Covered Companies

Echo (ECTE) Update 03-31-14

downloadreports Software & Manufacturing Changes Cause Delay
s Critical GEN2 Fixes & Financing Risks Remain
s Maintaining Neutral Rating – Needs Permanent CEO

Download Full 21-Page Update with Important Disclosures: ECTE Update 03-31-14

Cost Reductions Push Timetable Out 3 Months: Echo reduced headcount by approximately 33% and cash burn by 39% in part by outsourcing software development and switching contract manufacturers. As a result, the GEN2 modifications such as algorithm modifications for consistent Prelude microabrasion, warm-up and calibration improvements and sensor correction for IV acetaminophen are slightly delayed. We are now expecting limited European launch in Q1 2015 and initiation of the U.S. FDA clinical trial also in Q1 2015. (see Symphony™ tCGM Milestones & Events)

Restarting CEO Search: Echo is restarting the search for a permanent CEO, which we consider essential for investment in Echo shares. We do not anticipate investors returning with any enthusiasm due to the continued uncertainty surrounding management and the Board until an experienced permanent CEO is named.

Still Waiting on MTIA Funds: On December 10, 2013, Echo announced a 10-year strategic collaboration agreement with Medical Technologies Innovation Asia (MTIA), Ltd., Hong Kong, for a license agreement and $5M equity investment in Echo. However, as of March 26, 2014, Echo has only received $1.9M of the $5M and Echo is not be obligated to commence the transfer of any technology or other documents, product or information to MTIA until the total $5M has been received. (see Partnerships)

Good Data: As a reminder, the results for the tCGM Symphony trial were very good with a MARD of 12.5%, CG-EGA of 98.2% and CG-EGA A+B of 99.4% in 32 patients (18 cardiac/14 non-cardiac) using over 630 glucose readings with a wide range of glucose values 49-324 mg/dL. This was the first controlled clinical trial using all three components of the tCGM Symphony system (Prelude, Biosensor and Wireless Monitor) and the topline data appears to be clinically acceptable. It also met the primary safety objectives as there were no unanticipated adverse events during the study. (see Clinical Trial Results: CE Mark Trial – Gen1)

GEN2 Fixes Are Critical: The current GEN1 tCGM Symphony system requires several fixes to be commercially successfully. These range from minor fixes such as training and user manual operations to minimize variability among users, to significant issues requiring R&D such as an improved algorithm, more consistent Prelude skin ablation and a more consistent warm-up and calibration schedule. Of particular concern, IV acetaminophen (as used in ICU) interfered with the Biosensors and as a result, 3 patients were excluded from the trial. While management believes they have identified a solution, this is a known issue in the field and would hamper the commercial prospects for the Symphony system. Completion of the GEN2 fixes are critical for the pivotal U.S. FDA trial to begin next year.

Maintaining NEUTRAL: We continue to believe in the basic science of the tCGM Symphony system and that it should ultimately be successful. However, the near-term unknowns, especially the need for a permanent CEO, combined with the anticipated volatility surrounding both the product development and the financings prevent us from modeling Echo with any degree of confidence at this time.

Download Full 21-Page Update with Important Disclosures: ECTE Update 03-31-14

StemCells Inc. (STEM) Update 03-24-14

downloadreports StemCells Inc. to Begin 2 Controlled Phase II Trials
s Next Steps: Cervical Spinal Cord Injury and Dry AMD
s New cGMP Facility Online and Fully Operational
s Alzheimer’s IND Filing Expected 2016 – A Year Early

Download Full 33-Page Update Report with Important Disclosures: STEM Update 03-24-14

Phase I/II Trial in Thoracic Spinal Cord Injury – Enrollment Completes This Month: StemCells Inc. stated that 11 of the 12 required patients have been transplanted in the Thoracic Spinal Cord Injury trial and the company is targeting to complete enrollment in the current trial by March 31, 2014 with final data expected in 2015. StemCells Inc. has already announced the final 12-month data from the 1st patient cohort (AIS-A) showing that the gains in sensory function observed in 2 of the 3 patients at 6 months persisted for the 12 month period plus an unexpected improvement in 1 patient classified as a complete injury (AIS-A) to being reclassified as an incomplete injury (AIS-B).

Controlled Phase II with Cervical Spinal Cord Injury to Begin: In Late-2013, StemCells Inc. received FDA authorization for a controlled Phase II trial including cervical spinal cord injury patients, which represents approximately 60% of all traumatic spinal cord injuries. The trial is expected to begin mid-2014 and complete enrollment in 2015.

