A Medical Device Daily

Delcath Systems (Stamford, Connecticut), a developer of perfusion technology for delivery of therapeutic agents, reported filing a lawsuit against Laddcap Value Partners and certain related parties in U.S. District Court for the District of Columbia.

The lawsuit alleges that the Ladd defendants have made a series of material omissions and misstatements in violation of securities rules, most recently in a proxy statement for a proposed consent solicitation. It said that the statement omits a variety of negative facts concerning some of the nominees being offered by Ladd.

Delcath contends that the Ladd defendants' preliminary consent solicitation also misleads shareholders about the true motive of the Ladd Defendants' proposed consent solicitation – which is “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.”

Delcath said that “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 also alleges that the Ladd defendants have mischaracterized discussions with the company in an effort to discredit its directors and that “they have failed 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.

“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 (Medical Device Daily, July 12, 2006), 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.”

Samuel Herschkowitz, chairman and chief technical officer of Delcath, said that the company's management and board members “have helped Delcath to reach a great number of important milestones, including receiving Fast Track status from the FDA, garnering a Special Protocol Assessment (MDD, March 3, 2006) and drawing support from the National Cancer Institute (MDD, Jan. 6, 2006) . . . 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 company says that its technology is designed to allow aggressive chemotherapy while preventing the serious side effects that have precluded the use of high-dosage treatments.

In other legalities, SSI Surgical Services (Orlando, Florida) said that it would pursue a breach of contract claim against MSI Surgical Solutions and its affiliate, Empire Investment Holdings (Miami), a private equity investment firm.

SSI said that in June, MSI agreed to acquire SSI's off-site surgical reprocessing division in Syosset, New York (MDD, June 6, 2006), but that it has failed to complete the transaction. SSI has filed suit in Delaware Chancery Court and said it intends to explore alternatives for the division.

MSI has filed a counterclaim.

Chris Tihansky, president/CEO of SSI, said, “During this period of transition, the Syosset division will continue to provide reliable, high-quality services to its customers.”

SSI provides surgical support services to hospitals and ambulatory surgery centers throughout the U.S. including endoscopy management services, SPD staffing and surgical instrument sterilization.