Research

Navidea (NAVB) Note 07-29-15

downloadreportNIH Grant for Rheumatoid Arthritis & Funds for Cervical Cancer & Alzheimer’s
NIH Grant for Atherosclerotic Plaques with Mass General / Harvard Medical
Navidea Continues Unlocking Manocept as a Disease-Modifying Drug Platform

Download Full 12-Page Note with Important Disclosures: Morning Note 07-29-15 NAVB

NOTE: On Thursday, July 30, 2015 at 8:30 am EDT, Navidea will hold their Q2 conference call. U.S. dial-in (855) 897-5884 / Int. dial-in (720) 634-2940 / Access Code 92935833 / Webcast http://edge.media-server.com/m/p/amn8cqij/lan/en 

Navidea Receives NIH Grant using Lymphoseek® for Rheumatoid Arthritis (RA): Navidea announced the receipt of an initial notice of award for a Fast Track Small Business Innovation Research (SBIR) grant providing for up to $1.7M from the National Institutes of Health’s (NIH) National Institute of Arthritis and Musculoskeletal and Skin Diseases (NIAMD). The funds are for preclinical animal studies and a Phase I/II human clinical study for Lymphoseek® (Tc 99m-tilmanocept) to identify skeletal joints that are inflamed due to rheumatoid arthritis (RA). RA is a chronic, progressive, systemic autoimmune disease characterized by inflammation of numerous skeletal joints and if not treated successfully, RA can lead to disability, disfigurement and premature death. The funds will be released in two parts over 2.5 years. The first part is for $225K to support preclinical animal studies and to support activities needed to prepare for the Phase I/II clinical study. The second part will support the human Phase I/II study, the results from which are expected to confirm the safety and effectiveness of Tc 99m-tilmanocept to identify skeletal joint inflammation due to RA.

Phase I/II Human Clinical Trial Design: The study is a single center, open-label, non-randomized, Phase I/II Clinical Study of 44 individuals to investigate the ability of Tc 99m-tilmanocept to identify RA inflamed joints and to identify early RA patients among those with polyarthralgia/polyarthritis (P/P). There is intent to study three groups of subjects: participants with active RA, participants with recent development of P/P or healthy, arthritis free individuals over the age of 50. If this project is successful, follow on studies will investigate if tilmanocept can be used to target delivery of therapeutics to RA inflamed joints thereby increasing the potential effectiveness of treatments.

We believe that if successful, Navidea’s CD206 mannose receptor targeting scaffold (the Manocept™ platform) could be further developed into a therapeutic for RA. Investors should note that while Navidea’s joint venture, R-NAV, for RA combines the Manocept platform with Rheumco LLC’s Tin-117m radioisotope, Navidea may be able to pursue other therapeutic alternatives independently or with other partners.

Additional NIH Grants: In addition, Navidea announced they recently received confirmation of funding parts 2 and 3 of previously awarded NIH SBIR grants supporting clinical studies for Lymphoseek® in cervical cancer ($1.5 million) and for NAV4694 in Alzheimer’s Disease and Mild Cognitive Impairment ($1.7 million).

Maintaining Strong Speculative Buy as Shares Remain Undervalued: While those investors focusing on Lymphoseek® will need to wait for Q4’15/Q1’16 for significant revenue growth as the new salesforce completes their initial sales cycle, we would not be surprised for Navidea shares to begin trading higher in advance of Macrophage Therapeutics drug pipeline newsflow. The investment proposition is unusually favorable as the Manocept scaffold is already de-risked for safety, efficacy and manufacturing as it is already FDA-approved in Lymphoseek®. The unique mechanism of action and utility in a wide variety of diseases also makes it especially attractive for NIH grants and partnerships, both of which are sources of non-dilutive financing. Therefore, we believe Navidea will eventually become a biotech drug company rather than “just” a diagnostic imaging company. Our model values the Lymphoseek program at $3.00 per share based on a 35x multiple on projected fiscal year 2018 EPS and discounted 20% for cumulative risk plus $0.25 per share based on our internal valuation for Macrophage Therapeutics.

