Delcath Systems, Inc. (DCTH) Earnings Call Transcript & Summary

Greetings, and welcome to the Delcath Systems Business Update Call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, David Hoffman, General Counsel for Delcath Systems. Thank you. You may begin.

Thank you, and welcome to Delcath Systems Business Update Call. With me on the call are Gerard Michel, Chief Executive Officer; Sandra Pennell, Chief Financial Officer; and Vojo Vukovic, Delcath's Chief Medical Officer. In addition, we will share a prerecorded conversation between Dr. Vincent T. Ma, Assistant Professor and Medical Oncologist at the University of Wisconsin's Department of Medicine and Dr. Vukovic. I'd like to begin the call by reading the safe harbor statement. 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. 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. Actual results may differ in a material manner from those expressed or implied in forward-looking statements due to various risks and uncertainties. The preliminary estimated financial results for the quarter ended September 30 of 2025, included in this call have not been reviewed by Delcath's independent auditors and may change as a result of the continued review. Such preliminary results are subject to the finalization of quarter end financial and accounting procedures. 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 subsequently filed 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 knowledge, events or circumstances. Our press release with a summary of the CHOPIN trial results and our press release containing the preliminary 2025 Q3 financial results are available on our website under the Investors section. 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. Now I would like to turn the call over to Gerard Michel. Gerard, please proceed.

Thank you for joining us today to review the CHOPIN trial results and a summary of preliminary third quarter 2025 financial results. Yesterday, Delcath's Chief Medical Officer, Vojo Vukovic, had an opportunity to discuss the CHOPIN trial results with Dr. Vincent Ma, a current user of HEPZATO KIT for the treatment of metastatic uveal melanoma patients. Dr. Ma is an Assistant Professor of Medical Oncologists and the Immuno-Oncologist, Oncology Therapeutics Director of the Phase I program at the University of Wisconsin Carbone Cancer Center. He is a clinical investigator and translational scientists with a research program dedicated to melanoma and advanced cutaneous malignancies, recognized as an emerging national expert in uveal of melanoma. He leads and collaborates on multiple grants, clinical trials and scholarly publications focused on improving outcomes for patients with this disease. Delcath retained Dr. Ma to review the CHOPIN trial results and provide his feedback. Dr. Ma's comments are his own and do not constitute medical advice. Let me first recap the trial results that were presented Saturday by principal investigator and lead author, Professor Ellen Kapiteijn from Leiden University. The CHOPIN trial randomized 76 patients 1:1 to receive PHP alone at weeks 1 and 7 or 4 cycles of ipilimumab and nivolumab every 3 weeks over approximately 9 weeks with 2 PHP treatments at weeks 1 and 7. The trial protocol did not include additional PHP treatments beyond 2 treatments or nivolumab maintenance monotherapy. Once the 9-week treatment period was completed, patients were moderate without further treatment until progression. Key eligibility criteria included unresectable hepatic metastases, with 50% or less unresectable disease and limited extrahepatic disease. The primary endpoint was 1-year progression-free survival. Secondary influence included safety, best overall response rate and overall survival and hepatic progression-free survival. The primary endpoint was met with 1-year progression-free survival of 54.7% in the combination group versus 15.8% in the perfusion group. The combination also significantly improved overall survival, 23.1% versus 19.6 months and best overall response rates, 76.3% versus 39.5%. All of these efficacy advantages were statistically significant. Grade 3 or higher treatment-related adverse events were more frequent in the combination group, 81.6% versus 40.5% but most were manageable with standard care. Interestingly, this rate of adverse events in the combination arm were consistent with those seen in the FOCUS pivotal trial. To better explore the importance of the results, I will now share the prerecorded discussion between Dr. Vukovic and Dr. Ma. I will then discuss the implications of these results for Delcath as well as share preliminary third quarter 2025 financial results and full year guidance and open the floor for questions.

Dr. Ma, thank you for taking the time for speaking today regarding the results from the CHOPIN trial.

Good to be here to discuss these important results.

All right. So Dr. Ma, can you describe at the beginning right now, what's your political practice and your research interest and how they pertain to the CHOPIN trial?

Yes. So just a little bit about myself. So I'm a medical oncologist at the University of Wisconsin, Carbone Cancer Center. And I specialized, particularly in melanoma and advanced cutaneous malignancy but I also -- the immuno-oncology therapeutics lead in our early-phase program. And so about 10% of my practice is actually caring for patients with uveal melanoma. And so one particular research focus of mine is actually understanding the poor prognostic nature of liver mets, particularly in patients treated with immunotherapy. And so my group and I have sort of published several articles over the years and presented several studies on this topic particularly in melanoma. And our group was actually instrumental in opening an early phase clinical trial at the University of Michigan, where I did my training looking at combining liver-directed radiotherapy with immunotherapy to actually help enhance immunotherapy efficacy.

