Delcath Systems Inc · PRE 14C · For 8/7/06

Filed On 8/7/06 10:02am ET   ·   SEC File 1-16133   ·   Accession Number 1275927-6-32

Preliminary Proxy Information Statement   ·   Schedule 14C
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: PRE 14C     Press Release Dated August 7, 2006                     5     22K 

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[GRAPHIC OMITTED]                                                               

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
---------------                             ----------------   -----------------

Media Contact:                                                                  
Lewis Goldberg                                                                  
KCSA Worldwide                                                                  
(212) 896-1216                                                                  
lgoldberg@kcsa.com                              FOR IMMEDIATE RELEASE           
------------------                                                              

 DELCATH SYSTEMS ISSUES LETTER TO SHAREHOLDERS

STAMFORD, Conn., August 7, 2006 -- Delcath Systems, Inc. (NASDAQ: DCTH) today   
issued the following letter to shareholders:                                    

DO NOT SIGN ANY BLUE CONSENT CARD SENT TO YOU BY
 LADDCAP VALUE PARTNERS LP

                                              August 7, 2006

Dear fellow Delcath Shareholder:                                                

As you may know, merely three weeks after Laddcap Value Partners LP and its     
principal Robert Ladd agreed to end its attempt to remove all of the directors  
of Delcath Systems, Inc., Laddcap is again seeking to remove your Board of      
Directors. Now, Laddcap is seeking to solicit written consents from Delcath     
shareholders in order to remove your duly-elected Board and replace them with a 
slate of nominees handpicked by Laddcap with suspect qualifications, including  
one nominee who filed for personal bankruptcy and another nominee who served on 
the board of directors of a public company during the period in which that      
company misstated earnings and subsequently filed for bankruptcy.               
Notwithstanding any other issues Laddcap has tried to manufacture to disparage  
Delcath and your Board, we believe Laddcap's actions are driven by a singular   
purpose: to facilitate its own short-term interests and its selfish desire to   
extract a "quick profit" by selling the Company NOW - before the value of       
Delcath's key product can be properly realized.                                 

Your Board believes Laddcap's actions are not in the best interests of the      
Company's shareholders, and we are committed to acting in the best interests of 
all of the Company's shareholders. For the reasons detailed below, we believe   
that your current Board is better positioned than Laddcap's handpicked nominees 
to maximize long-term shareholder value. Based on its experience and familiarity
with the Delcath system, your Board believes that, if the Company obtains       
pre-market approval from the United States Food and Drug Administration (the    
"FDA"), the value of the Company's technology (and therefore the value of the   
Company) will be substantially increased beyond what could reasonably be        
expected to be obtained in a sale of the Company TODAY. You are urged to        
consider the following points carefully.                                        

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Your experienced management and Board have a proven track record of 
delivering results to its shareholders and increasing 
shareholder value 

The Company's results to date speak for themselves. Between May 15, 2003 and    
July 26, 2006 (the last trading day before Laddcap commenced its latest attempt 
to take control of Delcath), the market value of the Company's stock has        
increased by approximately 916%(1). This increase reflects the market's reaction
to the Company's achievements and its steady progress toward FDA approval during
this period. For example, on May 11, 2005, the Company announced that the FDA   
had granted rare fast-track status to Delcath's novel cancer treatment system.  
Subsequently, on February 21, 2006, the Company entered into a Special Protocol 
Assessment and Agreement with the FDA, which allowed the Company to begin active
patient enrollment immediately, representing a significant step toward obtaining
final FDA approval. The Company currently is undertaking its final clinical     
studies on the way to obtaining FDA approval and continues to successfully      
recruit both new patients and new clinical test sites for its Phase III trial.  

Laddcap has neglected to disclose the dubious qualifications
of its handpicked Board nominees

The Company believes that Laddcap's slate of handpicked nominees is less        
concerned about the long-term prospects of the Company and more focused on      
seizing control of, and selling, the Company for a "quick profit" at the        
earliest opportunity. While Laddcap's consent solicitation statement describes  
its proposed slate of nominees as "unaffiliated," your Board believes that all  
of them are ill-suited to run Delcath's business for the long-term and that they
have been handpicked by Laddcap simply to facilitate Laddcap's attempt to force 
an ill-advised sale of the Company.                                             

Mr. Robert Ladd. Laddcap is asking you to elect its principal, Robert Ladd, to  
the Company's Board of Directors. Mr. Ladd has no discernible expertise in      
research and clinical trials and has no discernible experience in the clinical  
field or with medical device or development stage companies. In fact, Mr. Ladd  
appears to lack "any demonstrable experience regarding public companies and/or  
the medical device industry," the exact criticism that Laddcap has of Delcath's 
current directors. Shareholders should understand that, notwithstanding Mr.     
Ladd's purported 20 years of experience in the equities markets and despite the 
fact that Mr. Ladd has approximately 33% of the Laddcap fund invested in        
Delcath's successful stock, the annual return for Mr. Ladd's fund for 2006      
through April 2006 was 5.1%, for all 2005 was -1.7%, and for all 2004 was 0.7%, 
each considerably below the performance of the rest of the market.              

