capacity. We had a strong surge in activations early this year, bringing three new sites online. Specifically MD Anderson, UT Southwestern, and Mayo Clinic, Scottsdale. We now have 28 REMS-certified treatment sites. Leading cancer centers continue to engage and we are targeting 40 active treatment centers by 2026. The pace of activations will likely be variable, given the planned timing of the Salesforce expansion, as well as the anticipated increase in interest and support following the pending publication of CHOPIN results. We expect more activations to occur in the second half of 2026 compared to the first half.

The expansion of the U.S. commercial team divides the country into nine regions. In addition to the expanded commercial team, we have revamped our medical affairs team with both new leadership and a new team of MSLs. We are off to a strong start in 2026, having treated new patients per site per month at a rate of approximately 0.75 for the first two months of 2026, similar to the pace we saw in 2025. For context, for the full year in 2025, the average rate was 0.5 new patients per site per month, with significant seasonality. We anticipate some seasonal loss of capacity in the late summer.

Seasonality is partially driven by the small number of REMS-certified team members at a treating site. For instance, when key personnel take vacation, sites cannot easily add new patients while also servicing our existing accounts. While we are working to minimize the seasonality by increasing bench strength—sites cannot easily add new patients. Total site capacity is a function of open sites and the total number of patients a center can treat, which can vary by month. Our 2026 projections regarding total site capacity, which can vary by month, assume a similar summer seasonality pattern that we experienced last year. Our second strategic priority is changing prescribing patterns by expanding the set of patients our treating oncologists consider appropriate for PHP.

With PHP clearly addressing a significant unmet need in liver metastases from uveal melanoma, recent 2025 publications and real-world evidence have reinforced the value of early and effective liver-directed therapy. Several of our strongest advocates highlighted that initiating PHP treatment earlier in the disease course can meaningfully improve outcomes by reducing tumor burden, and that combining Hepzato with systemic therapies can further enhance effectiveness. We expect increasing impact from the CHOPIN phase 2 data. As a reminder, this investigator-initiated trial showed that sequencing PHP with ipilimumab and nivolumab delivered statistically significant and clinically meaningful improvements in one-year progression-free survival, overall survival, and objective response rates versus PHP alone, all within a very short 10-week treatment window.

The ability to quickly initiate this combination therapy addresses concerns about delaying systemic therapy, and the combination itself addresses concerns regarding treating patients with extrahepatic disease. Leading centers such as UCLA and Massachusetts General Hospital are already adopting CHOPIN-inspired protocols, including flexible sequencing and combination use with agents like bevacizumab in eligible patients. These data are helping both to establish Hepzato as a preferred first-line liver-directed option and to expand the patient populations our treating oncologists are comfortable referring for PHP treatment. Our third strategic priority, developing referral patterns, is critical to ensure eligible patients are identified and efficiently referred to one of our treating centers.

The majority of patients with uveal melanoma are initially diagnosed with disease and managed at community or non-PHP institutions, making early referral a critical lever for both patient capture and better outcomes. To address this systematically, we are currently leveraging a variety of data sources to identify oncologists who have a patient who has very recently been diagnosed with metastatic disease before treatment decisions are locked in. Our oncology managers then engage those physicians to provide education on treatment options and the locations of our treating centers. We believe this upstream approach is already producing results and will be a meaningful driver of new patients per site going forward.

The development of referral networks to our treating centers will also support this third strategic priority and strengthen these referral networks across the country as a top priority to support the 2026 guidance Sandra will share shortly. Collectively, these three priorities and the underlying KPIs again, the expansion of both the commercial and medical field forces and the active referral development, will deliver continued long-term growth. I will now turn to an update in our clinical development programs. Our ongoing metastatic colorectal cancer trial continues activation of new trial sites.

While opening and training sites for medical device clinical trials is more complex than a clinical trial with conventional drugs, we are on track to activate nearly all of the currently targeted 26 trial sites by mid-2026 and to present interim data results in late 2027. Our second program in metastatic breast cancer has one active clinical trial site, and additional sites are opening soon. Compared to physicians who treat metastatic colorectal cancer patients, breast cancer doctors have much less experience with liver-directed therapies. This lower level of awareness requires extensive communication and education on the potential benefits of PHP for patients with metastatic breast cancer. We have had numerous well-attended advisory boards.

