[GRAPHIC OMITTED]
SEND A MESSAGE TO LADD THAT YOU WANT FULL VALUE
FOR YOUR SHARES
June 6, 2006
Dear Fellow Delcath Shareholder:
You may have recently received a shareholder letter and proxy materials
from Laddcap Value Partners LP and its principal Robert Ladd asking you to
support his short-sighted proposal to explore a sale of Delcath Systems and to
withhold support for the qualified independent company directors who stand for
re-election.
YOUR BOARD HAS AN OUTSTANDING TRACK RECORD OF VALUE CREATION
LADD'S SHORT-SIGHTED PROPOSAL DEPRIVES
SHAREHOLDERS OF THE VALUE YOU DESERVE
Your experienced management and Board has a proven record of delivering
results to its shareholders. Over the past approximately three years, the market
value per share of the Company's Common Stock has increased by over 680%, and
with recent fast-track approval and a Special Protocol Assessment and Agreement
from the U.S. Food and Drug Administration ("FDA"), each of which is a
significant step toward final FDA approval, Delcath's future prospects appear
bright and promising. Your Board believes that, if the Company obtains
pre-market approval from 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.
While your Board remains focused on executing on the Company's successful
business strategy that has delivered results to all shareholders, Mr. Ladd
appears to be interested only in realizing short-term profits on his recently
purchased shares. Mr. Ladd's shareholder proposal to retain an investment bank
and put the Company up for sale now, before the Company receives final FDA
approval for its novel technology, will deprive the Company's shareholders of
the potential for substantial increased value in the future over what the
Company is worth today.
In our view, Ladd's short-sighted proposal is simply a tactic to help Ladd
realize a quick profit on his recently purchased shares at the expense of all
Delcath shareholders, so that he can boost the short-term returns of his
under-performing hedge fund.(1) Accordingly, your Board strongly recommends that
you reject Ladd's short-sighted effort to deprive Delcath shareholders of the
full return that they deserve.
----------
(1) The annual return for Mr. Ladd's fund for 2006 through April 2006 was 5.1%,
for all 2005 was -1.7% and for 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. Annual return for S&P SmallCap 600 for 2006
through April 2006 was 12.52%, for all 2005 was 6.65% and for 2004 was
21.59%.
WE ARE COMMITTED TO DOING THE RIGHT THING FOR SHAREHOLDERS
We will pursue all appropriate means to ensure you receive the value you
deserve. The Company's strong capital position, substantial increase in stock
price and recent successful regulatory milestones leave the Company
well-positioned to deliver exciting future results. Your experienced management
and Board will continue to build on its long track record of successful
achievement.
Your Board is unanimous in its belief that Ladd's short-sighted proposal is
not in the best interests of Delcath and its shareholders and welcomes the
opportunity to meet constructively with any shareholder, including Mr. Ladd, to
demonstrate the value inherent in our Company. Despite the fact that meetings
with Mr. Ladd in the past have not been fruitful, the Company remains open to
productive meetings with all shareholders to demonstrate the exciting future
prospects of the Company.
PROTECT THE VALUE OF YOUR INVESTMENT
CONTINUE TO SUPPORT YOUR BOARD
Delcath has a proven track record of delivering results to its shareholders
and has exciting opportunities ahead. You deserve to receive the value of our
successful business strategy by staying the course and continuing to support
your hard-working management and Board. Don't let Ladd squander that
value--which rightfully belongs to you--to realize his self-serving interests.
SUPPORT your Board, vote FOR the Delcath nominees and AGAINST the short-sighted
Ladd shareholder proposal.
In order to ensure that every shareholder has an opportunity to vote his or
her shares, no matter how few or how many shares he or she may own, we are
enclosing an additional proxy card that will allow you to exercise your rights
as a shareholder. Please vote by TELEPHONE or by INTERNET today pursuant to the
instructions enclosed. REMEMBER--every share and every vote counts!
Alternatively, you may SIGN, DATE and MAIL your proxy card in the envelope
provided. If you have any questions, please call MacKenzie Partners, Inc.
toll-free at (800) 322-2885 or collect at (212) 929-5500.
We appreciate your support and will continue to take the appropriate steps
to protect your interests.
Very truly yours,
/s/ M.S. Koly
M.S. Koly
President and Chief Executive Officer
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.