Covered Companies

StemCells (STEM) Update 05-20-13

downloadreportAdds $10M Cash & $19M CIRM Alzheimer’s Funding
PMD Progressing to PII After Unprecedented Results
HuCNS-SC® Improves Spinal Cord Injury Patients
HuCNS-SC® Trial for Dry AMD Adds New Site

Download Full 30-Page Update Report with Important Disclosures: STEM Update 05-20-13

1.) $19.3M from CIRM For Alzheimer’s Disease: On April 11, 2013 StemCells, Inc. announced the California Institute for Regenerative Medicine (CIRM) will provide approximately $19.3M, as a forgivable loan, to help fund preclinical development and IND-enabling activities of HuCNS-SC for Alzheimer’s disease. The goal of the research will be to file an Investigational New Drug (IND) application with the FDA within four years. According to a RAND study published in The New England Journal of Medicine April 4, 2013, the total U.S. monetary cost of dementia was between $157B billion and $215B with Medicare paying approximately $11B making Alzheimer’s disease more costly to the U.S. than either heart disease or cancer. Investors should also note this comes after 2 failures last year for Alzheimer’s disease drugs, the August 24th failure of Eli Lilly’s (NYSE:LLY) solanezumab and the July 23rd failure of Pfizer (NYSE:PFE) and Johnson & Johnson’s (NYSE:JNJ) bapineuzumab. There remains no adequate treatment for Alzheimer’s disease.

2.) StemCells Inc. Adds More Cash: On April 9, 2013, StemCells Inc. announced that $10M in debt financing from Silicon Valley Bank for general corporate purposes. This results in a pro forma cash balance of $27M at March 31, 2013. The 3-year loan will accrue interest at 6% per year. For the first six months, payments will be interest only and then the loan will be amortized over 30 months with a final $1M payment at the end of the term.

3.) Pelizaeus-Merzbacher Disease (PMD) Moving to Phase II After Unprecedented Results Seen in Phase I: StemCells Inc. has had discussions with global experts and is designing the Phase II clinical trial. They will request a pre-protocol submission meeting with the FDA to finalize the protocol for formal submission. On October 10, 2012, 2 peer-reviewed papers described the successful preclinical animal studies and the successfully completed Phase I human trial using their HuCNS-SC® (purified human neural stem cells) for severe myelination disorders. The human trial results showed 1.) Small but measureable gains in motor and/or cognitive function in 3 of the 4 patients 2.) After 1 year, MRI showed changes compatible with increased myelination in the region of the transplantation and it persisted even after immunosuppression was stopped at 9 months and in fact, progressed over time and 3.) The development of new myelin signals is unprecedented in patients with conatal PMD and is consistent with HuCNS-SC engraftment. (see Pelizaeus-Merzbacher Disease (PMD) Background & Development Program)

4.) Unexpected Improvements in Spinal Cord Injury in Most Severe Patients: On February 12, 2013, StemCells Inc. announced the final 12-month data from the 1st patient cohort (AIS-A) in the Phase I/II clinical trial for chronic spinal cord injury. The results showed that the gains in sensory function observed in 2 of the 3 patients at 6 months persisted for the 12 month period. Of particular note is that 1 patient improved from being classified as a complete injury (AIS-A) to being reclassified as an incomplete injury (AIS-B). The third patient remains stable and the HuCNS-SC® continued to demonstrate a favorable safety profile. StemCells Inc. is now enrolling the 2nd cohort (AIS-B) with incomplete spinal cord injury which represents the 1st time neural stem cells have been transplanted into a patient that still has sensory function below the injury. (see Chronic Spinal Cord Injury Background & Development Program)

5.) Patient Implantation Continues for Dry AMD Phase I/II Trial: StemCells, Inc. management indicated that they have implanted 3 patient with HuCNS-SC® in their Phase I/II trial for Dry Age-Related Macular Degeneration (Dry AMD). They added an additional site, Byers Eye Institute at Stanford, in April 2013 and will be adding more enrollment sites during the year. Investors should note that this first cohort of patients consists of very advanced disease and is focused primarily on safety. The trial is an open-label dose-escalating trial in 16 patients treating their worst eye with a single injection into the space beneath the retina and results evaluated over the course of 12 months. Importantly, 85% of all AMD patients currently have the Dry form and 100% of patients with the more serious Wet form progressed from the initial Dry form. The dry form can also cause vision loss without turning into the wet form. (see Dry Age-Related Macular Degeneration (Dry AMD) Background & Development)