There are clear areas of unmet need in the subset of these patients with liver metastases. We will provide guidance related to the readouts from the metastatic breast cancer trial later this year, once progress of operational activities allows for more precise forecasting. We are now targeting 15 trial sites and expect to activate them by late 2026. Based on the results of the CHOPIN trial and the resulting interest in the medical community, we are evaluating combination PHP immune checkpoint inhibitor trials across various tumor types. It will take another three to six months to finalize the build plans for future combination trials and other indications. I look forward to sharing future updates on this topic.

I will now ask Sandra to review our financial results.

Sandra Pennell: Thank you, Gerard. Revenue from our sales of Hepzato was $19,000,000, and ChemoSAT was $1,700,000 for the quarter, compared to $13,700,000 for Hepzato and $1,400,000 for ChemoSAT during the same period in 2025. Full year 2025 revenue was $78,800,000 from Hepzato and $6,400,000 from ChemoSAT, compared to $32,300,000 for Hepzato and $4,900,000 for ChemoSAT in 2024. We recognize gross margins of 85% in the fourth quarter and 86% for the full year. Research and development expenses for the quarter were $9,400,000 compared to $2,900,000 for the same period in the prior year. Full year 2025 SG&A was $43,000,000 compared to $29,600,000 in 2024.

SG&A expenses versus last year have increased primarily due to continued commercial expansion and an overall increase in general business functions. While full R&D expenses in 2025 were $29,200,000 compared to $13,900,000 in 2024. The growth in R&D spending was primarily driven by ongoing investments in our clinical team and the initiation of the phase 2 clinical trial evaluating Hepzato in combination with standard of care for mCRC and mBC. We do expect our R&D expenses to increase in 2026 by nearly 90%, primarily due to CRC. With regards to SG&A, we also expect our SG&A expenses to increase in 2026 by nearly 50%, primarily due to the sales and marketing initiatives and the commercial expansion.

Our fourth quarter 2025 net loss was $1,900,000 compared to a $3,400,000 net loss in the fourth quarter of the previous year, while full year 2025 net income was $2,700,000 compared to a loss of $26,400,000 in 2024. Adjusted EBITDA for the full year was $25,100,000 compared to an adjusted EBITDA loss of $2,500,000 for 2024. Non-GAAP positive adjusted EBITDA for the fourth quarter was $2,400,000 compared to positive adjusted EBITDA of $4,600,000 for the same period last year. We ended the year with approximately $91,000,000 in cash and investments and quarterly positive operating cash flow of $8,300,000 and full year operating cash flow of $22,500,000. As of today, we have no outstanding debt obligation and no outstanding warrants.

Six hundred and twenty-eight thousand five hundred and seventy-two common shares were repurchased for $6,000,000 through December 31, 2025 under the approved $25,000,000 share buyback program. Turning to 2026 guidance, we are guiding to total revenue of at least $100,000,000 for the year, which represents greater than a 20% increase in Hepzato Kit procedure volume and greater than 10% growth in ChemoSAT. The revenue guidance reflects the 340B pricing change, and based on our current and projected customer mix, we do expect the 340B pricing impact to result in an average selling price of around $175,000 per kit for Hepzato, approximately a 10% discount off our published list price. Forecast for 2026 gross margins are between 84% and 87%.

Given the concentrated nature of our customer base, this dynamic will continue to introduce some variability in realized pricing as we add new sites and as centers’ 340B eligibility kind of fluctuates quarter to quarter. This does conclude our prepared remarks, and I will ask the operator now to open the phone lines for Q&A. Thank you.

Operator: We will now conduct our question and answer session. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. If you would like to ask a question, please press 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press 2 if you would like to remove your question from the queue. Our first question comes from the line of Marie Yoko Thibault with BTIG. Please proceed with your question.

Marie Yoko Thibault: Hi, good morning, Gerard and Sandra. Thanks for taking the questions. I wanted to ask my first one here on some of the assumptions around your guidance. You gave us a lot of details on pricing and volume expectations, but I just wanted to clarify, you mentioned seasonality. Is that your third quarter that you are talking about when you talk about summer seasonality? And because we had the NDRG come in last year, maybe you could remind us on the magnitude of that seasonality just because things were a little bit noisy with that pricing change. And, Sandra, on the price you said $175,000, I think, for this year.

