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Company Contact: Investor Contacts:
Delcath Systems, Inc. Todd Fromer / Garth Russell
M. S. Koly, Chief Executive Officer KCSA Worldwide
203-323-8668 (212) 896-1215 / (212) 896-1250
www.delcath.com tfromer@kcsa.com / grussell@kcsa.com
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Media Contact:
Lewis Goldberg
KCSA Worldwide
(212) 896-1216
lgoldberg@kcsa.com FOR IMMEDIATE RELEASE
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Delcath Systems Files Securities Lawsuit Against Laddcap
STAMFORD, Conn., August 7, 2006 -- Delcath Systems, Inc. (NASDAQ: DCTH)
announced today that it has filed a securities lawsuit against Laddcap Value
Partners LP and certain related parties (the "Ladd Defendants"). The lawsuit was
filed in U.S. District Court for the District of Columbia on Friday August 4,
2006.
The lawsuit alleges that the Ladd Defendants have made a series of material
misstatements and omissions in violation of the Securities Exchange Act of 1934.
The Ladd Defendants' most recent violations appear in their Schedule 14A
Preliminary Proxy Statement for their proposed consent solicitation
("Preliminary Consent Solicitation"). The Ladd Defendants seek to replace
Delcath's Board of Directors, the Board of a company whose stock has appreciated
916% between May 15, 2003 and July 26, 2006 (the last trading day before Laddcap
commenced its latest attempt to take control of Delcath). The Ladd Defendants
contend that their proposed slate of directors have the "necessary skills,
resources and relevant experience" to create more shareholder value than the
current Board. But what the Ladd Defendants have failed to disclose is that one
of their director nominees, Paul William Frederick Nicholls, filed Chapter 7
personal bankruptcy in 2002. Among other items, Mr. Nicholls amassed credit card
debt of $105,349.75 on nine credit cards, including cards issues by such luxury
retailers as Bloomingdale's, Bergdorf Goodman and Macy's. They failed to
disclose that another nominee, Fred. S. Zeidman, served on the Audit Committee
for Seitel Corporation, a company that restated its financials for seven
quarters and subsequently filed for bankruptcy. The Ladd Defendants failed to
disclose that Mr. Zeidman was named in seven lawsuits arising out of the
restatements. They failed to disclose that Michael Karpf, M.D. sat as Vice
Provost of the UCLA hospital system through its period of financial woes,
necessitating the hiring of an outside firm to ascertain what went wrong. And
certainly, the Ladd Defendants have failed to disclose the abysmal performance
of the Laddcap hedge fund run by Mr. Ladd.
Delcath contends that the Ladd Defendants' Preliminary Consent Solicitation also
misleads shareholders about the true motive of the Ladd Defendants' proposed
consent solicitation - i.e., to force the immediate sale of the Company so that
they can extract a quick profit and boost the short-
term performance of the under-performing Laddcap hedge fund. After nearly a year
of repeated attempts to force a sale of the Company, the Ladd Defendants would
have shareholders believe that they suddenly have a newfound interest in
developing Delcath's long-term business. Delcath's shareholders are entitled to
know the Ladd Defendants' true motives.
Delcath also alleges that the Ladd Defendants have mischaracterized discussions
with the Company in an effort to discredit Delcath's directors. In their
Preliminary Consent Solicitation, the Ladd Defendants profess "surprise" that
Delcath has "rejected" their efforts to "engage in a meaningful dialogue."
Nothing could be further from the truth. Delcath representatives have met or
spoken with Laddcap representatives on a number of occasions over the past year.
Most recently, following the annual shareholder meeting in June 2006, Robert
Ladd, the principal of Laddcap, and M.S. Koly, Delcath's President and CEO, had
what appeared at the time to be a number of constructive calls. During the
calls, Mr. Ladd indicated to Mr. Koly that he no longer wanted to remove Mr.
Koly or Samuel Herschkowitz, M.D., Chairman of Delcath's Board, and was
satisfied with the Company's business plan. In addition, after Delcath announced
its Board's initiative to add two new independent directors, Mr. Koly invited
Mr. Ladd to submit the names and resumes of candidates Laddcap would like to be
considered. Mr. Ladd agreed to do so and also to withdraw Laddcap's demand for a
special shareholder meeting to vote on its proposal to remove Delcath's
directors.
Delcath further alleges that the Ladd Defendants have failed to comply with
their obligation under the federal securities laws to disclose the identity of
and nature of their relationship with persons and entities with whom they are
acting together as a group for the purpose of acquiring, holding, voting or
disposing of Delcath stock. In addition, the Ladd Defendants misrepresented the
experience and independence of banks it used to issue a purportedly
"independent" valuation.
Delcath filed the lawsuit because the Ladd Defendants are attempting to take
control of the Company through a scheme of material misstatements and omissions.
The Ladd Defendants have hidden their real motives, the real qualifications of
their nominees and the real facts behind their so-called "independent"
valuation. Delcath believes that its shareholders are entitled to make decisions
on the future of their Company based on full and accurate information.