That's really interesting. So this phenomenon, how well documented is the role of liver mets in reducing systemic ipi/nivo or other immune checkpoint inhibitor efficacy. And how large of a clinical problem is it?

Yes, great question. So prior to me joining faculty at the University of Wisconsin, I was actually involved in a variety of translational research at Michigan where we actually correlated liver metastases with worse immunotherapy outcomes. The mechanisms that we propose is that liver mets actually siphons and actually deplete activated CD8 positive T cells from circulation, causing almost a systemic immune desert, sort of diminishing the effects of immune checkpoint inhibitors. And this hypothesis actually translates very well to uveal melanoma, which unlike cutaneous melanoma is considered to be an immunologically cold tumor. And part of the explanation for this may be due to the disease and propensity to metastasize the liver. And so my team and I actually published previously a mets analysis and found that liver mets across all solid tumors actually leads to worse survival outcomes particularly wind treated with immune checkpoint inhibitors. And it continues to be, at this point, an unmet need to identify better or optimal liver-directed therapy strategies for these patients.

Okay. Thank you for this extensive explanation. It's a real clinical problem. Now would you mind describing your experience, specifically with HEPZATO? For example, how many patients have you treated and what type of treatment regimen protocol you utilize in clinical practice?

Yes, absolutely. So at our institution, we actually treated our first patient with HEPZATO or melphalan PHP in March 2024. And really since then, our institution has done over 60 procedures on 15 patients. And I will admit, I was pleasantly surprised to see that nearly all our patients had some degree of liver tumor volume reduction and actually also with very minimal complications. Most patients actually recovered within a week after each PHP treatment, and we're able to continue to work and travel in between cycles. And so at our institution, the typical path of getting patients evaluated is through medical oncology, such as myself. And every newly diagnosed metastatic uveal melanoma patient seen by medical oncology, really the intent here is for the consultation to review all local and systemic therapy options, including clinical trials. And so oftentimes, I go through the eligibility, review the pros and cons of every treatment. And in some cases, we do a multidisciplinary tumor board discussion. After initial consultation, if we determine the patient is fit enough for HEPZATO, patients are then referred to our interventional radiologist, Dr. Orhan Ozkan for the procedure. And really most unique about our institution is the ability to do real-time CT angiography on the day of PHP procedure. So we can actually assess with contrast the anticipated distribution of the melphalan and make minor adjustments with the catheter location, in particular, to optimize drug delivery to the whole liver and tumor.

All right. That's really quite clear. Now with the release of the CHOPIN results, what do you think of the results? And in your opinion, how CHOPIN results impact your practice in the treatment of metastatic uveal melanoma patients?

Yes. It was great to be at the conference yesterday to witness these results, this oral presentation. But yes, I mean, the Phase II results of the CHOPIN trial actually affirms the similar impressively high percentage objective response rate with combination ipi/nivo plus PHP as in their Phase Ib portion of the study, which, I mean, is the highest objective response rate. It was 75% plus seen for any prospective Phase II trial for any uveal melanoma study. And although the trial comparison and interpretation should always be taken with caution as the cohorts are often dissimilar, when we look at the median progression-free survival of other studies, for example, so we see that, for example, for tebentafusp it's 3.3 months, ipilimumab and nivolumab is anywhere from 2.7 to 5.5 months. But what we saw with the ipi/nivo plus PHP, the median PFS was 12.8 months, so impressively numerically higher. And although PFS is an informative endpoint for treatment efficacy, overall survival is also an important patient-centered outcome to take into consideration. And fortunately, as a secondary endpoint, overall survival seem to also favor the combination approach, where Dr. Kapiteijn mentioned a median overall survival of 23.1 months compared to PHP alone, which was much shorter. Now I do think the results of the CHOPIN trial are practice changing and aligns with the scientific rationale for the combination therapy, which is what we had primarily done a lot of research on. And in my opinion, the main challenge with adopting the use of combination ipi/nivo plus PHP is going to be the considerably high rates of grade 3 plus adverse events. But in the presentation, it was reported around 81.6%. But if we compare that to what we also saw in the FOCUS trial, the rates were actually similar at around 80% for patients who were just treated with PHP alone, albeit in the FOCUS trial, they received 6 cycles of therapy of PHP. Now it seems that most of the adverse events were hematologic with the combination therapy per Dr. Kapiteijn, which interestingly enough is not a common immune-mediated adverse event with immune checkpoint inhibitors. I think it would be important to see probably in a future published article, what the non-hematologic and specifically the immune-mediated adverse events were in the combination. And so I think ongoing correlative studies right now are needed to just better understand the underlying immune versus cytotoxic mechanism. But nevertheless, I think based on the presented Phase II CHOPIN trial results, I think the combined use of ipi/nivo and PHP should be at least considered and offered to patients who are eligible and certainly fit enough to receive combination therapy. But I think future consideration should be made to at least evaluate this role of combination regimen in uveal melanoma patients both hepatic as well as extrahepatic disease that is not amenable for definitive therapy, which we can see in this patient population. Notably, I think Dr. Kapiteijn mentioned in the CHOPIN trial that only about 20% to 30% of patients had known extrahepatic disease. But my suspicion is that they probably were presumably definitely treated at the time of trial enrollment.

