Covered Companies

Navidea (NAVB) Note 02-18-14

downloadreportFDA Sets June 16th PDUFA for Lymphoseek® sNDA for Sentinel Lymph Node
NEJM Confirms 10-Year Benefit of Sentinel Lymph Node in Melanoma
Management Expects >50% Market Share Next Year for Lymphoseek®
Europe Incorporates H&N SLN Data to Existing MAA

Download Full 11-Page Note with Important Disclosures: Morning Note 02-18-14 NAVB

FDA Grants Priority Review – June 16th PDUFA: On December 17, 2013, Navidea submitted their Lymphoseek® sNDA (Supplemental New Drug Application) with the FDA for SLN (Sentinel Lymph Node) detection in patients with head and neck cancer, which was also granted FDA Fast Track designation. If approved, Lymphoseek would be the only approved agent for Sentinel Lymph Node detection in these patients. We also believe this would drive additional adoption of Lymphoseek in breast cancer and melanoma which was approved for lymphatic mapping in the U.S. We also note that Navidea Management indicated during their presentation at BIO CEO 2014 on Monday that they expect Lymphoseek® to achieve greater than 50% market share next year which would result in the de facto standard of care.

NEO3-06 Phase III Results
On April 11, 2013, Navidea announced that the interim data from their Phase III clinical trial of Lymphoseek in head and neck squamous cell carcinoma that were so strong that the Data Safety Monitoring Committee (DSMC) recommended the trial be ended early to speed an FDA sNDA submission. The primary endpoint for the NEO3-06 trial was based on the number of subjects with cancer-positive lymph nodes following a multiple level lymph node dissection and required a minimum of 38 patients whose lymph nodes contained pathology-confirmed disease. The results were for 39 patients with cancer-positive lymph nodes and Lymphoseek accurately identified 38 for an overall False Negative Rate (FNR) of 2.56%. This is a particularly strong result considering the goal of the trial was a FNR less than 10%. The results were also statistically significant (p=0.0205). Sensitivity was 97.4% and the Negative Predictive Value was 97.8% yielding an Overall Accuracy of 98.8%. It should also be noted that using Lymphoseek led to the removal of only 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.

Download Full 11-Page Note with Important Disclosures: Morning Note 02-18-14 NAVB

Navidea (NAVB) Note 02-13-14

downloadreportNEJM Confirms Importance of Sentinel Lymph Node in Melanoma
Management Expects >50% Market Share Next Year for Lymphoseek®
Lymphoseek® sNDA Filed – FDA Fast Track – May Get Priority Review
Europe Incorporates H&N SLN Data to Existing MAA

Download Full 11-Page Note with Important Disclosures: Morning Note 02-13-14 NAVB

10-Year Data Confirms Importance of Sentinel Lymph Node Management in Melanoma:

Source: Morton, D. et al “Final Trial Report of Sentinel-Node
Biopsy versus Nodal Observation in Melanoma” N Engl J Med
2014; 370:599-609February 13, 2014DOI: 10.1056/NEJMoa1310460

The New England Journal of Medicine published 10-year follow-up data on the impact of Sentinel Lymph Node biopsy in melanoma patients. 1,000 patients underwent wide excision of the primary melanoma plus sentinel-node biopsy and were compared to 661 patients who underwent wide excision plus postoperative nodal observation. The paper titled “Final Trial Report of Sentinel-Node Biopsy versus Nodal Observation in Melanoma” showed the 10-year disease-free survival rates were significantly improved in the sentinel lymph node biopsy group, as compared with the observation group. Intermediate-thickness melanomas rates were 71.3% versus 64.7% and thick melanomas 50.7% versus 40.5%. Sentinel Node Biopsy-based management also improved the 10-year rate of distant disease–free survival and the 10-year rate of melanoma-specific survival for patients with intermediate-thickness melanomas and nodal metastases. The paper may be accessed at http://www.nejm.org/doi/full/10.1056/NEJMoa1310460 or contact the research analyst above for discussion. We also note that Navidea Management indicated during their presentation at BIO CEO 2014 on Monday that they expect Lymphoseek® to achieve greater than 50% market share next year which would result in the de facto standard of care.