Phase I/II in Dry Age-Related Macular Degeneration (Dry AMD) – Enrollment Completing Soon: On March 12, 2014, StemCells, Inc. management indicated that they completed implantation in the 1st cohort of 8 patients (20/400 vision, 4 patients receiving 200,000 cells and 4 patient receiving 1 million cells) in their Phase I/II trial for Dry Age-Related Macular Degeneration (Dry AMD) with interim cohort data expected later this year. StemCells Inc. expects to complete enrollment in the 2nd (final) cohort of 8 patients receiving 1 million cells by mid-2014 as they expand from four sites to a total of five sites.

Controlled Phase II in Dry Age-Related Macular Degeneration (Dry AMD to Begin: Subsequent to enrollment of the 2nd cohort in the Phase I/II Dry AMD trial, StemCells Inc. stated that they expect to initiate a controlled Phase II efficacy proof-of-concept study by year-end 2014 with enrollment completing in 2015. Investors should note that 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.

Alzheimer’s Disease IND Moved Up One Year: StemCells Inc. announced that they intend to file an IND for Alzheimer’s Disease in 2016, a year earlier than expected. The current preclinical work is being funded with a $19.3M forgivable loan from the California Institute for Regenerative Medicine (CIRM).

Next Step for PMD Pushed Back: In December 2013, StemCells Inc. had a pre-protocol submission meeting with the FDA and received guidance on a Phase II trial protocol for formal submission. However, due to new Phase II trials in both Chronic Spinal Cord Injury and Dry AMD expecting to commence during 2014, a Phase II trial for PMD will likely be deferred due to resource constraints.

New cGMP Manufacturing Facility Now Online: StemCells Inc. announced that they are now fully self-sufficient for their manufacturing requirement of the Phase II trials with their new cGMP manufacturing facility in Sunnyvale. The facility allows StemCells Inc. to secure their own supply chain including process development laboratories, manufacturing, QC/QA and documentation systems.

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 already shown unprecedented results in human patients for Pelizaeus-Merzbacher Disease (PMD) and for Complete Thoracic Spinal Cord Injury. The company is now progressing with controlled Phase II trials in Cervical Spinal Cord Injury and Dry Age-Related Macular Degeneration (Dry AMD) and they are also expecting to file an IND for Alzheimer’s Disease a year early in 2016 with preclinical funding via a forgivable loan of $19.3M from the California Institute for Regenerative Medicine (CIRM). With their new cGMP manufacturing facility fully operational and a strong management team unlocking the value of HuCNS-SC’s strong science, we believe StemCells Inc. has emerged as a cutting-edge stem cell company with a focus toward commercialization for large unmet medical needs. Our Strong Speculative Buy rating and 12-18 month target price of $4.50 is based on 35x estimated 2020 EPS discounted 50% for cumulative risks in a first-in-class stem cell therapy.

Download Full 33-Page Update Report with Important Disclosures: STEM Update 03-24-14

Navidea (NAVB) Update 03-20-14

downloadreports CHMP Reviews Breast & Melanoma – H&N Review Next
s Multiple Near-Term Catalysts for Lymphoseek®
s >50% Market Share Expected Next Year for Lymphoseek
s Alzheimer’s, Parkinson’s, Manocept™ Under the Radar

Download Full 41-Page Update Report with Important Disclosures: NAVB Update 3-20-14

Successful EU CHMP Meeting on Breast & Melanoma But Running Behind on H&N: Yesterday, the meeting of the European Committee for Medicinal Products for Human Use (CHMP) focused only on Lymphoseek in breast cancer and melanoma (the initial MAA filing) and Navidea believes CHMP found the safety and efficacy of Lymphoseek acceptable. CHMP will now focus on Head & Neck cancer and other items specific to Europe. We are now anticipating CHMP recommendation in July with full EMA approval early-Q4. There is no impact to our financial model as EU sales commence in 2015.

Lymphoseek Catalyst #1 – June 16th: On February 18, 2014, the FDA granted the sNDA for SLN (Sentinel Lymph Node) detection in patients with head and neck cancer a Priority Review status with a PDUFA decision date of June 16th. 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.

Lymphoseek Catalyst #2 – July: We are anticipating a European Committee for Medicinal Products for Human Use (CHMP) recommendation for approval to cover at a minimum, breast cancer, melanoma and head & neck cancer with sentinel lymph node detection. Investors should further note that it is possible Lymphoseek will be recommended for intraoperative lymphatic mapping not restricted to any particular solid tumor type.

Lymphoseek Catalyst #3 – October 16th: On March 5, 2014, the FDA accepted for review an additional sNDA (Supplemental New Drug Application) for Lymphoseek with a standard review PDUFA data of October 16, 2014 for expanding label claims to include lymphoscintigraphy (sentinel lymph node mapping) and flexible procedure timing allowing for up to 2-days post-injection of Lymphoseek.

Lymphoseek Catalyst #4 – October: We expect the European Medicines Agency (EMA) to follow the Committee for Medicinal Products for Human Use (CHMP) recommendation and grant full European approval to Lymphoseek.