Samuel Herschkowitz, M.D., Chairman of the Board of Directors of Delcath, said,
"Delcath is committed to maximizing value for its shareholders and has been
executing on its stated plan to expand the board of directors, generate greater
awareness among investors and accelerate the number of sites participating in
our pivotal Phase III trial. Unfortunately, the recent actions taken by Mr. Ladd
have forced management and the Board of Directors to defend the rights of its
shareholders against Mr. Ladd's deceptive plot to hijack the future of Delcath
Systems in order to save his underperforming hedge fund."
"Less than three weeks after reaching an agreement with Mr. Ladd that resulted
in the withdrawal of his request for a special meeting of shareholders, it is
once again apparent that Mr. Ladd will stop at nothing to achieve his goal of
forcing a premature sale of Delcath Systems, including misleading investors and
violating securities law. It is very disturbing that the Ladd Defendants would
like to replace the board of Delcath with nominee directors who have been
involved in either personal or professional financial problems or dramatic
professional underperformance. Even more disturbing is that the Ladd Defendants
have failed to disclose these relevant facts about their nominees. This lawsuit
sheds light on Mr. Ladd's deceptive tactics and seeks to ensure that
shareholders can cast their votes about the future of Delcath based on the
facts."
Dr. Herschkowitz concluded, "The Delcath management team and Board of Directors
have dedicated many years to the development of the Delcath system and have
helped Delcath to reach a great number of important milestones including
receiving Fast Track status from the FDA, garnering a Special Protocol
Assessment and drawing support from the National Cancer Institute, one of the
elite research centers in the world. The Delcath system, which has shown
promising results, including the ability to prolong life in certain terminally
ill liver cancer patients, constitutes a true breakthrough for the treatment of
liver cancer and represents a multi-billion dollar addressable market. The Board
of Delcath wholeheartedly believes that the ultimate value of the Delcath system
is worth many multiples more upon FDA approval. Attempting to sell Delcath in
the clinical stage would rob shareholders of a rare growth opportunity. We are
hopeful that the actions we have taken against Mr. Ladd and the other defendants
will enable us to level the playing field for investors that have clearly been
misled by Mr. Ladd."
Delcath stockholders are reminded that federal securities laws require that no
written consents may be solicited from you by Laddcap and its representatives
before Laddcap provides you with definitive consent solicitation materials.
Important Additional Information
On August 1, 2006, Laddcap filed a preliminary consent solicitation statement
with the SEC relating to Laddcap's proposal to, among other things, remove the
current Board of Directors and replace them with Laddcap's nominees. In
response, on August 7, 2006, the Company will be filing a preliminary consent
revocation statement on Form PREC14A with the SEC in opposition to Laddcap's
consent solicitation. Delcath shareholders should read the preliminary consent
revocation statement (including any amendments or supplements thereto) when it
is filed with the SEC because it will contain additional information important
to the shareholders' interests in Laddcap's consent solicitation.
The preliminary consent revocation materials on Form PREC14A (when filed), the
definitive consent revocation materials (when filed) and other public filings
made by Delcath with the SEC are available free of charge at the SEC's website
at www.sec.gov. Delcath also will provide a copy of these materials free of
charge upon request to Delcath Systems, Inc., Attention: M. S. Koly, Chief
Executive Officer, (203) 323-8668.
Delcath has engaged MacKenzie Partners, Inc., who may be deemed to be a
participant in the solicitation of Delcath stockholders, to assist in connection
with Delcath's communications with shareholders regarding Laddcap's consent
solicitation. Information regarding the interests of MacKenzie Partners, Inc.
will be contained in the preliminary consent revocation materials (including any
amendments or supplements thereto) when filed. In addition, certain of Delcath's
directors, officers and employees may be deemed to be participants in the
solicitation of Delcath's shareholders. Information regarding the names and
interests of these other persons will be contained in the preliminary consent
revocation materials (including any amendments or supplements thereto) when
filed.
About Delcath Systems, Inc.
Delcath Systems is a developer of isolated perfusion technology for organ or
region-specific delivery of therapeutic agents. The Company's intellectual
property portfolio currently consists of
12 patents on a worldwide basis, including the United States, Europe, Asia and
Canada. For more information, please visit the Company's website,
www.delcath.com.
This release contains forward-looking statements, which are subject to certain
risks and uncertainties that can cause actual results to differ materially from
those described. Factors that may cause such differences include, but are not
limited to, uncertainties relating to our ability to successfully complete Phase
III clinical trials and secure regulatory approval of our current or future
drug-delivery system and uncertainties regarding our ability to obtain financial
and other resources for any research, development and commercialization
activities. These factors, and others, are discussed from time to time in our
filings with the Securities and Exchange Commission. You should not place undue
reliance on these forward-looking statements, which speak only as of the date
they are made. Delcath undertakes no obligation to publicly update or revise
these forward-looking statements to reflect events or circumstances after the
date they are made.
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