Manocept Platform Development Continues:
Data utilizing compounds Navidea’s new Manocept™ platform in models of rheumatoid arthritis will be presented by Thomas Rosol, DVM, PhD, DACVP from The Ohio State University at a Keystone Symposia on Molecular Cell Biology of Macrophages in Human Disease held, February 9-14 in Santa Fe, NM. The data highlighted the identification of immune-mediated inflammation seen in arthritic elbows and knees of arthritis-affected mice but not in control mice or un-affected joints within arthritic mice.

Source: Rosol T., et al “Imaging of macrophages in immune-mediated inflammatory disease and cartilage
antibody-induced arthritis in mice using Cy3-tilmanocept” Keystone Symposia on Molecular Cell Biology of
Macrophages in Human Disease held, February 9-14 in Santa Fe, NM

Download Full 11-Page Note with Important Disclosures: Morning Note 02-13-14 NAVB

Navidea (NAVB) Note 02-06-14

downloadreportNAV4694 Strong Results in First Cohort for PIIb in MCI
Navidea Continues Lymphoseek Globalization – First Step in Asia
Europe Incorporates H&N SLN Data to Existing MAA
Lymphoseek® sNDA Filed – FDA Fast Track – May Get Priority Review

Download Full 9-Page Note with Important Disclosures: Morning Note 02-06-14 NAVB

Navidea announced strong Phase IIb data for the initial 12 patient cohort using their beta-amyloid imaging agent, NAV4694, in a positron emission tomography (PET) imaging study of subjects with Mild Cognitive Impairment (MCI) at the Alzheimer’s Disease Center at Quincy Medical Center, Quincy, MA. The results indicate that NAV4694 produced high-quality diagnostic images that segregated MCI subjects into two discrete groups, either amyloid-positive or amyloid-negative. The scans for the 12 patients were assessed by two independent readers using a 3-point visual scale. Both raters were in complete agreement on the 3-point scale, with 8 scans highly positive for β-amyloid and 4 scans negative. There were no intermediate ratings or ambiguous cases despite the early-stage characterization of the subjects’ cognitive impairment status. The scans were easy to read and the readers noted a high gray matter relative to white matter signal. Results are expected to be presented at an upcoming scientific conference on Alzheimer’s disease (AD). Navidea also noted that enrollment is expected to accelerate in conjunction with the expanded availability of the NAV4694 tracer following the recent completion of technical transfer activities at PET manufacturing facilities.

Investors should note that while CMS is not fully reimbursing for Amyvid® and Vizamy® as there are no effective treatments for Alzheimer’s Disease yet, Navidea is also pursuing earlier and more accurate differentiation of MCI subjects who are at risk of developing Alzheimer’s disease before clinical dementia has fully developed. According to the Alzheimer’s Association, An estimated 5.4M Americans ages have Alzheimer’s disease in 2012, which includes 5.2M people age 65 and older and 200,000 individuals under age 65 who have early-onset Alzheimer’s. We believe that initial adoption will be in the early-onset patients in which Alzheimer’s must be definitively ruled out.

Reiterating Strong Speculative Buy: Navidea continues progress in placing Lymphoseek on a global scale but such efforts remain below the radar screen on Wall Street. In regard to the CHMP delay in Europe, we believe incorporating all the cancer indications and SLN data into a single MAA, rather than splitting them as in the U.S., will ultimately make sales and marketing in Europe easier with a faster adoption curve than originally anticipated. We continue to believe Navidea remains undervalued with a strong balance sheet as Lymphoseek’s U.S. permanent A-Code for reimbursement went into effect January 1, 2014. Additional catalysts during 2014 are expected to be European launch (with material sales in 2015), sNDA approval in head & neck cancer with a sentinel lymph node claim as well as significant newsflow for NAV4694 in Alzheimer’s disease, NAV5001 in Parkinson’s disease and their new Manocept™ imaging platform. We are reiterating our Strong Speculative Buy rating with a 12-18 month price target of $3.75 based on a 35x multiple on projected fiscal year 2017 EPS and discounted 25% for cumulative risk.