All right. Thank you for the extensive review of the key highlights and results. Now in the CHOPIN trial per design, patients were treated with only 2 PHP treatment cycles. Do you think that the efficacy of the CHOPIN trial could have been improved if some additional PHP treatments were introduced? And I think the second question is also nivolumab maintenance is often used after ipilimumab induction and that nivo maintenance was not part of the CHOPIN trial. So what are your thoughts around the number of PHP treatment cycles and the nivolumab maintenance question.

Yes, great question and a good follow-up, especially after the presented results. So I would just kind of speak to our own institutional experience that we saw a correlation between the number of PHP treatments with liver tumor volume reduction. We found that most patients can actually tolerate 6 doses or 6 cycles of PHP in some patients and the maximal tumor volume reduction in liver was not seen until after the 6 treatment. So I actually do think that the efficacy could be better achieved with more PHP treatment. But what, of course, would need to be balanced with the toxicity risk, particularly in this case of the hematologic side effects that were reported. Now in the CHOPIN trial, the combination ICI plus PHP arm reported a 80% plus grade 3 plus adverse event rate with numerically higher rates of hematologic side effects compared to PHP alone. But from an institutional experience, we see that these hematologic or cytopenias recovery is often a bit -- that's often slower with successive cycles of PHP. So that's a caution that we have to take into account of if we're thinking of incorporating more of those into a combined modality. Now the question about the nivolumab maintenance, I think, should have probably been incorporated into the combined PHP plus ipi/nivo treatment schema. I think just thinking about some good correlative studies to think about, presented earlier this year at ASCO 2025, the DANTE trial did a comparison between 1 versus 2 years of anti-PD-1-based therapy in advanced stage melanoma subjects. who were treated with 2 years. And what they actually found was that patients who were treated with 2 years had a numerically higher 2-year progression-free survival than a 1-year course of anti-PD-1 therapy. And so it makes sense that from an immunologic and a treatment perspective, more therapy seems to make more sense to provide better durability. But of course, barring any ICI limiting toxicities, I think it's still, generally speaking, considered standard of care to continue nivolumab maintenance therapy after an initial induction of ipi/nivo.

All right. Thank you for these really interesting insights. Now thinking about the potential of synergy between the PHP treatment and the immune checkpoint inhibitor treatment, we've seen really these great results in patients with metastatic uveal melanoma. Now in your opinion, what are the implications for other cancers? Is this concept that we have seen in MUM? Do you think it's feasible to evaluate them to test in other cancer types?

Yes, absolutely. I mean there's something to be said and some conclusions that can be drawn from the CHOPIN trial, which is that the study suggest the importance of aggressive upfront management with a multi-modality therapy. We know a substantial percentage of patients with liver mets regardless of the origin, respond poorly to ICI therapy. We published this. Waiting for patients to progress with ICI before receiving liver-directed therapy or even vice versa is potentially risky. And I will say this, time and time again as a medical oncologist, I see that the driver of morbidity and even mortality comes from liver met progression. It is oftentimes frequently seen as the cause of things like weight loss, cachexia, altered mentation, hypoalbuminemia that leads to edema, coagulopathy. And I think sequencing therapy separately poses a risk to patients of not being eligible for later-line therapies due to declining performance status, whether it's due to disease progression or toxicity. And I think as ICI therapy is, at this point, FDA approved across multiple, if not nearly all solid tumor types, I think understanding effective strategies to overcome ICI resistance from liver mets with earlier introduction of liver-directed therapies such as PHP is a definite ongoing unmet need.

