SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
DELCATH SYSTEMS, INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
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DELCATH SYSTEMS, INC.
1100 Summer Street
Stamford, Connecticut 06905
(203) 323-8668
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Notice of Special Meeting of Stockholders
To Be Held on January 8, 2003
Notice is hereby given that a Special Meeting of Stockholders of
Delcath Systems, Inc., a Delaware corporation, will be held on Wednesday,
January 8, 2003, at 11:00 a.m. (Eastern Time) at our principal executive
offices, 1100 Summer Street, 3rd Floor Stamford, Connecticut 06905.
At the special meeting, the stockholders will be asked:
1. To vote on a proposed amendment to our certificate of
incorporation to increase the authorized number of
shares of our common stock, par value $0.01 per
share, from 15 million to 35 million; and
2. To transact any other business that may properly come
before the meeting or any postponements or
adjournments thereof.
A proxy statement detailing the matter to be considered at the special
meeting is attached to this Notice. Our Board of Directors has fixed the close
of business on December 3, 2002 as the record date for the determination of
stockholders entitled to notice of and to vote at the special meeting and any
postponements or adjournments thereof. A complete list of the stockholders
entitled to notice of and to vote at the special meeting will be open to the
examination of any of our stockholders upon request during regular business
hours at our offices at 1100 Summer Street, Stamford, Connecticut 06905, for the
ten-day period prior to the special meeting.
You are cordially invited to attend the special meeting. Whether you
plan to attend the special meeting or not, it is important that you promptly
complete, sign, date and return the enclosed proxy card in accordance with the
instructions set forth on the card. This will ensure your proper representation
at the special meeting. Your proxy is revocable in accordance with the
procedures set forth in the proxy statement.
By Order of the Board of Directors
M. S. KOLY
President and Chief Executive Officer
Stamford, Connecticut
December ____, 2002
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DELCATH SYSTEMS, INC.
1100 Summer Street
Stamford, Connecticut 06905
(203) 323-8668
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Proxy Statement
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This proxy statement is being furnished to the stockholders of Delcath
Systems, Inc., a Delaware corporation, in connection with the solicitation of
proxies by and on behalf of our Board of Directors for use at a Special Meeting
of Stockholders to be held at 11:00 a.m. (Eastern Time) on Wednesday, January 8,
2003, at Delcath's principal offices, 1100 Summer Street, 3rd Floor, Stamford,
Connecticut 06905, and any postponements or adjournments thereof. This proxy
statement and the form of proxy are first being mailed to stockholders on or
about December , 2002.
At the special meeting, the stockholders will be asked:
1. To vote on a proposed amendment to our certificate of
incorporation to increase the authorized number of
shares of our common stock, par value $0.01 per
share, from 15 million to 35 million; and
2. To transact any other business that may properly come
before the meeting or any postponements or
adjournments thereof.
VOTING PROCEDURES
Each of M. S. Koly and Samuel Herschkowitz, M.D. are named as proxies
in the enclosed proxy. Mr. Koly is our President, Chief Executive Officer and
Treasurer and is also a member of our Board of Directors. Dr. Herschkowitz is
our Chief Technology Officer of Delcath and is also Chairman of our Board of
Directors. Mr. Koly or Dr. Herschkowitz will vote all shares represented by
properly executed proxies returned in time to be counted at the special meeting.
SOLICITATION OF PROXIES
If the accompanying proxy is properly executed and returned, the
shares of our common stock represented thereby will be voted in accordance with
the instructions specified in the proxy. In the absence of an instruction to the
contrary, such shares will be voted FOR the proposed amendment to our
certification of incorporation to increase the authorized number of shares of
our common stock from 15 million to 35 million.
The Board of Directors is not currently aware of any business to be
acted upon at the special meeting other than as described herein. If, however,
other matters are properly brought before the special meeting or any
adjournments or postponements thereof, Mr. Koly and Dr. Herschkowitz will have
the discretion to vote or act thereon in accordance with their best judgment.
MANNER AND EXPENSE OF SOLICITATION
Solicitation of proxies will be undertaken by our officers and
employees, on behalf of the Board of Directors, by mail, telephone, facsimile,
electronic means and personal contact. All costs thereof will be borne by
Delcath. We shall also make arrangements with brokerage houses, banks and other
custodians, nominees and fiduciaries to forward proxy materials to the
beneficial owners of our common stock and to request authority for the execution
of proxies. We do not expect to retain a firm to assist us in soliciting
proxies. However, if we decide to retain a proxy solicitor, we would pay such
solicitor its customary fee and reimburse it for its out-of-pocket expenses. We
shall reimburse such organizations for their reasonable expenses in connection
therewith.