Trial Background
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. More details on the trial design are at: http://clinicaltrials.gov/show/NCT01812213

PHASE II [18F]NAV4694 HUMAN CLINICAL TRIAL PROTOCOL
Title Beta-Amyloid Imaging With [18F]NAV4694 Positron Emission Tomography (PET) in Predicting Progression to Alzheimer’s Disease (AD) in Subjects With Mild Cognitive Impairment (MCI) (NAV4-04)
Purpose To investigate whether [18F]NAV4694 positron emission tomography (PET) scan findings have the ability to distinguish subjects with mild cognitive impairment (MCI) who progress to Alzheimer’s disease (AD) from those who do not.
# of Patients 50 (male and female)
Trial Design Interventional Safety/Efficacy Study, Single Group Assignment, Open Label, Diagnostic
Ages 65 Years Old and Older
Single Arm Intravenous [18F]NAV4694 (8.1mCi) administered once every 18 months
Primary Objective Incidence of Mild Cognitive Impairment Progression to Alzheimer’s Disease (3 years)
Secondary Objectives Incidence of [18F]NAV4694 PET Positive scans at 18 and 36 months compared to baseline
Change in Neurocognitive Test Battery Scores at 6, 12, 18, 24, 30 and 36 months compared to baseline
Change in SUVR (Standardized Uptake Value Ratio) scores at 18 months compared to baseline
Incidence of Adverse Events post baseline (3 years)
Inclusion
Criteria
•Subject has signed informed consent to participate in the study and continues to give willing consent for participation
•Age ≥ 65 years with a diagnosis of MCI
•Educational level of at least 6 years

•Female subjects will not be of child-bearing potential (> 1 year post-menopausal or surgically sterile)

•Availability of a “study partner” who can assist in completing rating scales for the duration of the study

•Cognitive complaints reported by the subject and confirmed by the “study partner”

•Clinical Dementia Rating (CDR) global score = 0.5

•Mini-mental state examination (MMSE) score of 24-28

•Diagnostic and Statistical Manual of Mental Disorders, Version 4, Text Revised (DSM-IV-TR) criteria of dementia not fulfilled

Exclusion
Criteria
•Has been previously enrolled in this study and received the investigational product
•Has participated in a clinical study involving an investigational pharmaceutical product within 30 days prior to screening
•Has received anti-amyloid immunotherapy

•Has exceeded yearly radioactive dose of 30 mSv

•Has a known allergy to the study drug or any of its constituents

•Has a history of alcohol abuse or alcohol dependency in the 3 years prior to study entry, or is an alcoholic or drug addict, as determined by the investigator

•Has ongoing clinically significant (as judged by the investigator), metabolic or any other disease that could currently cause impaired memory (e.g., untreated thyroid disease, vitamin or other nutritional deficiencies, chronic kidney, or liver disease)

•Regular use of psychoactive medications that could affect cognition (e.g., benzodiazepines, sedatives, antipsychotics)

•Has received any contrast material (X-ray, MRI) or radiopharmaceutical within 48 hours prior to, or a therapeutic radiopharmaceutical (e.g., 131I) within 10 days prior to, or any radiopharmaceutical administration within 10 radioactive half-lives prior to the administration of the investigational product or for whom administration of such substances is planned within 7 days after investigational product administration

•History of major recurrent depressive disorder (per DSM-IV-TR) within the last 5 years prior to screening

•Has a brain tumor or other intracranial lesion, a disturbance of cerebral spinal fluid circulation (e.g., normal pressure hydrocephalus), and/or a significant history of head trauma or brain surgery

•Has signs of major cerebrovascular disease, as verified by medical history and/or brain MRI

•Is scheduled for surgery and/or another invasive procedure within the 7 days following investigational product administration

•Has any contraindication to MRI examination, e.g., metal implants, phobia, or cannot undergo an MRI for other reasons such as the inability to lie flat

Locations Qunicy Medical Center, Alzheimer’s Disease Center, Quincy, MA 02169
Investigators Anil Nair, M.D. Quincy Medical Center, Alzheimer’s Disease Center
Cornelia Reininger, MD, PhD, Navidea Biopharmaceuticals
Source: ClinicalTrials.gov NCT01812213