Dr. Ma, thank you again for taking the time to speak with me today about the results from CHOPIN trial and your insights. Again, thank you so much.

Thank you, Vojo Vukovic, and the Delcath team certainly for inviting me to participate in this milestone update call.

As we just heard, these results clearly demonstrate the benefits of treating early with a combination of systemic checkpoint inhibitors, ipilimumab and nivolumab and PHP. The option of this 10-week induction regime may accelerate uptake given some oncologists are uncomfortable postponing systemic treatment. Of equal importance are the potential longer-term implications given the numerous indications such as non-small cell lung cancer and cutaneous melanoma, where ICI therapy or immune checkpoint inhibitor therapy is a mainstay and liver metastases are common. We have already scheduled advisory boards to discuss potential protocols in these and other patient populations. Now turning to our financial results and revised guidance. For Q3, we are reporting preliminary unaudited revenue of $20.5 million, gross margins of 87%, net income of $0.8 million, operating cash flow of approximately $4.8 million and positive adjusted EBITDA of $5.3 million. As of September 30, 2025, the company is preliminarily reporting $88.9 million of cash, cash equivalents and short-term investments. In the third quarter, the effect of the 340B discounts associated with NDRA participation was an approximate 12% decrease in average revenue per HEPZATO Kit. We expect a similar average price level in the fourth quarter. While there was a slowdown in pace of site activations from June to August, we have returned to a more steady pace, activating 4 new sites in the past 2 months. We currently have 24 active sites with Memorial Sloan-Kettering Cancer joining most recently. Interest from major cancer centers remain strong, and we remain confident that it is a case of when rather than if they will become active. We still expect 40 centers to be operational by the end of next year. Historically, our sites have acquired new patients at a rate between 0.4 to 0.7 per month per treating center. In Q3, we observed a marked decrease in the number of new patient starts per site, driven at least partially by seasonality. The process for new patient starts can take 2 months from initial visit to an oncologist and subsequent referrals and treatment. During the late summer, we saw this process disrupted due to scheduling issues. We have seen a rebound in new patient rates from the summer low but the impact of these lost patients will continue through the fourth quarter as new patients drive subsequent retreatments. We are confident, however, that total new patient recruitment will steadily increase as additional sites come online. We are prioritizing working with centers to train additional health care professionals to administer HEPZATO to avoid disruptions due to scheduling conflicts. Most importantly, we believe the CHOPIN data will change this dynamic since patients can quickly start ipi/nivo treatment. I want to stress that we do not believe the decline in revenue for both the quarter and the year reflects physician perspectives regarding the positive effects of treatment with HEPZATO. The feedback from oncologists to use HEPZATO consistently indicates HEPZATO addresses a significant unmet need. We believe there's a meaningful untapped demand for HEPZATO, and we remain focused on finding creative solutions to the distinct challenges that often arise with novel innovative therapies. As a result of the change in the rate of new patient starts, we have decided to lower our guidance to $83 million to $85 million for the total revenue for 2025. Forecast for 2025 gross margins are between 85% and 87% with continued positive non-GAAP adjusted EBITDA and positive cash flow for the rest of the year. The total HEPZATO treatment volume in 2025 is projected to increase by approximately 150% versus 2024. That concludes our prepared remarks. I'd ask the operator to open the phone lines for Q&A. And please note, we will be limiting our financial-related responses to only the information provided during this call and the preliminary financial related release issued on October 18.

[Operator Instructions] Our first question comes from the line of Marie Thibault with BTIG.

Thank you so much for hosting this and also please pass on our thanks to Dr. Ma for his prerecorded comments. Very interesting. I want to ask 2 quick questions here. One on the CHOPIN data and then one on the financials. First, on the CHOPIN data, I want to understand if we could see any sort of real-life impact to adoption of PHP, HEPZATO-PHP as a result of this. In my mind, it sort of points to there could be more interest in a combination therapy by tumor boards or considering a more, I guess, multimodal approach to some of these tumors. And so I wanted to understand if that's something we should come to expect or if there's more clinical work that needs to be done before doctors can be considering that.