6.) We are reiterating a Strong Speculative Buy with a Price Target of $4.50 as StemCells Inc. has evolved into one of the most advanced players in the stem cell space. StemCells Inc.’s HuCNS-SC® (purified human neural stem cells) have shown unprecedented results in human patients for Pelizaeus-Merzbacher Disease (PMD) and for Complete Thoracic Spinal Cord Injury and both programs are continuing to progress. In addition, the Dry AMD trial is progressing with additional trial sites. CIRM’s $19M funding for HuCNS-SC® in Alzheimer’s Disease validates their research demonstrating for the first time that human neural stem cells can have a significant effect on memory in two different animal models. (see Alzheimer’s Disease Background & Development Program). We believe the StemCells Inc. management team and science continues to be successfully validated. Our Strong Speculative Buy rating and 12-18 month target price of $4.50 is based on 35x estimated 2017 EPS discounted 50% for cumulative risks in a first-in-class stem cell therapy.

Download Full 30-Page Update Report with Important Disclosures: STEM Update 05-20-13

FluoroPharma (FPMI) Update 05-17-13

downloadreportCardioPET PIIa Images Strong in “At-Rest” Patients
BFPET On Track to Initiate PIIb/III by Year-End
Strong M&A Interest in Molecular Imaging Space

Download Full 27-Page Report with Important Disclosures: FPMI Update 05-17-13

Interim Images Strong from CardioPET™ Phase IIa Trial: On February 28, 2013, FluoroPharma released initial images from their ongoing open-label Phase IIa trial in Europe for CardioPET (Trans-9-[18F]-Fluoro-3, 4-Methyleneheptadecanoic Acid or FCPHA) to assess myocardial perfusion and fatty acid uptake in coronary artery disease (CAD) patients. Of particular interest were the very clear and well-defined images from CAD patients at rest (no stress testing). The clear images strongly suggest that FluoroPharma’s CardioPET may have significant value for diagnosing patients who cannot undergo stress-testing. Investors should also note that since CardioPET provides the metabolic component for Cardiac Viability Assessment (CVA), it could be used in combination with FluoroPharma’s BFPET or other blood flow agents in performing CVA. We are expecting the Phase IIa to be completed in Q3 2013 with the Phase IIb to commence shortly afterward. (see CardioPET Phase II Clinical Trial – ONGOING)

BFPET™ Phase IIa Trial on Track – Phase IIb/III to Start by Year-End: On January 3, 2013, FluoroPharma announced that their BFPET™ (18)F-TPP Phase II clinical trial will be conducted at Massachusetts General Hospital) for use in stress-testing for patients with presumptive or proven Cardiac Artery Disease (CAD). We are anticipating data in Q3 2013 in the open label trial, which is designed to assess the safety and diagnostic performance of BFPET. We anticipate this data will support the following Phase IIb/III trial. Investors should note that on November 30, 2012, FluoroPharma announced continued successful results as they received the second round of high-quality images from their Phase Ib investigator-sponsored trial (IST) at the PLA 301 Hospital in Beijing China. The investigator-sponsored trial administers BFPET to patents with Cardiac Artery Disease (CAD) using FluoroPharma’s BFPET imaging agent for measuring cardiovascular blood flow in combination with PET (positron emission tomography) during stress-testing. These images are then compared against images using the stress perfusion imaging Cardiolite® (technetium Tc99m sestamibi) which uses SPECT (single-photon emission computed tomography) which showed a high level of agreement between the angiography, the SPECT and the BFPET images. These results were also consistent with those seen from the first round of images announced on July 26, 2012 and which continues to demonstrate BFPET’s clear diagnostic qualities as well as PET technology’s inherent superior resolution compared to SPECT technology. We believe these results are highly supportive for FluoroPharma’s U.S. Phase IIa and Phase IIb/III human clinical trials as BFPET has the potential for non-invasive diagnostic images with higher specificity than Cardiolite®. (see BFPET Molecular Imaging Agent)