REVOCATION OF PROXY
Any proxy may be revoked by the person giving it at any time before it
is exercised by (i) attending and voting in person at the special meeting or
(ii) delivering to us (a) a written notice of revocation or (b) a duly executed
proxy relating to the same shares, bearing a date later than the proxy
previously executed. Attendance at the special meeting will not in and of itself
constitute a revocation of a proxy. All written notices of revocation and other
communications with respect to revocation of proxies should be addressed to us
at our principal executive offices and must be received before the taking of
votes at the special meeting.
RECORD DATE; OUTSTANDING SHARES; VOTING AT THE SPECIAL MEETING
Only holders of our common stock of record at the close of business on
December 3, 2002 (the "Record Date") will be entitled to receive notice of and
to vote at the special meeting. At the close of business on the Record Date, we
had outstanding and entitled to vote 4,145,197 shares of common stock. Each of
the shares is entitled to one vote on each matter submitted to stockholders at
the special meeting.
Votes cast by written proxy or in person at the special meeting will
be counted by the persons appointed by the Board of Directors to act as
inspectors of election for the special meeting. Our bylaws provide that the
holders of shares representing a majority of the votes entitled to be cast at
the meeting, present in person or by proxy, will constitute a quorum for the
transaction of business. Shares for which a holder has elected to abstain on a
matter will count for purposes of determining the presence of a quorum. "Broker
non-vote" shares (i.e., shares held in street name which cannot be voted by a
broker on specific matters in the absence of instructions from the beneficial
owner of the shares) will be treated as shares that are present and entitled to
vote for purposes of determining the presence of a quorum. The affirmative vote
of a majority of the shares entitled to vote at the special meeting is required
for approval of the amendment to our certificate of incorporation. Because the
vote required to approve the amendment to our certificate of incorporation is a
majority of the votes entitled to be cast, abstentions and broker non-votes have
the same effect as a vote against approval of the amendment.
PROPOSAL NO. 1
TO APPROVE AN AMENDMENT TO OUR CERTIFICATE OF INCORPORATION TO INCREASE THE
AUTHORIZED NUMBER OF SHARES OF OUR COMMON STOCK FROM 15 MILLION TO 35 MILLION
Under our certificate of incorporation, as currently in effect, we are
authorized to issue up to 15 million shares of common stock. On November 22,
2002 the Board of Directors approved an amendment to our certificate of
incorporation to increase the number of authorized shares to 35 million, subject
to approval by Delcath's stockholders. As of the Record Date, we had 4,145,197
shares of common stock issued and outstanding, 2,572,663 shares of common stock
reserved for future issuance upon exercise of outstanding warrants and options
and 6,717,860 shares reserved for possible issuance under our stockholder rights
agreement. Under our certificate of incorporation, we are also authorized to
issue up to 10 million shares of preferred stock. As of the date hereof, we have
no shares of our preferred stock outstanding. If the proposed amendment to our
certificate of incorporation is approved and becomes effective, the number of
shares of preferred stock we are authorized to issue would remain unchanged at
10 million. The par value of both the common stock and the preferred stock would
also remain unchanged.
Holders of our common stock are entitled to one vote per share on all
matters to be voted on by stockholders and to receive such dividends, if any,
that are declared by the Board of Directors. The common stock has no other
rights and there are no preemptive or sinking fund provisions applicable to the
common stock.
Pursuant to our stockholder rights agreement, rights to purchase
common stock will accompany each additional share of common stock issued prior
to the earliest of the Distribution Date, the Redemption Date and the Final
Expiration Date (as those terms are defined in the stockholder rights
agreement). The stockholder rights agreement also provides that at all times,
Delcath must reserve for issuance that number of shares of common stock that
would be issuable upon the exercise of the right to purchase common stock in
accordance with the terms of the stockholder rights agreement.
Taking into account our outstanding common stock, the shares reserved
for outstanding options and warrants and for additional options that may be
granted under our option plan and the shares reserved for our stockholder rights
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agreement as of the Record Date have approximately 1,564,280 shares of our
common stock that are not issued or reserved for issuance. We are currently
exploring the feasibility of undertaking an underwritten public offering of our
common stock (and warrants to purchase our common stock) with a public offering
price of approximately $3 million (not including the proceeds from the exercise
of any over-allotment option or other rights we might grant in connection
therewith). We are not able to estimate with any certainty the public offering
price. We do not have a sufficient number of authorized but unissued or reserved
for issuance to complete such an offering.