Maria, as you might expect, my sampling so far of what docs think of this as maybe n equals 7 to 8 at this conference. The majority of them believe they will adopt this, at least in the U.S., believe they will adopt this regime. And that -- now that's coming from docs who are already using it, to be honest. But I do think it will help across the board for 2 reasons. One, there are an awful lot of docs who just are plain uncomfortable postponing systemics. They've been trained their whole lives that you go off to liver-directed therapy when there's really no other option and you exhaust all lines of systemic therapy. So with those docs now, they can kind of -- I don't know how to put it, have their cake and eat it too and that we can get them started on systemics. They're getting the benefit of that, and they're also getting the liver directed, which is the life-limiting organ for these patients. The second thing is that we definitely lose some patients due to scheduling hassles, especially if the patient is coming from a referral center, getting referred to another oncologist at a treating center and sometimes the duration, they have to get into a -- find an open slot in the IR suite. And sometimes we lose patients because of that. This will give a longer lead time. And I expect, although I don't know this, I expect some docs will work in an extra week or 2 of ipi/nivo as necessary to fit in the PHP. So I think it will help from that angle as well. And then third, there's just simply a lot of docs are very interested in the systemic immunotolerance that's known to occur with liver mets. And I think for those docs, this will be fascinating data and may move the needle with their practice patterns as well.

Okay. It seems like very practical data, very interesting. My follow-up on financials. There was a mention in yesterday's press release or Saturday's press release about discounting under the drug rebate agreement. I wanted to understand how much of an impact that was in Q3 and what's sort of being assumed in Q4 now that we know some of the seasonality is behind you, what's being assumed in the discounting?

Marie, this is Sandra. It's consistent with what we mentioned, I believe, in our previous call in August that the discounts are anywhere from 10% to 15% overall. That's a range we did see in Q3, and we expect to see in Q4 as well.

Yes. So it's basically 50% of the sites of volume basically at 23.1%. And that's how we get to roughly a 12% discount on average per kit.

Our next question comes from the line of John Newman with Canaccord Genuity.

First of all, congrats on really fantastic CHOPIN data, very unexpected to see the magnitude of benefit there. I just had 2 questions this morning. The first one on CHOPIN, you plan on submitting those data for compendia listing in the United States? And if so, what might be the time line? The second question I have is a financial question. Would you say that the impact in the third quarter in terms of the sales decline had more to do with the effect of the 340B discount or the challenges that you noted with scheduling treatments?

Yes. On the first question, Vojo is sitting here next to me. Yes, Vojo is certainly going to be working with KOLs for guidelines. In terms of compendia, generally, the way that works in the U.S. is if it's published in a certain set of journals, which I think this likely will be, it's automatically included in compendia. It's kind of an automatic, as I understand it, effect. So guidelines, yes, compendia, I think if it's in a decent journal, it will have -- it will essentially be on compendia. In terms of the revenue slowdown, there were 3 compounding effects. One is the decline in price, average revenue per kit, which we've discussed exhaustively. The second was the slowdown in -- or frankly, the stoppage for about 2 months plus in new site activation, and that has ended and now we're back to a really good clip, kind of the average clip we were at in the past. And then the last thing was unexpected. It happened very quickly that we saw a very steep drop in new patient enrollment, not the type of drop that you would think to see, hey, we're peaking in revenue. You have to keep in mind that we're talking about, let's call it, roughly 10 new patients a month, okay? And 10 new patients is $7 million revenue swing given our price point over a couple of quarters. So if you get a drop in new patients all of a sudden, you get the law of small numbers. You have -- given the high price, you have a wide swing in revenue. We do believe at least part of that because we saw cancellations and we saw scheduling issues. We do believe part of it was frankly just summer vacations. We have to have 3 health care providers available for these treatments. There really are no backups trained. It's just an issue of REMS. Now we're trying to get backup docs trained. It's not as simple as one would hope but we're working hard to get that done. And then also the referrals, if it's oncologist to oncologist to IR, again, there's somewhere in that longitudinal sequence. If someone's out, it's a lot easier just to put them on a systemic quickly or give the case and those patients are gone. But again, I think as we get a wider base of activated centers, we attempt to train some backup teams. And importantly, CHOPIN, where they can start on a systemic, which really doesn't have any scheduling issues, I think we'll be able to mitigate those effects.

Our next question comes from the line of Sudan Loganathan with Stephens Inc.

This is [ Keith ] on behalf of Sudan. Congrats on the CHOPIN trial data. Got 2 quick questions on my end. So on the seasonality aspect, if you could just provide some more color there and its specific impact on patient starts. And then with your current cash and cash equivalents balance alongside the results from CHOPIN, has your long-term strategy in metastatic colorectal or breast cancer deviated?