Three “Shots-on-Goal” in Cardiac PET Imaging: FluoroPharma’s BFPET is being developed for use in combination with stress-testing in patients with suspected or proven cardiac artery disease and has the potential to become the cardiac standard of care in institutions with PET/CT imaging scanners. (see BFPET). For patients who are unable to perform exercise cardiac stress-testing, FluoroPharma is developing CardioPET for detecting regions of metabolic insufficiency to diagnose acute and chronic cardiac artery disease. (see CardioPET) Finally, FluoroPharma is developing VasoPET for patients that have already had a heart attack or stroke with the risk of a potentially fatal recurrence. VasoPET detects inflammatory cells and rapidly dividing cells to identify plaque that is likely to rupture and result in a recurring heart attack or stroke. (see VasoPET)

Cardiovascular Disease is the Leading Global Killer: According to the World Health Organization, 7.3M deaths were directly attributable to cardiovascular disease representing 12.8% of all deaths making it the leading cause of death worldwide. In the United States, the situation is even worse with cardiovascular disease being responsible for 32% of all deaths (1 in every 3 deaths) with 11.8% of the U.S. population, or 27.1M people, currently diagnosed with heart disease. (see Coronary Artery Disease CAD)

Better Screening and Diagnostics Needed to Drive Cost-Efficiencies: While other companies are developing drugs and devices to treat cardiovascular disease (see Coronary Artery Disease CAD), FluoroPharma is focused on a pipeline of non-invasive PET imaging agents BFPET, CardioPET and VasoPET that are being developed to more accurately screen and diagnose patients for the most cost-efficient care. With 1 in 3 U.S. adults currently living with cardiovascular disease and 935,000 heart attacks and 795,000 strokes each year, total U.S. direct and indirect costs from cardiovascular disease is almost $300 billion annually. Research has shown that PET imaging is cost-effective for CAD management and can result in a 50% reduction in the use of coronary arteriography and CABG, a 30% reduction in CAD management costs, and excellent short-term patient outcomes, compared with conventional SPECT imaging. (see PET/CT Imaging Scanners)

Attractive Space for M&A: We note that the molecular imaging space has been active for M&A deals such as Eli Lilly’s (NYSE:LLY) acquisition of Avid Radiopharmaceuticals Amyvid™ [18F] florbetapir for Alzheimer’s PET imaging in Q4’10 for $300M in cash and up to an additional $500M for milestones. More recently, Navidea (Nasdaq:NAVB Rating:Strong Speculative Buy) acquired AZD4694 for PET imaging in Alzheimer’s and acquired an option on [123I]-E-IAFCT for SPECT imaging in Parkinson’s. We also note that last year Piramal Healthcare acquired Bayer Pharma AG’s (XETRA:BAYN) [18F] florbetaben for Alzheimer’s PET imaging while Phase III trials were still ongoing. We believe FluoroPhama’s cardiac PET imaging portfolio could make them an attractive M&A or partnering candidate as early as Phase II completion should they show strong clinical results.

Reiterating FluoroPharma with Strong Speculative Buy $2.50 Target: Although FluoroPharma is an early-stage company and will be required to raise funds very soon, we believe savvy investors wanting to get ahead of the curve will find FluoroPharma shares attractive. While currently “under the radar”, we expect their future newsflow in the active molecular imaging space combined with their focus on cardiac PET imaging to bring additional investor attention in the near-future. Our Strong Speculative Buy rating and a 12-18 month price target of $2.50 is based on a 35x multiple on projected fiscal year 2017 EPS and discounted 50% for cumulative risk with an acquisition premium of 20%.

Download Full 27-Page Report with Important Disclosures: FPMI Update 05-17-13

Navidea (NAVB) Update 05-15-13

downloadreportNavidea & Cardinal Health Launch Lymphoseek® in U.S.
Strong Head & Neck Data Could Be Future Game Changer
European Lymphoseek Approval Possible by Year-End
NAV4694 Alzheimer’s & NAV5001 Parkinson’s to PIII

Download Full 36-Page Update Report with Important Disclosures: NAVB Update 05-15-13

Lymphoseek® Launched in U.S.: On May 1, 2013, Navidea launched their first product in the United States, Lymphoseek® (technetium 99m tilmanocept) Injection for patients with breast cancer and melanoma, partnered with Cardinal Health (NYSE:CAH) with a price of $300 per procedure. Investors should note that Cardinal is a very strong marketing partner with over 140 nuclear pharmacies and more than 400 radiopharmacists. As a result, they can reach 99% of the nuclear medicine customers within 3 hours after receiving an order. While Lymphoseek must use CMS A-Code A4641 Radiopharmaceutical, diagnostic, not otherwise classified, Navidea expects to file for a unique pass-through C-Code by the June 1st deadline for an October 1st implementation.

