Schaeffer's Trading Floor Blog

Delcath Systems Devastated by 'Inconclusive' Trial Data

DCTH is down 11% after unveiling less-than-stellar study results

by 9/1/2011 10:26 AM
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Delcath Systems, Inc. (DCTH - 3.67) has taken a major hit today, after the drug company confessed to disappointing trial data. This morning, DCTH admitted that the mid-stage results from the metastatic colorectal cohort of a recent Phase II trial of its chemosaturation system were inconclusive, due to a variety of factors impacting the patient group. However, the firm said "there is a solid clinical and scientific justification to conduct a new Phase II trial," which is expected to occur during the second half of 2012.

DCTH price chartDCTH gapped lower out of the gate this morning, with the shares down roughly 11% at last check. However, today's drop simply continues a longer-term decline for the stock, which has given up nearly 58% of its value so far in 2011. Since late February, DCTH's downtrend has been highlighted by stubborn resistance at its 10-week and 20-week moving averages.

Unfortunately, DCTH looks very vulnerable to potential downgrades in the wake of today's disappointing news. According to Zacks, all five brokerage firms following the stock maintain a "buy" or better rating, leaving plenty of room for downward revisions. During the near term, any negative notes from this bullish group could spark a wave of fresh selling pressure on the shares.

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