Yes. Again, our average new patient starts for this year up until the summer months was 0.4 to 0.7, bouncing around there. So maybe an average of 0.6 new patient starts. And every new patient that starts -- again, that's per site. Every new patient that starts leads to about 4 more treatment -- 3 more treatments down the road. So there's a tail effect to the new patient starts. We went from that range I mentioned a moment ago to about 1/3 of that range all of a sudden for about 2 months, and now it's swung back up again. I cannot definitively say that was 100% due to seasonality. I can definitively say we know of quite a few new patient starts that were canceled due to conflicts. So a subset of them, we certainly saw a signal there. So that's about as much color as I can provide. I frankly shared everything that we've been able to discern from it. Our #1 competitor is still clinical trials. Those are always wax and wane. I don't think that may be a component of it. Other trials, I think the CHOPIN data will help us there. But the most concrete thing I could see was scheduling issues, and that's our theory that at least part of this was due to seasonality. And the second question was -- thank you, Mike, [indiscernible] whether your strategy has changed. The -- no, the strategy hasn't changed at all in terms of the trials for COC and breast. We've got plenty of cash. We're cash flow positive. And a point in fact, we're very eager to have these advisory boards with the likes of non-small cell lung cancer docs, cutaneous melanoma docs and other places where ICI therapy is used to see if it makes sense to use this product earlier and in combination with checkpoint inhibitors.

Our next question comes from the line of Chase Knickerbocker with Craig-Hallum Capital Group.

Gerard, maybe just to start, can we get a little bit more detail on kind of the specifics as far as where you saw that impact on the average patient -- patients per month kind of enrolled into therapy. I mean was it at some specific centers? Was it kind of across the board? Can you just give us a little bit more of a view?

It was across the board. And this isn't a crystal clear explanation. There are some sites such as I'll mention this one, MGH that frankly didn't start new patients because they're full up. They're doing as many as they possibly can fit in with their slot at the IR suite and with the single team they have. So that one kind of swing cycles in and out as new patients start. Other centers just dropped all of a sudden. I don't want to mention names and specific centers, to be honest. But yes, it was quite a few of them all of a sudden just dropped in terms of new patient starts. I've had the reps talk to the oncologists. And again, some of them were -- and the IRs and some of them were just simply scheduling issues. People were away. They couldn't fit them in. They put them on another therapy. So that's about as clear as I can be because that's the limit of our understanding at this moment.

We have a hypothesis on maybe why a seasonal impact would be worse kind of this year relative to kind of -- we kind of didn't see the same kind of sequential utilization trends last year. I get it's much smaller numbers than last year.

Yes, just the growth overwhelmed any signal. I think as simple as that.

Can you share where those average monthly patient starts sits today? Have we seen a full recovery?

I'd say we're about 80% there. The only reason I can't go further than that is, frankly, our visibility into new patient starts is all of about 1 to 2 weeks. These they just pop up on the calendar. So we don't have a long lead time to understand this. But yes, I think it's at least 80% back.

So maybe just confirm that, I guess, average kind of treatments per patient has been consistent as far as, I guess, where does that sit? And then the second piece is if we've seen that recovery, can you kind of speak to your confidence on, call it, looking out a quarter or 2 as we look forward into kind of first half next year, kind of returning to utilization trends that we would expect, call it, 2-plus per month? Because again, I have a little bit of trouble kind of reconciling that Q4, Gerard, with that utilization.

I would say just stay tuned to our fourth -- I mean, our third quarter call, and we'll provide more detail.

Got it. And then just one from CHOPIN. Sorry for all the questions. But can you just help me understand kind of how this will be treated for those physicians that do want to adopt some sort of sequencing with checkpoint. Can you kind of share how you would expect it to be treated by insurers? Would this kind of work within kind of existing guidelines as far as liver-directed therapy today? And then just a little bit more detail on the safety side, if you would, as far as how some of those -- a little bit more detail as far as how those AEs cleared up and if there was a need for any meaningful treatment discontinuation, just a little bit more detail under the hood there.

Yes. Let me start with the second one. I'm going to hand that off to Vojo to talk through the safety profile, the 80% versus 40%, roughly 40%.

Sure, Gerard. So at the ESMO conference, the presentation was quite limited. They didn't share the full extent of the safety data. And that's why my ability to really address things in detail will be also limited. We understand roughly that approximately half of the adverse events reported in the combination are hematological, which is attributed to the PHP treatment. And the other half is immunological, which is attributed to the ipi/nivo combination. We also understand that no new safety signals have emerged, meaning the frequency and the intensity of the adverse events is consistent with historical data. PHP produces roughly the similar hematological toxicity and ipi/nivo produces roughly similar immunological toxicity as reported in previous trials. Also important, there's no overlapping toxicity. So overall, the regimen is acceptably tolerable as stated by the investigator. And we also understand that in terms of discontinuation of treatment, more patients have discontinued because of ipi/nivo than because of PHP. And that's something that is well known ipi/nivo induction treatment is not exactly a very user-friendly treatment. Many patients experience tolerability issues. And again, what we saw here is nothing unusual, nothing that will be different than historical data. So back to you, Gerard.