Lymphoseek Head & Neck Cancer Data could be a Game Changer: On April 11, 2013, Navidea announced that the interim data from their Phase III clinical trial of Lymphoseek met the primary endpoint in patients with head and neck squamous cell carcinoma. The interim results showed Lymphoseek accurately identified 38 of 39 cancer-positive lymph nodes for an overall False Negative Rate (FNR) of 2.56% which was statistically significant (p=0.0205). This is a particularly strong result as the goal was an FNR less than 10%. Lymphoseek only required the removal of 4 lymph nodes per patient on average versus an average of 38 lymph nodes per patient in the trial. LymphoSeek has the potential to provide a substantial reduction in lymph-related adverse side-effects for patients with head and neck cancer undergoing sentinel lymph node biopsy. These results were so strong that the Data Safety Monitoring Committee (DSMC) recommended the trial be ended early to speed an FDA filing. We now expect Navidea to use these strong results to make a solid case for expanding the label for Lymphoseek to a sentinel lymph node biopsy claim. Investors should note there are no FDA-approved imaging drugs for sentinel lymph node detection and if granted, Lymphoseek would represent a major game changer in the space.

European Partnership Soon: On December 18, 2012, Navidea announced they filed the European Marketing Authorization Application (MAA) for LymphoSeek® (technetium Tc 99m tilmanocept) injection for intraoperative lymphatic mapping (ILM) not restricted to any particular solid tumor type. The Day 120 EMA comments are due later this quarter and a positive CHMP opinion could come in Q4 2013. We then expect Navidea to announce a partner in Europe soon afterward. Partnerships could also be announced for other countries that accept FDA or EU marketing approvals such as Mexico, Israel, Singapore, Saudi Arabia and the Philippines.

NAV4694 for Alzheimer’s Disease Moving to Late-Stage Trials: Navidea is on track to initiate a late-stage Phase III registration trial for Dementia mid-year. On March 27, 2013, as an adjunct study to the Phase III Dementia trial, Navidea began enrollment of a Phase IIb trial for Mild Cognitive Impairment (MCI) for patients who have earlier stage cognitive impairment and would show utility for NAV4694 to diagnose dementia and cognitive impairment earlier. There is also an ongoing 200-patient Phase IIb, open-label, safety and efficacy study in subjects diagnosed with probable Alzheimer’s disease (AD) compared with similarly aged and young healthy volunteers. (see NAV4694 Alzheimer’s Clinical Trials)

NAV5001 Parkinson’s Disease Also Moving to Late Stage Trials: Navidea is also on track to begin pivotal Phase III studies in Parkinson’s disease (Movement Disorders) this year. On April 3, 2013, Navidea announced that Molecular Neuroimaging’s Investigator-Sponsored Trial (IST) enrolled the first subject in a clinical study to investigate the performance of NAV5001 in Dementia with Lewy Bodies (DLB). The IST is a single center, open-label study to assess the distribution, safety and tolerability of NAV5001 as an agent to evaluate the integrity of the dopamine transporters in the brain, using healthy volunteers. This study is in preparation for the planned company-sponsored Phase IIb study in Dementia with Lewy Bodies (DLB). NAV5001 has a high affinity that can generate clean images quickly, beginning 15 minutes after injection as opposed to waiting periods of 3-6 hours and up to 24 hours as required with other agents. NAV5001 is a fully synthetic molecule, unlike GE’s DaTscan, which is derived from cocoa leaves and regulated by the U.S. Drug Enforcement Agency (DEA). NAV5001 can also be sterilized whereas other agents are provided aseptically so NAV5001 could have important and practical convenience in handling advantages. (see NAV5001 Parkinson’s Imaging Background & Development Program)

Undervalued Shares Represent a Significant Investment Opportunity: We believe the current weakness in Navidea’s share price represents a limited view of Navidea’s true long-term value. With an FDA approval for their first product, LymphoSeek, under their belt and a U.S. launch by marketing partner Cardinal Health (NYSE: CAH) we believe management has proven themselves in getting to products into the market. Looking forward, investors can expect a European partnership announcement and EU approval by year-end as well as progress in expanding LymphoSeek’s label with head & neck data and colon cancer data in the future. In addition, Navidea continues to advancing two additional candidates, NAV4694 in Alzheimer’s disease and NAV5001 in Parkinson’s disease into late-stage Phase III trials during 2013 as well as getting RIGScan back into clinical trials with a humanized MAb. We believe these multiple shots-on-goal represent a significant buying opportunity as we reiterate our Strong Speculative Buy rating and 12-18 month price target of $5.75 based on a 35x multiple on projected fiscal year 2016 EPS and discounted 35% for cumulative risk.