That is a little higher than where you kind of exited the year. I would love to hear a little bit about the trends behind that.

Gerard Michel: We do expect seasonality in the third quarter. Not all of the seasonality last year was due to pricing. A great deal of it was. And although we are trying to increase staffing at the certified teams at the hospitals, it is a tall order to get physicians and perhaps patients taking time off. From Q2 to Q3, from a volume perspective, because it was noisy last time with the pricing, we expect only modest growth, perhaps even flat, given the seasonality we saw last year. We have small numbers to work with, but that is what we are assuming.

And as Sandra mentioned, due to 340B across all our customers, it is looking like it is closer now to getting closer to 10%, so a bit in our favor. Sandra, you can comment on the magnitude of the pricing question.

Sandra Pennell: Sure. Thanks. I will deal with the seasonality at a high level. We do expect seasonality in the third quarter, so you may see a bit of a maybe flat to modest growth from Q2 to Q3, similar to what we saw in 2025, and then with that growth starting back up from Q3 to Q4. So from a pricing perspective, yes, we did have a slight price increase. Our list price went from $187,500 last year to $189,100, again limited by inflation. And then we are seeing a more favorable mix.

I think we have said, Marie, in previous calls, that we thought we were going to have more of a 20% discount, but seeing that some of our higher-end users tend to not be 340B eligible at the moment, we had some favorability there and really were tracking closer to a 12% net effective reduction on price. It swung closer to 10% in the fourth quarter. We came up with the 10% based on the mix of hospitals that we think will come on board. Again, we will continue to update everyone if that changes significantly outside of $175,000.

Marie Yoko Thibault: Alright. Very clear. Thank you for that detail. And then when we look at your websites from time to time, you mentioned the REMS certification process. You also mentioned some clinical trial centers. I wonder if you could just remind me of the difference between your Hepzato Kit REMS site, your Hepzato Kit site, and then how we should be thinking about the differentiation between the sites that are, you know, commercial and those that are purely clinical as we keep track of some of these metrics. Thanks.

Gerard Michel: Yeah. I am glad you asked that. It is our intention for the Hepzato Kit REMS site to be compliant, and for it to be compliant for the FDA, we cannot put hospitals on that are accepting referrals but have yet to do their first patient. We want patients to know where to find treating centers, so that is why we put together the hepzatokit.com website with a physician finder on that as well. I did say in the past that we believe REMS-certified centers, even if they have yet to do their first, needed to be put on that first FDA website. Upon further digging, it is a bit of a gray area.

But on further digging, we have reached the determination that it is probably best not to put on clinical trial centers unless they are going to be commercial centers. So, actually, I am glad you asked the question because this is a change. So if investors and analysts want to know how many treating centers there are, you just go to hepszatokitrems.com. Everybody there is either actively treating UM patients or is REMS certified and will soon treat a UM patient. We do have some clinical trial overlap, but we will only put those on there that are going to be commercial centers. Short answer is look at hepszatokitrems.com for the number of treating centers.

If you are a patient, go to hepzatokit.com because that is all the centers that are accepting referrals.

Marie Yoko Thibault: Alright. Very helpful. Thank you.

Operator: Our next question comes from the line of John Lawrence Newman with Canaccord Genuity. Please proceed with your question.

John Lawrence Newman: Hi, team. Good morning, and thanks for taking my question. I just had two here. On the CHOPIN study, really impressive data last year. How you plan to use that study in the United States and when we might start to see an effect? And then, Gerard, just curious on the timing on the publication there, anything you could tell us? And then also just from an operations perspective on the business, you have got two really interesting and important clinical studies running in colorectal and breast cancer.

Just curious if you are more focused on those studies and making sure that they enroll quickly, or if you are kind of balancing that with keeping the business cash flow positive this year? Thanks.

Gerard Michel: Okay. Thanks for the questions. In terms of timing of CHOPIN, as I think everyone on the call knows, this is an investigator-initiated trial. We are told that it is imminent. I think probably within the next month or so it will be published, but I cannot absolutely promise that. In terms of how we will use it, it is going to be used in a multifaceted way.