Yes. And we expect a full publication to come out, hopefully, if not within weeks, 1 or 2 months with all the data. I think the first question was our expectation in terms of how docs will incorporate this into their practice. Is that correct?

Yes, that's correct.

Yes, the insurance coverage. So we have had doctors use this or a very similar treatment regime in a number of centers across the country, and we know they're getting paid. So that's a positive. The second is I am confident this protocol -- these results will be published in a very reputable journal. So that will impact CMS coverage and as well as commercial payer coverage because it will be a solid journal. So combined with the fact that we haven't seen any pushback to date, admittedly, the end might be 10 or 20 patients, but we haven't seen any pushback to date on this, plus the level of journal we expect the publication to come out in. I think we're on solid ground from a reimbursement perspective.

Our next question comes from the line of Yale Jen with Laidlaw & Company.

On very outstanding outcomes. Just got 2 here. First about CHOPIN and the second on the financial side. For the CHOPIN study, do you guys have any reference to think about in terms of the ipi plus nivo compared to what you have learned from the combo study to suggest that this could be -- that the combo will be better than the 2 checkpoint inhibitors combined? And then I have a follow-up.

Sure. So on the ipi/nivo side, there is published data on ipi/nivo [indiscernible] chat about those kind of cross-study comparisons.

Yes. So there are at least 2 prospective, we designed and executed Phase II trials with ipi/nivo in patients with unresectable metastatic uveal melanoma. In those 2 studies, which represent probably the strongest evidence, the response rate of ipi/nivo is in the range of 12% to 18% when it's given as a combination in this patient population. The progression-free survival is roughly 3 months, and the overall survival is typically around 1 year. So that's the historical reference. These are contemporary trials that were published in the last several years. So when you look at the CHOPIN trial, even the control arm, PHP alone achieves better efficacy. And then the combination arm clearly doubles that efficacy, practically speaking. So here, we have a situation where the combination of PHP and ipi/nivo is 1 plus 1 equals 3. And that's why the authors conclude they likely have observed a synergistic effect.

And I'll just add 2 things. One is the reason Professor Kapiteijn at Leiden University made the control arm PHP is simply because she believes for liver-dominant disease, that should be standard of care, not ipi/nivo because the results with ipi/nivo to date have been very weak. It doesn't really do a heck of a lot. The second thing is they just did 2 PHPs. I expect doctors, at least in the U.S. and others, will continue to treat. So theoretically, we should see even better efficacy.

Okay. Great. Maybe I'll just follow up on this point, which is that should -- I mean, I understand it's not a pure apple-to-apple comparison because of the patient population of those prior study versus the CHOPIN. But nevertheless, would this message of that the checkpoint inhibitor alone versus the checkpoint inhibitor plus HEPZATO is actually much better. Would that be a strong push for physicians to really think about putting the combo as a frontline as a starting -- at the beginning of the study, even they may have a little bit time difference between, which one to be administrated.

Yes. So let me -- I think we kind of have to segment the market to talk about which oncologists are we talking about. There's a set of oncologists who just say, "Hey, I want to start with systemic period" And even though the data with ipi/nivo is pretty thin or tebe has very decent data. So whether it's HLA-2 positive or negative, depends on the scenario. But there are set that are just going to say, I'm starting with systemic. So putting aside the HLA-2 positive for a moment and the HLA-2 negative, now they can start with the systemic and move them on to PHP, that helps a tremendous amount with that audience. With the tebe appropriate patients, HLA-2 positive, I think it's going to be a mix. Some docs are going to stick with tebe first and then this might become a second-line option. Other physicians, I was just talking to some a few hours ago are going to postpone tebe. It's a mix. I think probably tebe will still win, jump ball in first line for the time being. Hard to say, time will tell. The other physician segment are docs who really like clinical trials. And I've said before that I think in the HLA-2 negative segment of the market, clinical trials are our largest competitors. I think this data is fairly compelling. I'm hopeful that we will lose less of that. The other -- so that's one patient population in the physician population. An important patient population that we've lost out on a bit are patients with a fair amount of extrahepatic mets. So some docs, just the way the label was written, have said, "Hey, look, if there's any meaningful amount of extrahepatic mets," even though the patients almost never die from extrahepatic mets, they're generally manageable. They often say, well, it's not hepatic only or hepatic dominant or -- and they don't treat with HEPZATO. This is valuable in that now they can do a systemic to treat the extrahepatic mets as well as liver directed. So from that patient subpopulation amongst some docs, it will be valuable as well. So this will be positive for us in a number of different dimensions.

