Delcath Systems, Inc. (NASDAQ: DCTH) has had an interesting time in the market as of late. After climbing dramatically, the stock seems to have gotten stuck in a rut over the past couple of weeks. So, what’s the deal? Today, we’ll talk about the good, the bad, the ugly, and the opportunity surrounding DCTH.
The Good With Regard To DCTH
There’s no doubt that Delcath Systems does have some good going for it at the moment. First and foremost, ChemoSat has been approved in Europe. As a result, a treatment that the company created is actually saving lives as we speak. However, that’s not the only bit of good news surrounding the company either.
On top of movement in Europe, DCTH is currently working on multiple clinical trials here in the United States. If these trials go well, as I would imagine that they would considering the European approval, the company will soon be bringing its life-saving cancer treatment to patients in the United States. Of course, if this were to happen, the opportunity to drive revenue, profits, and stock price growth will be tremendous.
The Bad With Regard To Delcath
While there is quite a bit of good when it comes to DCTH, as with just about any other company in the world, this one has made some mistakes. Unfortunately, these mistakes have put the company in a financial position that it needs to find a way to dig its way out of. While the management at the company enjoys exorbitant salaries, the company is struggling to stay afloat financially.
However, this is just one of the many financial mistakes that DCTH has made. The truth is that I’m not knocking them. I own a business of my own, and I’ve made financial mistakes of my own. However, there is a harsh reality that must be faced here, and that brings us to…
The Ugly With Regard To DCTH
Unfortunately, because of the financial mistakes that Delcath Systems has made throughout their years in business, they are stuck between a rock and a hard place. With the amount of authorized shares at the brink, opportunities to tap into funds are becoming more and more difficult to find. Raising funds through the market isn’t working well either. Unfortunately, the stock price is far too low to attract the investors that could make a change here.
So, what we’re left with is a strong possibility of a reverse split. Now, investors do need to approve the split, and many continue to say no. Concerned with high salaries and other financial drags, investors want to see DCTH management figure out how to get out of the pickle they are in.
However, the ugly reality is that, even if management at DCTH decides to reduce their salaries, they are still going to need a reverse split to stay afloat. This will create an opportunity to bring in newer, stronger investors, instead of the penny traders that have been swarming the stock for so long. Look, I love this company and what they are doing in the oncology space, so this is as hard for me as it is for you. But the ugly truth is that without shareholder approval for a split, we’re going to see some very hard times ahead.
Ultimately, there is a ton of opportunity surrounding this stock. While a reverse split isn’t what most people want to see, it could save this company. At the end of the day, the RS isn’t death, it’s an opportunity to bring in money that will bring life into the company.
If there’s not going to be a reverse split, there’s also an opportunity in the idea of an acquisition. While this is a slim possibility at the moment, it is indeed a possibility. Think about it. DCTH is a stock with a relatively small market cap, considering that they already have an approved treatment on the market. Wouldn’t a bigger oncology company want to get their hands on the company’s assets? Of course they would! However, the question is whether or not a company would acquire DCTH given not just its assets, but its financial picture. Nonetheless, this is still a plausible opportunity.
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At the end of the day DCTH has created an incredible treatment, one that’s approved in Europe and likely to become approved in the United States. However, the company also has to survive long enough to see this come to fruition. For that, they need the backing of their shareholders. At the end of the day, I’d like to see Delcath bring the company to success, would you?
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