We have filed a registration statement under the Securities Act of
1933 with respect to a proposed public offering. We would use a substantial
portion of the net proceeds of any such offering to pay the expenses of Phase II
and Phase III clinical trials to demonstrate the safety and effectiveness of the
Delcath system in administering chemotherapy agents in treating liver cancer.
Whether and when we might be able to complete a public offering of our
securities will depend on market and other conditions that are not within our
control. In addition, we cannot say what the public offering price might be if
we complete an offering. This proxy statement does not constitute an offer to
sell or the solicitation of an offer to buy any securities. Any offer or sale of
securities will be made only pursuant to a registration statement that has been
filed with the Securities and Exchange Commission. Shares will not be sold and
offers to buy shares will not be accepted prior to the time the registration
statement becomes effective.
Once authorized, the additional shares of common stock may be issued
with approval of the Board of Directors but without further approval of our
stockholders unless stockholder approval is required by applicable law, rule or
regulation. If the proposed amendment becomes effective, it could, under certain
circumstances, have an anti-takeover effect, although that is not its intention.
For example, if we were the subject of a hostile takeover attempt, we could try
to impede the takeover by issuing shares of common stock, thereby diluting the
voting power of the other outstanding shares and increasing the potential cost
of the takeover. The Board of Directors is not aware of any attempt or plan to
acquire control of Delcath, and this proposal is not being presented as an
anti-takeover device.
In the event the stockholders vote in favor of this proposal, we
intend to amend our certificate of incorporation promptly thereafter to provide
for the increase in authorized common stock. If the stockholders do not approve
the amendment, then the number of authorized shares of common stock will remain
at 15 million. In that event, we may not have enough shares of common stock to
issue in connection with the proposed public offering of our securities and the
proposed public offering would not be consummated.
RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board of Directors, which unanimously approved the amendment to
our certificate of incorporation, recommends a vote "FOR" this proposal.
SECURITY OWNERSHIP BY MANAGEMENT AND PRINCIPAL STOCKHOLDERS
The following table sets forth, as of November 15, 2002, certain
information regarding the ownership of our voting securities by (i) each person
who, to our knowledge, beneficially owned more than 5% of our voting securities
outstanding on such date, (ii) each of our directors and executive officers and
(iii) all of our directors and executive officers as a group.
Unless otherwise stated, the address for each person or entity listed
below is c/o Delcath Systems, Inc., 1100 Summer Street, Stamford, Connecticut
06905.
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Directors, Shares Percentage of
Executive Officers Beneficially Common Shares
and 5% Stockholders (1) Owned (2) Outstanding (3)
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M. S. Koly (4) 1,635,348 39.5%
Venkol Trust (5) 1,245,864 30.0%
Samuel Herschkowitz, M.D. (6) 178,074 4.3%
Yenom X Partners (7) 263,446 6.3%
Mark A. Corigliano (8) 28,000 *
Daniel Isdaner (9) 30,500 *
Victor Nevins (10) 31,100 *
Thomas S. Grogan (11) 6,000 *
All directors and executive officers as a group (6 1,909,022 46.0%
persons) (12)
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* Less than 1% of total voting securities
(1) Except as otherwise noted in the footnotes to this table, each person or
entity named in the table has sole voting and investment power with
respect to all shares owned, based on the information provided to use by
the persons or entities named in the table.
(2) Shares of common stock subject to options or warrants exercisable within
60 days of November 15, 2002 are deemed outstanding for computing the
percentage of shares owned by the person or entity holding such options or
warrants.
(3) The percentage of beneficial ownership is calculated on the amount of
outstanding securities (common stock) at November 15, 2002 (4,145,197
common shares) plus, for each such person or entity, any securities that
the person or entity has the right to acquire within 60 days pursuant to
stock options for other rights.
(4) Mr. Koly is a director of Delcath. Includes 78,507 shares held by Mr.
Koly, 19,231 shares held by M. Ted Koly, Mr. Koly's minor son, and
approximately 181,000 shares held by the Venkol Trust in which Mr. Koly
has a pecuniary interest. The figure above also includes the vested
portion (291,746 shares) of stock options to purchase shares of common
stock.
(5) Mr. Koly is the trustee of Venkol Trust and is deemed the beneficial owner
of its shares based on his voting power with respect thereto.
(6) Dr. Herschkowitz is the Chairman of the Board of Directors of Delcath. The
figure above includes 18,238 shares held by Dr. Herschkowitz. The figure
excludes approximately 181,000 shares held by Venkol Trust. The figure
also includes the vested portion (159,836 shares) of options to purchase
shares of common stock.
(7) The figure above represents 243,181 shares owned directly by Yenom X
Partners and 20,265 shares which could be acquired within 60 days upon
exercise of warrants.