Lymphoseek Catalyst #5 – Q4: We are expecting data from Navidea’s post-marketing head-to-head trial comparing injection site pain using Lymphoseek versus sulfur colloid in breast cancer patients. We believe Lymphoseek may result in less patient pain. Investors should note that out of 542 Lymphoseek patients in Phase III trials, only 1 patient reported pain and only 3 patients reported site irritation.

Under the Radar #1 – NAV4694: We believe Navidea’s development program for NAV4694 for Alzheimer’s Disease imaging remains under the radar on Wall Street. NAV4694 is currently in a late-stage Phase III trial for dementia. In addition, a Phase II trial for mild cognitive impairment (MCI) is also underway which we expect to see additional interim data later this year. We note that a blood test panel of 10 lipids claiming to predict Alzheimer’s disease recently received national media coverage. Investors should note that a.) it was not accurate enough for use as a screening test and b.) it would still require follow-up with a more definitive diagnostic such as NAV4694.

Under the Radar #2 – NAV5001: Navidea’s NAV5001 for Parkinson’s Disease imaging is currently enrolling 2 late-stage Phase III trials including a head-to-head trial against GE’s DaTscan along with a Phase II trial for Dementia with Lewy Bodies (DLB). We believe this late-stage candidate is also below the radar on Wall Street.

Under the Radar #3 – NAV1800: Navidea’s humanized NAV1800 RIGS tumor-specific radiolabeled, monoclonal antibody (MAb) anti-TAG-72 imaging agent is expected to begin a Phase I/II human clinical trial later this year in colon cancer (for liver metastasis) University of Alabama at Birmingham (UAB). This candidate expands on the previously RIGScan data with the benefit of using human antibodies instead of the previous mouse antibodies.

Under the Radar #4 – Manocept™: Leveraging FDA-approved Lymphoseek, Navidea is developing the Manocept platform using CD206 mannose receptors for disease imaging of macrophage inflammatory cells. Manocept has already shown strong pre-clinical data in Kaposi Sarcoma and Rheumatoid Arthritis along with applicability to Tuberculosis (TB), Lupus and Crohn’s disease. Data was published in Nature – Medical Imaging October 2013 with Navidea’s publication http://www.nature.com/nature/outlook/medical-imaging/pdf/navidea-white-paper.pdf

Undervalued Shares: We believe 2014 represents the turning point for Navidea as multiple Lymphoseek® near-term regulatory and sales catalysts extend the boundaries of the overall market for Lymphoseek to the point where the company now expects >50% market share in 2015. Furthermore, we believe the late-stage Phase III trials for NAV4694 (Alzheimer’s disease) and NAV5001 (Parkinson’s disease) remain under the radar on Wall Street. Combined with NAV1800 (RIGScan oncology) entering clinical trials and additional Manocept™ platform utility data expected this year, we believe Navidea shares are significantly undervalued for savvy investors. 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 2018 EPS and discounted 25% for cumulative risk.

Download Full 41-Page Update Report with Important Disclosures: NAVB Update 3-20-14

Navidea (NAVB) Update 03-17-14

downloadreports This Week: European CHMP Decision Expected
s Multiple Near-Term Catalysts for Lymphoseek®
s >50% Market Share Expected Next Year for Lymphoseek
s Alzheimer’s, Parkinson’s, Manocept™ Under the Radar

Download Full 41-Page Update Report with Important Disclosures: NAVB Update 3-17-14

We believe Navidea is significantly undervalued in front of multiple near-term catalysts for Lymphoseek® along with additional programs that remain unvalued on Wall Street as they are “under the radar” such as NAV4694 (Alzheimer’s imaging), NAV5001 (Parkinson’s imaging), NAV1800 (MAb Cancer imaging) and their Manocept macrophage imaging platform.

THIS WEEK – Lymphoseek Catalyst #1: We are anticipating a European Committee for Medicinal Products for Human Use (CHMP) recommendation for Lymphoseek during their meeting on March 17th-20th. We expect the recommendation for approval to cover at a minimum, breast cancer, melanoma and head & neck cancer with sentinel lymph node detection. Investors should further note that it is possible Lymphoseek will be recommended for intraoperative lymphatic mapping not restricted to any particular solid tumor type.

Lymphoseek Catalyst #2 – June 16th: On February 18, 2014, the FDA granted the sNDA for SLN (Sentinel Lymph Node) detection in patients with head and neck cancer a Priority Review status with a PDUFA decision date of June 16th. 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.

Lymphoseek Catalyst #3 – May/June: As we are expecting a positive opinion from CHMP, we are also expecting the EMA (European Medicines Agency) to follow the CHMP recommendation and to grant Lymphoseek full European approval.