Mr. Jonathan Foltz. Mr. Foltz was, until recently, a consultant to Delcath and  
prior to that an employee for approximately 10 years. On July 27, 2006, the same
day that Laddcap announced its intention to launch a consent solicitation, Mr.  
Foltz abruptly resigned from the Company and appeared on the slate of directors 
handpicked by Laddcap. The Board believes that it cannot be a coincidence that  
the day Mr. Foltz resigns from Delcath he appears as Laddcap's handpicked       
nominee. Yet, Laddcap has not disclosed what arrangements, if any, it has with  
Mr. Foltz.                                                                      

Mr. Paul William Frederick Nicholls. Mr. Nicholls filed for personal bankruptcy 
in 2002. Shareholders should question why Laddcap would propose a nominee, whose
responsibilities will include the oversight of Delcath's finances and business  
affairs, who himself has recently declared personal bankruptcy. In contrast,    
none of Delcath's current directors has ever declared personal bankruptcy.      

-------------------                                                             
(1)  In contrast, the annual return for Mr. Ladd's fund for 2006 through April  
2006 was 5.1%, for all 2005 was -1.7%, and for all 2004 was 0.7%, each
considerably below the performance of the rest of the market. Source: 
     Laddcap Value Partners LP April 2006 update to investors. The annual return
     for S&P SmallCap 600 for 2006 through April 2006 is 12.52% and for all 2005
    was 6.65%. The annual return for S&P SmallCap 600 for all 2004 was 21.59%.

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Mr. Fred S. Zeidman. Mr. Zeidman served as a member of the audit and            
compensation committees of the board of directors of Seitel Corporation during  
the period in which Seitel misstated its earnings for seven quarters and        
subsequently filed for bankruptcy. Mr. Zeidman was named in seven shareholder   
derivative suits stemming from Seitel's aforementioned earnings misstatements   
and eventual bankruptcy.                                                        

Mr. Michael Karpf, M.D. Mr. Karpf was vice provost of the UCLA Hospital System  
from January 1996 until September 2003, during which time the UCLA Hospital     
System's net income dropped from $51 million in 1998 to under $5 million in     
2000. By 2002, despite being the largest University of California medical       
system, UCLA reported net income of only $7.2 million as compared with between  
$29.0 million and $36.5 million for other University of California hospital     
systems. Despite these poor financial results, Mr. Karpf's base salary in 2002  
was $436,600, higher than his counterparts at the other University of California
hospital systems.                                                               

Laddcap's takeover attempt will destabilize the Company and 
its stock price and will result in NO EXPERIENCED 
MANAGEMENT IN PLACE TO RUN THE COMPANY

Mr. Koly and Dr. Herschkowitz have each been associated with Delcath as members 
of the Board for over 15 years and served as officers of Delcath for over seven 
years. Each of Mr. Koly and Dr. Herschkowitz has over 15 years of experience    
interacting with, and guiding products through, the FDA, while, on the other    
hand, Laddcap's handpicked nominees appear to lack any discernible experience   
with the FDA process. Under the guidance of your current Board, Mr. Koly and Dr.
Herschkowitz have led Delcath on a stable, consistent, and deliberate path to   
FDA approval of an effective treatment for liver cancer, developing deep, long  
standing relationships with the National Cancer Institute ("NCI") and           
administrators of the various Delcath trial sites along the way.                

Even Laddcap acknowledges that Mr. Koly and Dr. Herschkowitz are critical to the
continued effective execution of Delcath's business strategy, including         
sheparding Delcath's novel system through the regulatory approval regime, and   
that none of Laddcap's nominees is capable of running the daily affairs of the  
Company. Laddcap's own consent solicitation statement is careful to note "that  
Mr. Ladd, by virtue of this consent solicitation, is not seeking to change the  
current management of Delcath," and that even if the consent solicitation is    
successful, at least in the near-term, "Mr. Koly would remain as the President  
and CEO of Delcath and Dr. Herschkowitz would remain as Delcath's Chief         
Technical Officer."                                                             

This is absolutely not the case. If Laddcap's handpicked nominees succeed in    
taking control of the Board, both Mr. Koly and Dr. Herschkowitz have indicated  
to the Board that they would not remain as employees of Delcath effective       
immediately upon removal of the Board. Mr. Koly and Dr. Herschkowitz both feel  
that at that point, they will no longer have the support and confidence of the  
Board necessary to continue to pursue Delcath's long term business strategy.    
Their departure will leave NO EXPERIENCED MANAGEMENT IN PLACE TO PURSUE THE     
CONTINUED DEVELOPMENT OF THE DELCATH SYSTEM.                                    