Download Full 9-Page Note with Important Disclosures: Morning Note 02-06-14 NAVB

Echo (ECTE) Note 01-13-14

downloadreportEcho Files for CE Mark in Europe – Expects Limited Launch in EU
Still Waiting on $5 Million Investment from MTIA – March 10th Deadline
Maintaining Neutral – Waiting for Gen2 Development, Testing & FDA

Download Full 4-Page Note with Important Disclosures: Morning Note 01-13-14 ECTE

CE Mark Filed: Echo announced they submitted their European CE Mark Technical File to obtain market approval for its Symphony CGM System in the hospital critical care environment and anticipates receiving CE Marking Q2 2014. Investors should note that the company is expecting a “limited launch” in Europe where reimbursement is typically negotiated on a country by country basis.

Waiting on MTIA $5 Million Investment: While Platinum-Montaur Investment has invested their $5 million per the December 10, 2013 agreement, the $5 million from Medical Technologies Innovation Asia, LTD. (MTIA) and Beijing Sino Tau Shang Pin Tech and Development Corp. (MTIA Affiliate) has been delayed to the governmental currency exchange process in China. As a result, MTIA now has until January 31, 2014 and the MTIA Affiliate now has until March 10, 2014 to make their combined $5 million investments. Echo is not obligated to transfer of any technology or documents to MTIA until Echo receives their $5 million. If Echo can terminate the agreement if the $5 million is not received by March 10th.

Maintaining NEUTRAL: While a CE Mark is certainly helpful in validating the Gen1 Symphony tCGM system, the “limited launch” in Europe will result in low sales revenues. We are maintaining our neutral rating until we see how well management executes in developing and testing the Gen2 product enhancements as well as the initial feedback from the FDA on trial design. We continue to believe in the basic science of the Symphony tCGM system and that it should ultimately be successful. However, the near-term unknowns combined with the anticipated volatility surrounding both the product development, clinical data and future financings prevent us from modeling Echo with any degree of confidence at this time.

Download Full 4-Page Note with Important Disclosures: Morning Note 01-13-14 ECTE

StemCells Inc. (STEM) Note 01-10-14

downloadreportSpinal Cord Enrollment Expands to North America – Completes in Q1
Multiple Shots-On-Goal with Human Trials in Spinal Cord, AMD & PMD
Strong Balance Sheet and With New GMP Facility Coming Online
Alzheimer’s Disease Pre-Clinical Work Funded by CIRM

Download 8-Page Note with Important Disclosures: Morning Note 01-10-14 STEM

Spinal Cord Trial on Track to Complete Enrollment Q1: Today, StemCells Inc. announced that the ninth patient in the ongoing Phase I/II chronic spinal cord injury became the first spinal cord injury patient to be implanted with HuCNS-SC® (purified human neural stem cells) in North America (University of Calgary). The first eight patients were implanted at the University of Balgrist in Zurich, Switzerland and with the additional trial sites in North America, the company expects to complete enrollment of the final three patients (12 total) during Q1 with a controlled Phase II trial expected to commence mid-2014.

Dry AMD Enrollment to Complete Mid-2014: StemCells Inc. indicated that they have implanted 6 of the 18 patients required in their Phase I/II trial for Dry Age-Related Macular Degeneration (Dry AMD) and expected to complete enrollment by mid-2014. 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.

New GMP Manufacturing Facility Coming Online for 2014: StemCells Inc. is bringing their new GMP manufacturing facility in Sunnyvale online to prepare for multiple Phase II trials starting in 2014. The facility allows StemCells Inc. to secure their own supply chain including process development laboratories, manufacturing, QC/QA and documentation systems. They recently received their drug manufacturing license from the state California.

We are reiterating a Strong Speculative Buy with a Price Target of $4.50 as StemCells Inc. continues to be 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. strong management team and strong 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 2018 EPS discounted 50% for cumulative risks in a first-in-class stem cell therapy.

Download 8-Page Note with Important Disclosures: Morning Note 01-10-14 STEM

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