Lymphoseek Catalyst #4 – October 16th: On March 5, 2014, the FDA accepted for review an additional sNDA (Supplemental New Drug Application) for Lymphoseek with a standard review PDUFA data of October 16, 2014 for expanding label claims to include lymphoscintigraphy (sentinel lymph node mapping) and flexible procedure timing allowing for up to 2-days post-injection of Lymphoseek.

Lymphoseek Catalyst #5 – Q4: We are expecting data from Navidea’s post-marketing head-to-head trial comparing injection site pain using Lymphoseek versus sulfur colloid in breast cancer patients. We believe Lymphoseek may result in less patient pain. Investors should note that out of 542 Lymphoseek patients in Phase III trials, only 1 patient reported pain and only 3 patients reported site irritation.

Under the Radar #1 – NAV4694: We believe Navidea’s development program for NAV4694 for Alzheimer’s Disease imaging remains under the radar on Wall Street. NAV4694 is currently in a late-stage Phase III trial for dementia. In addition, a Phase II trial for mild cognitive impairment (MCI) is also underway which we expect to see additional interim data later this year. We note that a blood test panel of 10 lipids claiming to predict Alzheimer’s disease recently received national media coverage. Investors should note that a.) it was not accurate enough for use as a screening test and b.) it would still require follow-up with a more definitive diagnostic such as NAV4694.

Under the Radar #2 – NAV5001: Navidea’s NAV5001 for Parkinson’s Disease imaging is currently enrolling 2 late-stage Phase III trials including a head-to-head trial against GE’s DaTscan along with a Phase II trial for Dementia with Lewy Bodies (DLB). We believe this late-stage candidate is also below the radar on Wall Street.

Under the Radar #3 – NAV1800: Navidea’s humanized NAV1800 RIGS tumor-specific radiolabeled, monoclonal antibody (MAb) anti-TAG-72 imaging agent is expected to begin a Phase I/II human clinical trial later this year in colon cancer (for liver metastasis) University of Alabama at Birmingham (UAB). This candidate expands on the previously RIGScan data with the benefit of using human antibodies instead of the previous mouse antibodies.

Under the Radar #4 – Manocept™: Leveraging FDA-approved Lymphoseek, Navidea is developing the Manocept platform using CD206 mannose receptors for disease imaging of macrophage inflammatory cells. Manocept has already shown strong pre-clinical data in Kaposi Sarcoma and Rheumatoid Arthritis along with applicability to Tuberculosis (TB), Lupus and Crohn’s disease. Data was published in Nature – Medical Imaging October 2013 with Navidea’s publication http://www.nature.com/nature/outlook/medical-imaging/pdf/navidea-white-paper.pdf 

Undervalued Shares: We believe 2014 represents the turning point for Navidea as multiple Lymphoseek® near-term regulatory and sales catalysts extend the boundaries of the overall market for Lymphoseek to the point where the company now expects >50% market share in 2015. Furthermore, we believe the late-stage Phase III trials for NAV4694 (Alzheimer’s disease) and NAV5001 (Parkinson’s disease) remain under the radar on Wall Street. Combined with NAV1800 (RIGScan oncology) entering clinical trials and additional Manocept™ platform utility data expected this year, we believe Navidea shares are significantly undervalued for savvy investors. 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 2018 EPS and discounted 25% for cumulative risk.

Download Full 41-Page Update Report with Important Disclosures: NAVB Update 3-17-14

Navidea (NAVB) Note 03-05-14

downloadreportFDA Sets October 16th PDUFA for 2nd sNDA for Lymphoseek 2-Day Protocol
FDA Sets June 16th PDUFA for Lymphoseek® sNDA for Sentinel Lymph Node

 

Download Full 12-Page Note with Important Updates: Morning Note 03-05-14 NAVB

NOTE: Navidea Q4 Conference Call Tomorrow 8:30am Eastern Webcast: http://www.media-server.com/m/p/dh2x4bbc U.S. Dial-In: 1-800-708-4539 Int. Dial-In: 1-847-619-6396 Passcode: 36792037

Second sNDA Filing Gets October 16th PDUFA for Lymphoscintigraphy and 2-Day Prior Injection: Navidea announced the FDA accepted for review an additional sNDA (Supplemental New Drug Application) for Lymphoseek® with a standard review PDUFA data of October 16, 2014. The expanded label claims include lymphoscintigraphy imaging and flexible timing of Lymphoseek administration allowing for a 2-day protocol.

June 16th PDUFA for H&N and Sentinel Lymph Node: 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. On February 18, 2014, the FDA granted the sNDA Priority Review status with a PDUFA decision date of June 16th. 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.

Download Full 12-Page Note with Important Updates: Morning Note 03-05-14 NAVB

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