This is bad news for Delcath because it sharply decreases the pool of patients eligible for ChemoSat treatment.

There are about 1,300 cases of ocular melanoma diagnosed each year in the U.S., according to the National Cancer Institute. A French study published in 2005 found 10% of ocular melanoma patients develop liver metastases. (Hat tip: @JFMoriarity.)

This implies about 130 eligible patients for Delcath's ChemoSat each year. If Delcath were to treat all these patients, projected ChemoSat revenue would be $2 million to $5 million, depending on the pricing assumption used ($20,000 to $40,000 per patient).

As I said, tiny sales. Irrelevant sales relative to Delcath's $100 million-plus market value.

Even if the 75% of ocular melanoma patients were diagnosed with liver mets, Delcath is still only looking at a $20 million to $40 million revenue opportunity with ChemoSat. Not enough.

Delcath may grow ChemoSat sales eventually by receiving expanded indications from FDA but that will require the company to run clinical trials costing money and time. No guarantees.

Sales of ChemoSat in Europe are minimal because Delcath hasn't been able to nail down reimbursement. On Wednesday, Delcath essentially admitted to investors not to expect significant revenue contribution from Europe when it announced a new $35 million equity financing agreement. This sits on top of a $21.5 million at-the-market equity sales facility already in place. Delcath needs to raise money.

It's entirely possible to see Delcath shares trade higher next year as we approach an expected FDA advisory panel in May or the June 15 FDA approval decision date. We see plenty of bio-pharma stocks "run up" into regulatory events.

But I believe the debate about the market opportunity for ChemoSat has been settled. Critics of the company, including myself, who have long argued ChemoSat sales would be small -- were proven right this week.

Will writes, "What do you think of Teva's ( TEVA) recent investment in Galena Biopharma's ( GALE) NeuVax? I am a Teva long, and all that I know about Galena is from your articles, so it sounds like it's not very promising. But what do you think Teva's business-development people see in NeuVax and what are the detailed terms of this deal? Is it really a bona fide investment/partnership on Teva's part? Or is it basically like a lottery ticket for them tied only to a small region (Israel) where Galena would get tiny royalties if it ever worked out? Based on how much risk is taken on, sometimes these deals reflect a very limited interest in the molecule by the partner, and sometimes a very strong interest. I don't know how to judge them."

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