The sales reps will certainly make the treating physicians aware that it exists and give them access to the publication, as well as make our medical science liaisons and our senior medics at the company available to answer detailed questions about how doctors might interpret the data and based on these data both in respect of highlighting Hepzato was probably the liver-directed therapy to use for most patients, showing its combination therapy with ipi/nivo can be safely utilized. And thirdly, I do believe a number of KOLs believe that the guidelines should be updated, and perhaps even downgrading the role of clinical trials in the guidelines.

So that is another critical way we are going to try to utilize the data. In terms of prioritizing clinical development versus cash flow positive, we have a very healthy balance sheet of over $90,000,000. I do not think there is any need for us to focus on positive cash flow from quarter to quarter. We may go cash flow negative on some quarters, but we think that is the right thing to do for the long-term value of the business. We are not going to chase a perceived optical gain that would simply hinder the long-term value of the company.

John Lawrence Newman: K. Great. Thanks very much.

Operator: Thank you. Our next question comes from the line of Chase Richard Knickerbocker with Craig-Hallum. Please proceed with your question.

Chase Richard Knickerbocker: Good morning. Thanks for taking the questions. Just a quick one to start. As far as commercially, can you give us a sense for the average treatments per patient and kind of an update there? And with that in mind, to that average number of treatments, is it kind of been every six to eight weeks, or are we seeing a little bit longer in the real world? Even more so, how long it is taking a single patient to get to the next treatment? And then on your guide, can you kind of walk us through what it assumes as far as new patient starts?

Because if you use that number that you gave around 0.75, you could theoretically get to a number that can be above $100,000,000. Right? So should we think about it conceptually as a floor? And then have an updated thought as far as cadence of new center adds this year. I realize it can be pretty variable, but just as we think about our models and kind of the pipeline that you have right now I am sorry if I missed it again. And then, Sandra, maybe just last one. Any sort of guidepost that you would be willing to give us just around either kind of R&D spend or kind of EBITDA—same kind of question.

But any sort of help as you kind of think about how you are modeling patient enrollment in your ongoing studies?

Gerard Michel: Average still is for treatments per patient around four. That has changed very little. How long it takes them is more of a decay curve—what is the probability of getting to the next treatment. Any single patient might just get one or up to six. Some are going past six. In terms of the interval between treatments, it is probably stretching out closer to eight than to six. Every site is different. The actual interval is probably seven-point-some-odd at this moment, which is what we saw last year. And with growing sites, that means growing revenue. I do not think it is going to go past eight. I do not think it is going to drop down to six.

It is going to be in that realm. We are assuming, as we said before, that the first two quarters of the year are stronger than the third quarter, and then the fourth quarter rebounds, which is what we saw last year. We think it is prudent to think that as we gain more sites—and we keep the average new patient per site per month consistent with what we saw last year. In other words, the average site does not get incrementally more productive as we add new sites, which is what generally happens. The newer sites take a while to reach their stride on average. I do not think the average productivity will decline.

It will keep steady as we add sites. There are two things that will increase the pace in the back half of the year. That is the addition of more reps—we are going from six to nine regions—as well as we reinvigorated our medical affairs group. We have an expanded team in the field right now. So increased field presence. And then the second thing will be the publication of CHOPIN results. We believe that will take a bit of time to really make its mark, and I think that will be in the back half of the year.

As a function of all of that, we expect more centers being activated in the back half of the year than the front half of the year.

Sandra Pennell: Yeah. So we are expecting R&D to increase by nearly 90% in 2026 over 2025, primarily due to CRC. Now, again, this is dependent on making sure we get those sites open and enrolled. With regards to SG&A, again, we are expecting nearly a 50% increase overall this year, primarily due to the sales and marketing initiatives and the commercial expansion. Q1 alone will probably go up nearly 30% to 40% over Q4, and then more of a healthy growth, maybe 15% each quarter thereafter. Q4, probably flat or modest increase each quarter thereafter. Hopefully, that will give you a little bit more information for your modeling from an expense side.