Okay. Great. That's very helpful. And again, congrats on the outstanding data.

Thank you.

Our next question comes from the line of RK with H.C. Wainwright.

I know a lot of my questions have been answered but I'm just trying to triangulate -- I'm just trying to see how CHOPIN can help with some of the seasonality that we are talking about. I know you gave some color but why -- do you think because of the data, the way it is now with CHOPIN, the wait periods during holidays could be handled by whatever you lose on direct HEPZATO could be somewhat neutralized by having patients put on the CHOPIN protocol. Is that how you're thinking about it?

Yes. So RK, what we witnessed in the past, like is that patients who are already on the product who are coming back for their second, their fourth, et cetera, treatment. They might see their treatment pushed around by a few weeks around schedules but we don't lose them. It's the new patient starts, again, it was at least -- that was part of the issue. And again, we think part of this was scheduling in the summer months. And yes, this should definitely help because they'll go on at nivo and I think doctors will be comfortable if they need to prolong the ipi/nivo, they might do so to get the PHP but they're able to start them on something, which I think will be very helpful because, frankly, and it's understandable, patients and physicians, just given the logistical realities of this, sometimes don't want to wait. And now they have a reason -- they have a tool to have some level of flexibility.

Our final question comes from the line of Bill Maughan with Clear Street.

Congrats on the data. So as you talk about potentially having doctors do more HEPZATO treatments or extend nivo, is that something you expect to be sort of on a case-by-case basis and kind of spread by word of mouth? Or do you think it might be in your plans to formally study that at some point? And then my second question is now that this systemic IO plus HEPZATO paradigm has proof of concept, the breast and colorectal programs seem to be far more tangible. So if and when those are successful, in order to accommodate the additional TAM, what does an updated commercial effort look like down the road in terms of site activations or additional treatment centers and train doctors?

Yes. Starting with that second one. I think that it's probably premature to talk about expanding the commercial footprint for those opportunities. Those are Phase II trials. They're down the road. If those Phase III trials read out and there's demand -- organic demand because it's not a label, we would probably expand the medical affairs group because that's the appropriate to do it for off-label usage. So we're -- I think probably -- I don't think there's a meaningful pop anytime in the near future on that front.

Okay. And then on extending nivo or having doctors use more...

Yes. So in terms of that, nivo, I'm pretty certain docs will do maintenance therapy, extend that because that is pretty much standard of care in all the published regimes for both cutaneous and uveal melanoma. So we will continue to see nivo. I also don't think docs are going to let patients progress in the liver and not retreat HEPZATO. And that was pretty much a very consistent set of input we've heard over the last few days. Now with that said, if there is indeed more toxicity with the combination, and there seem to be a signal there, although the combination seem to be what we saw in the FOCUS trial. It was the single arm, the PHP only that seem to -- had a much lower AE rate. But the docs can postpone the PHP until the hematological markers bounce back. And that's kind of what a lot of docs do now. They'll just postpone and wait. So she was trying to stick to a protocol, which is often the case, and it stays -- so they stay very structured and that's compressed -- they have less flexibility.

And if I can just add a comment or 2 to Gerard's points. CHOPIN trial is a European trial and European doctors tend to be somewhat less aggressive when choosing treatments, particularly in first line of cancer patients. So we expect that U.S. doctors will take the learnings from the CHOPIN trial and that is you can safely combine systemic immune checkpoint inhibitors with PHP, and they will probably quite likely expand on that, add additional PHP cycles to achieve better disease control. I mean a number of patients had complete responses in the CHOPIN trial, which is very encouraging for patients and doctors. They will most certainly introduce the nivo maintenance. And because of the less reimbursement issues, they can retreat with PHP and the checkpoint inhibitors if and when patients progress after remission, which was not done in the CHOPIN trial. So I think there's definitely lots of room for additional treatment, improving and optimizing both the safety and tolerability.

Thank you. Ladies and gentlemen, that concludes our question-and-answer session. I'll turn the floor back to Mr. Michel for any final comments.

I just want to say thank you all for listening and most importantly, your continued commitment and belief in our mission. Everyone, have a great day.

Thank you. This concludes today's conference call. You may disconnect your lines at this time. Thank you for your participation.