Laddcap's business plans for the Company offer nothing new
and reflect a lack of understanding of and experience with the
FDA regulatory process

Your Board believes that unlike your current, experienced management and Board, 
Laddcap and its handpicked nominees do not have a sufficient grasp of Delcath's 
business and the mechanics of its clinical trials to be able to successfully run
your Company once your Board and management depart. The business plans outlined 
by Laddcap in its consent solicitation materials represent either regurgitations
of the Company's current business strategies or, more disturbingly, fundamental 
misunderstandings of the Company's business.                                    

For example, in its consent solicitation statement, Laddcap states that with the
support of the NCI, Laddcap will seek "to establish at least two additional     
sites for Delcath's ongoing Phase III trial using melphalan." What Laddcap fails
to realize is that adding additional sites is not something that can be forced  
upon the NCI. Under the guidance of your current Board, the Company's management
has worked hard to develop long-standing relationships with the NCI and the     
principal investigators and other personnel at potential test sites, and these  
critical relationships likely would disappear upon the departure of the current 
management.                                                                     

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Laddcap's consent solicitation statement further states that its nominees will  
review "whether continuing to devote resources to the Doxorubucin Phase III     
trials undermines the Melphalan Phase III trial treating the same patient       
population." This statement reflects a fundamental misunderstanding of the      
relationship between the two trials. The NCI has no control over the Doxorubucin
trials and the Doxorubucin trials are an effective parallel, not conflicting,   
track that are being used to show the effectiveness of the Delcath system. In   
fact, the Phase I and II Doxorubucin trials have produced compelling results in 
melanoma.                                                                       

DO NOT BE FOOLED
The Company believes that Laddcap's true intention is to seize
control of your Company and facilitate a quick sale of the Company
in order to bolster the returns of Laddcap's underperforming hedge fund 

In its Schedule 13D filed with the SEC on October 17, 2005, Laddcap indicated   
that it may, among other things, "seek to cause the Company to merge with or    
into, consolidate with, transfer all or substantially all of its assets to, or  
otherwise engage in any business combination with, one or more parties.         

On January 5, 2006, Laddcap submitted a shareholder proposal for inclusion in   
the Company's Proxy Statement for its Annual Meeting recommending that the Board
immediately retain the services of a nationally recognized investment banking   
and/or merger advisory firm with expertise in the medical device industry to    
assist the Company in exploring a potential sale to or business combination with
a third party.                                                                  

On June 9, 2006, Laddcap sent a letter to shareholders announcing its engagement
of Glocap Funding LLC ("Glocap") and Fulcrum Global Partners LLC ("Fulcrum") to 
provide a valuation of the Company, which the Company believes was designed to  
facilitate its sale. Laddcap described Glocap and Fulcrum as "investment banking
firms" with "decades of experience," specializing in, among other things,       
"mergers and acquisitions." However, at least one of the firms, Fulcrum, did    
not, in fact, have "decades of experience"; rather, its press releases indicated
that it was formed in 2001 and did not even engage in traditional investment    
banking activities. In fact, on June 6, 2006, one day before Fulcrum issued its 
valuation opinion on the Company, the New York Post reported that Fulcrum had   
"shut its books and resigned from the National Association of Securities        
Dealers." Additionally, since neither Fulcrum nor Glocap requested or were      
provided access to the Company's confidential books and records, the valuations 
prepared by Fulcrum and Glocap are based on incomplete information.             

 Your Board listened to shareholder comments at the Company's 2006
Annual Meeting and has responded with results and new initiatives 

As previously disclosed in press releases issued by the Company on June 27, 2006
and July 17, 2006, the Company has taken concrete steps to address shareholder  
comments received at the Company's 2006 Annual Meeting and will continue to     
carefully consider and respond to any additional comments that it receives.     

 YOUR SUPPORT IS IMPORTANT
Do not sign any BLUE Consent Card sent to you by Laddcap Value Partners LP

If you have any questions, please call MacKenzie Partners, Inc., toll-free at   
(800) 322-2885 or collect at (212) 929-5500.                                    

Thank you in advance for your support.                                          

                              Sincerely,

                                             Samuel Herschkowitz, M.D.
                                         Chairman of the Board

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This letter 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. We undertake no obligation to publicly update or revise these    
forward-looking statements to reflect events or circumstances after the date    
they are made.                                                                  

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, Delcath 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 shareholders, 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.                                                                          

5 

Dates Referenced Herein   and   Documents Incorporated By Reference

				Referenced-On Page
This PRE 14C Filing		Date		First		Last			Other Filings
		5/15/03		2					10QSB, 424B1
		5/11/05		2					8-K
		10/17/05		4					SC 13D
		1/5/06		4					S-3
		2/21/06		2
		6/6/06		4
		6/9/06		4					DFAN14A, 4
		6/27/06		4					8-K
		7/17/06		4					8-K
		7/26/06		2
		7/27/06		2
		8/1/06		5					PREC14A, 4
Filed On / Filed As Of / For The Period Ended		8/7/06		1		5			PRE 14C, 4
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