Chase Richard Knickerbocker: Yes. Thank you, Sandra. Thanks, guys.

Operator: Thank you. Our next question comes from the line of Sudan Naveen Loganathan with Stephens. Please proceed with your question.

Sudan Naveen Loganathan: Hi, thanks, Gerard and Sandra. My first question is around the third quarter. You mentioned kind of having a potential seasonality. But, you know, you guys have a lot of other potential catalysts coming through such as the CHOPIN publication and also the focus on the new regions that you kind of split up the Salesforce. So, you know, is there any catalyst or anything else to kind of rally around for the third quarter that could maybe help mitigate some of this seasonality? Also, maybe even some more site starts coming online that quarter that could potentially help? Is there anything you can kind of give details on?

Gerard Michel: Yeah. I think the one aspect of the seasonality that will always be with us to some extent is physician schedules. At our high-producing sites, they are flat out. They book room time ahead of time, and they fill it with patients. When one or two of those members take time off, they lose capacity, and they generally just treat existing patients. They do not bring on new patients. So for us to kind of counter that effect, we would have to efficiently refer patients to other centers that seem to have capacity, and that is tough to do.

We just think it is prudent despite the fact that we are trying to increase bench strength at these various centers to take that into account and assume it is going to happen again. Are there upsides? Could CHOPIN increase the number of site activations because of CHOPIN? Yeah. That is an upside as well. So, yeah, we are hopeful for upside. I think for now we are just being not overly conservative but reasonably conservative in our guidance.

Sudan Naveen Loganathan: Again, I have to ask it, though, but I appreciate it. Thank you. Alright.

Operator: Thank you. Our next question comes from the line of Charles Wallace with H.C. Wainwright. Please proceed with your question.

Charles Wallace: Hi. This is Charles on for R.K. Thank you for taking my question. You mentioned that the procedure growth and also the site activation may be weighted in the back half. But as you add more patients from these sites, do you expect that the discount will expand from the current 10%? As potentially more 340B patients get added to this mix? And are you still targeting 23.1 treating centers? And then one more question on gross margin. You reached 86% in 2025. Expect to maintain this level in 2026?

Gerard Michel: Yeah. So I think the discount for the 340B is very difficult for us to be precise as to what we think the discount will be. What matters then after that number is the mix—the effective average value per kit that we are getting, the discount off of AMP for ASP. We have modeled 10% for the year, which is a little bit better than we were running close to 12%. It swung closer to 10% in the fourth quarter. Looking forward, we are doing the best we can. We came up with the 10% based on the mix of hospitals that we think will come on board.

Sometimes we do not know until we are ready to ship a product to a hospital. Sometimes it is even after the fact that we find out whether or not they want to claim 340B pricing. Some of them roll on and off the DSH eligibility. That is disproportionate share hospital. And some of them actually choose not to use it because they want to use a different legal entity. So it is highly complex. I think for now, just stick with the 10%. That is what we are modeling.

Sandra Pennell: Yes. We are guiding right now from 84% to 87% in 2026. So I think it is obviously dependent on each quarter’s sales as well as any pricing impacts over this next year, but even potentially hitting close to 90% in 2027 and beyond.

Operator: Perfect. Thank you. Our next question comes from the line of William Maughan with Clear Street. Please proceed with your question.

William Maughan: Hey, good morning and thanks. So with the pricing reset around mid-’25, are you pleased with the amount of volume increase that you feel you have gotten from that expansion into 340B hospitals? And then you have spoken before about one of Hepzato’s major competitors for patients being competitive trials. So can you just comment on anything you have seen from those competitive trials in terms of increasing or finishing enrollment that might leave more patients available to you? Thank you.

Gerard Michel: I think it is impossible for us to state whether or not we are getting increased volume due to 340B pricing. Just as a reminder, it is not that there was an access issue to these hospitals. It was a matter of, you know, how much margin, frankly, would they make for each kit. And, not surprisingly, we will never know. My jokingly say, unless we have a kind of a parallel universe experiment. We just will not know. We simply count the number of patients being recruited by the ongoing trials that we can see listed on clinicaltrials.gov. Thankfully, the IDEA trial, which was a big one, finished enrolling late last year.