Download Full 36-Page Update Report with Important Disclosures: NAVB Update 05-15-13

Navidea (NAVB) Note 05-01-13

downloadreportNavidea & Cardinal Health Launch Lymphoseek® in U.S.
First Lymph Node Mapping Drug in 30 Years for Breast & Melanoma
Lymphoseek® H&N Very Strong – DSMB Recommends Stopping Trial Early

Download Full 8-Page Note with Important Disclosures: Morning Note 05-01-13 NAVB

NOTE: Navidea will be holding a conference call today at 8:30am Eastern Time Dial-In: (877) 407-8031 International (201) 689-8031

Navidea announced the United States product launch of Lymphoseek® (technetium Tc 99m tilmanocept) Injection by their U.S. partner, Cardinal Health (NYSE:CAH). Cardinal will sell and distribute Lymphoseek to health care professionals through its existing network of nuclear pharmacies. Navidea will support the marketing and educational efforts as well.

Lymphoseek will initially be reimbursed under existing CPT (Current Procedural Terminology) codes priced at $300 per procedure. Navidea will be applying for a specific Lymphoseek CPT code and expects to receive it within few months. Navidea and Cardinal Health will provide information and support to providers and payers to ensure that they can secure formulary status and appropriate payment.

While Lymphoseek is approved for lymphatic mapping procedures for breast cancer and melanoma, we expect Navidea to file an sNDA (Supplemental New Drug Application) in Head & Neck cancer soon based on the NEO3-06 interim trial results. The results were so strong that the Data Safety Monitoring Board (DSMB) recommended stopping the trial early and filing.

Undervalued Shares Represent a Significant Investment Opportunity: We believe the current weakness in Navidea’s share price represents a limited view of Navidea’s true value. With an FDA approval for their first product, LymphoSeek, under their belt and an imminent U.S. launch by marketing partner Cardinal Health (NYSE: CAH) we believe management has proven themselves in getting past the previous PDUFA misses. Looking forward, investors can expect a European partnership announcement and EU approval by year-end as well as progress in expanding LymphoSeek’s label with head & neck data and colon cancer data in the future. In addition, Navidea is advancing two additional candidates, NAV4694 in Alzheimer’s disease and NAV5001 in Parkinson’s disease into late-stage Phase III trials as well as getting RIGScan back into clinical trials with a humanized MAb. We believe these multiple shots-on-goal represent a significant buying opportunity as we reiterate our Strong Speculative Buy rating.

Download Full 8-Page Note with Important Disclosures: Morning Note 05-01-13 NAVB

Navidea (NAVB) Note 04-24-13

downloadreport

Navidea Investor J.P. Morgan Asset Management Adds More Shares

 

Download Full 7-Page Note with Important Disclosures: Morning Note 04-24-13 NAVB

Navidea announced the sale to J.P. Morgan Asset Management and one other institutional investor of 2,100,000 shares at $2.43 per share, representing an at-the-market price, for gross proceeds of approximately $5.1 million. This follows their January 30, 2013 sale to J.P. Morgan Asset Management and one other institutional investor of 1,542,389 shares of common stock at $3.10 per share for gross proceeds of approximately $4.8M.

Undervalued Shares Represent a Significant Investment Opportunity: We believe the current weakness in Navidea’s share price represents a limited view of Navidea’s true value. With an FDA approval for their first product, LymphoSeek, under their belt and an imminent U.S. launch by marketing partner Cardinal Health (NYSE: CAH) we believe management has proven themselves in getting past the previous PDUFA misses. Looking forward, investors can expect a European partnership announcement and EU approval by year-end as well as progress in expanding LymphoSeek’s label with head & neck data and colon cancer data in the future. In addition, Navidea is advancing two additional candidates, NAV4694 in Alzheimer’s disease and NAV5001 in Parkinson’s disease into late-stage Phase III trials as well as getting RIGScan back into clinical trials with a humanized MAb. We believe these multiple shots-on-goal represent a significant buying opportunity as we reiterate our Strong Speculative Buy rating.

Download Full 7-Page Note with Important Disclosures: Morning Note 04-24-13 NAVB

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