(8) Mr. Corigliano is a director of Delcath. The figure above represents
11,500 shares owned directly by him and 1,500 shares issuable upon
exercise of warrants. The figure above also includes the vested portion
(15,000 shares) of stock options to purchase shares of common stock.
(9) Mr. Isdaner is a director of Delcath. The figure above represents 8,000
shares directly owned by him or jointly with his wife and 7,500 shares
issuable upon exercise of warrants. The figure above also includes the
vested portion (15,000 shares) of stock options to purchase shares of
common stock.
(10) Mr. Nevins is a director of Delcath. The figure above represents 10,100
shares owned directly by him and 4,000 shares issuable upon exercise of
warrants. The above figure also represents 1,000 shares owned directly by
his wife and 1,000 shares issuable upon the exercise of warrants. The
figure above also includes the vested portion (15,000 shares) of stock
options to purchase shares of common stock.
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(11) Mr. Grogan is Chief Financial Officer of Delcath. The figure above
represents the vested portion of stock options to purchase shares of
common stock.
(12) The number of shares beneficially owned by all directors and executive
officers as a group includes 502,582 shares of common stock issuable
within 60 days of November 15, 2002 upon exercise of certain stock options
granted to directors and executive officers pursuant to our various stock
option plans and 10,000 shares issuable upon exercise of warrants.
OTHER BUSINESS
The Board of Directors knows of no other items that are likely to be
brought before the special meeting except those that are set forth in the Notice
of Special Meeting of Stockholders. If any other matters properly come before
the special meeting, the persons designated on the enclosed proxy will vote in
accordance with their judgment on such matters.
STOCKHOLDER PROPOSALS
It is contemplated that our next Annual Meeting of Stockholders will
be held on or about May 22, 2003. To be eligible for inclusion in the proxy
statement to be furnished to all stockholders entitled to vote at the next
Annual Meeting, proposals must be addressed to our Secretary and must be
received at our principal executive offices not later than December 4, 2002. In
order to avoid controversy as to the date on which a proposal was received by
us, it is suggested that any stockholder who wishes to submit a proposal submit
such proposal by Certified Mail, Return Receipt Requested.
By Order of the Board of Directors
M. S. KOLY
President and Chief Executive Officer
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Please mark your
A [ X ] votes as in this
Example
FOR AGAINST ABSTAIN THIS PROXY, WHEN PROPERTY EXECUTED, WILL BE
1. Amendment to Certificate of Incorporation [ ] [ ] [ ] VOTED AS DIRECTED. IF NO DIRECTION IS MADE,
to increase the number of authorized shares of THE PROXY WILL BE VOTED FOR THE AMENDMENT TO
common stock to 35 million OUR CERTIFICATE OF INCORPORATION AND, IN THE
CASE OF OTHER MATTERS THAT LEGALLY COME BEFORE
THE MEETING, AS SAID ATTORNEY(S) MAY DEEM ADVISABLE.
PLEASE CHECK HERE IF YOU PLAN TO ATTEND
THE SPECIAL MEETING OF STOCKHOLDERS ON
JANUARY 8, 2003 AT 11:00 A.M. (EASTERN [ ]
TIME) AT OUR PRINCIPAL OFFICES, 1100
SUMMER STREET, 3RD FLOOR, STAMFORD,
CONNECTICUT 06905.
Signature:_________________________ Date:__________ Additional signature(s) if
held jointly:__________________ Date:__________ Important: Please sign exactly
as name appears hereon. Joint owners should each sign. If signing as attorney,
executor, administrator, trustee, guardian or other fiduciary, please indicate
title or capacity in which signed.
DELCATH SYSTEMS, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
SPECIAL MEETING OF STOCKHOLDERS TO BE HELD ON JANUARY 8, 2003
Revoking all prior proxies, the undersigned, a stockholder of DELCATH
SYSTEMS, INC., hereby appoints M. S. Koly and Samuel Herschkowitz, M.D., or
either of them, as attorneys and agents of the undersigned, with full power of
substitution, to vote all of the shares of Delcath's common stock, par value
$0.01 per share, owned by the undersigned at the Special Meeting of the
Stockholders to be held at Delcath's principal offices, 1100 Summer Street, 3rd
Floor, Stamford, Connecticut 06905, on Wednesday, January 8, 2003 at 11:00 a.m.
(Eastern Time) and at any postponements or adjournments thereof, as fully and
effectively as the undersigned could do if personally present and voting, hereby
approving, ratifying and confirming all that said attorney and agent or his
substitute may lawfully do in place of the undersigned as indicated on the
reverse.
IMPORTANT: SIGNATURE REQUIRED ON THE REVERSE SIDE