NEW YORK ( TheStreet) --Questions about the safety of the chemotherapy drug used in Deltcath Systems' ( DCTH) liver-tumor treatment system prompted U.S. regulators to issue a rare refuse-to-file letter, Delcath's chief executive said in an interview Tuesday. Delcath shares fell 38% to $7.01 Tuesday after the company disclosed the U.S. Food and Drug Administration's refusal to accept an approval filing for the company's "chemosaturation system." The Delcath system is a device that isolates the liver from the body's blood supply, allowing doctors to flood the organ with high doses of the approved chemotherapy drug melphalan. Delcath is seeking approval for the system as a treatment for skin cancer patients who have tumors that spread to the liver. Delcath CEO Eamonn Hobbs, in an interview, said FDA "didn't like" the manner in which the company characterized the safety of melphalan as used with the company's chemosaturation system. "The safety question was the linchpin behind the refuse-to-file letter," said Hobbs. "FDA decided it wanted to see our melphalan safety data stand on its own," he added. Melphalan is an old, FDA-approved chemotherapy drug used primarily today to treat multiple myeloma. Delcath filed for approval of its chemosaturation system using a regulatory shortcut known as a 505(b)(2) application, which allows the company to seek approval for a potential new use for melphalan by relying in part on the FDA's existing safety and efficacy findings for melphalan. A 505(b)(2) application can save companies time and money when they're trying to gain approval for new formulations or uses of older, already approved drugs. The strategy can backfire, however, if FDA concludes that the existing safety and efficacy data is insufficient to assuage concerns raised by the drug's new intended use. Hobbs said FDA, in its refuse-to-file letter, did not give any indication that it disagreed with Delcath's decision to seek approval for the chemosaturation system using the 505(b)(2) shortcut. The FDA also, in its refuse-to-file letter, did not ask Delcath to conduct additional clinical trials, he added. However, FDA did request additional safety data related to melphalan and the Delcath system, which the company intends to collect and submit to the agency no later than September, Hobbs said. These updated data will come from a longer follow up of the phase III study of melanoma patients with liver metastases treated with Delcath's chemosaturation system.