Around the second quarter of last year, there was a large expansion of Replimune access trials—sites—as well as Thomas Jefferson on a number of single-center trials at their center, which definitely took some patients out of the mix. So I think we have a steady headwind. It is definitely a bit less than what was ongoing last year.

Operator: Thank you. Our next question comes from the line of Yale Jen with Laidlaw. Please proceed with your question.

Yale Jen: Good morning, and thanks for taking the questions. Just two up here. One of those is the referral development. I appreciate you highlight some of the major efforts in terms of going forward. Would that be more of an emphasis given that will potentially create much more flow of patients from much larger sources?

Gerard Michel: You know, thanks for the question. It has to be because, as we get deeper into the TAM, we are now going to be looking for patients that are, you know, less, let us call it, educated, who are seeking out our sites. To do that, we have to get patients whose doctor—who is likely a doctor who treats cutaneous melanoma—just quickly says, “Hey, ipi/nivo for HLA-A2 negative, or tebentafusp for HLA-A2 positive.” Cutaneous melanoma docs do not refer a lot of patients for liver-directed therapy. It is not first on their mind, important in their normal mixed practice.

We need to get in front of those docs who have patients who are not online looking for the latest and greatest, and to get in front of those docs early, introduce them to a physician at one of our treating centers, educate them on the product so they can offer that option to their patient. So, yeah, it is a critical activity for us to continue to deliver growth.

Yale Jen: Okay. Great. That is very helpful. One other question is that given some of the sites treating patients for quite a while, maybe already been a couple quarters up to now. Do you feel most of those sites are heavily rich, steady state at fewer patients? Or would you be able to deepen the number of patients to be treated over there, or do you feel that, for all those sites, you are pretty much at a steady state at fewer patients?

Gerard Michel: Yeah. There are certain centers—we have a set of centers. I think MGH would be a good example—that for them to do a lot more patients, they are going to have to book more room time and get another team. That would be the dial that has to be turned to increase their capacity. We would love it if they did that. We are ready and willing to help them on the training of the new team members. There are other centers where we have a low share. Think of a narrow set of patients, like no extrahepatic disease, which is not a limiter. It should not be per our label.

Another reason being that the physician is just a believer that cancer is a systemic disease. “I will only treat this patient if they only have hepatic disease.” Clinical trials being one of them. It is usually a mix of reasons. So the first one of those is we will try to impact by changing guidelines, if at all possible, to deemphasize clinical trials. And the second one, we will try to put the data in front of the docs saying, “Look. You can treat these patients with extrahepatic disease with systemic and our product at the same time.” That is an educational component.

So, in some of the higher-volume centers where we have a low share—our high-volume centers—modestly changing training patterns at our lower-share hospitals where there is a high volume, the CHOPIN data, perhaps some changes in the guidelines, all should help us there.

Yale Jen: Maybe the last question here, just squeeze in. I know it is often difficult to predict, but do you feel the NCCN guideline could happen maybe later this year or maybe early next year? Or that is too elusive to predict?

Gerard Michel: The first driver is the expanded MSL force and the expanded Salesforce. In terms of NCCN, they have all been known to have off-cycle meetings. I think this one, the schedule is November. They have all been known to have off-cycle meetings. That is a physician-initiated activity more than a company-initiated activity. All we can do is discuss the available data with the KOLs, share our perspective that perhaps there are some areas of the guidelines that should be modified based on the latest data, and they really need to drive it. We can send notes in—pharma companies requesting or providing information into the guideline committees.

But at the end of the day, it is up to them to drive it. We are hopeful that they will foster the conversation amongst them, but, again, this is more of a physician-initiated activity than a company-initiated activity. Our mission at the company is simple: to improve survival and quality of life for patients with liver metastases by delivering the most effective liver-directed therapy available. None of this progress would be possible without the dedication and hard work of our entire team and the support of our investors who are in many ways part of the team. And I want to thank every one of them. We look forward to sharing our continued momentum with you throughout 2026.

Have a great day.

Operator: This concludes our question and answer session. I would like to turn the floor back over to Gerard Michel for closing comments.

Gerard Michel: Thank you all for joining us today and for your continued support and thoughtful questions.

Operator: This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation and have a wonderful day.

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