Download Full 12-Page Note with Important Disclosures: Morning Note 07-29-15 NAVB

Navidea (NAVB) Note 07-28-15

downloadreportNIH Grant for Atherosclerotic Plaques with Mass General / Harvard Medical
Navidea Continues Unlocking Manocept as a Disease-Modifying Drug Platform
Buy Ahead of Macrophage Newsflow and Lymphoseek Sales

Download Full 11-Page Note with Important Disclosures: Morning Note 07-28-15 NAVB

NOTE: On Thursday, July 30, 2015 at 8:30 pm EDT, Navidea will hold their Q2 conference call. U.S. dial-in (855) 897-5884 / Int. dial-in (720) 634-2940 / Access Code 92935833 / Webcast http://edge.media-server.com/m/p/amn8cqij/lan/en 

Navidea Receives NIH Grant using Lymphoseek® for Atherosclerosis: This morning, Navidea announced a Phase 1 Small Business Innovation Research (SBIR) grant for $321K from the National Heart Lung and Blood Institute (NHLBI), National Institutes of Health (NIH) to study Lymphoseek® (Tc 99m-tilmanocept) to localize in high-risk atherosclerotic plaques. Navidea will collaborate with Massachusetts General Hospital (MGH) and Harvard Medical School (HMS). Atherosclerotic plaques are rich in CD206 expressing macrophages and are at high-risk for near term rupture resulting in myocardial infarctions (heart attacks), sudden cardiac death and strokes, which are cumulatively the leading cause of death in the U.S. Persons with advanced atherosclerosis are frequently asymptomatic until one of their atherosclerotic plaques ruptures, leading to blood clots that trigger myocardial infarctions, sudden cardiac deaths and strokes. The study will first examine HIV infected patients, which as a group, suffer disproportionally from atherosclerosis and cardiovascular disease (CVD).

Why is this Important? The represents Navidea’s continued efforts to expand the utility of their CD206 (mannose receptor) Manocept platform. Lymphoseek® is currently FDA and EU approved as a diagnostic for use in breast, melanoma and head & neck cancer of the oral cavity sentinel lymph node detection. This new study examining the binding to high-risk atherosclerotic plaque could allow for Lymphoseek to become an effective cardiac imaging diagnostic as well the potential to develop a targeted therapeutic to treat cardiac disease.

Rationale and Design of the Phase 1 SBIR Clinical Study: It has been observed that CD206 expressing macrophages densely populate vulnerable plaques or thin cap fibroatheromas (TCFA) but not other kinds (i.e., stable) of atherosclerotic plaques. A primary goal for this grant involves an approved clinical investigation of up to 18 individuals with and without aortic and high risk coronary atherosclerotic plaques and with and without HIV infection to determine the feasibility of 99mTc-tilmanocept to image high risk plaque by SPECT/CT. Results have the potential to provide evidence of the potential of 99mTc-tilmanocept to accumulate in high risk morphology plaques, the ability to make preliminary comparisons of aortic 99mTc-tilmanocept uptake by SPECT/CT in each group, and to evaluate the ability of 99mTc-tilmanocept to identify the same aortic atherosclerotic plaques that are identified by contrast enhanced coronary computed tomography angiography (CCTA) and/or PET/CT.

Maintaining Strong Speculative Buy as Shares Remain Undervalued: While those investors focusing on Lymphoseek® will need to wait for Q4’15/Q1’16 for significant revenue growth as the new salesforce completes their initial sales cycle, we would not be surprised for Navidea shares to begin trading higher in advance of Macrophage Therapeutics drug pipeline newsflow. The investment proposition is unusually favorable as the Manocept scaffold is already de-risked for safety, efficacy and manufacturing as it is already FDA-approved in Lymphoseek®. The unique mechanism of action and utility in a wide variety of diseases also makes it especially attractive for NIH grants and partnerships, both of which are sources of non-dilutive financing. Therefore, we believe Navidea will eventually become a biotech drug company rather than “just” a diagnostic imaging company. Our model values the Lymphoseek program at $3.00 per share based on a 35x multiple on projected fiscal year 2018 EPS and discounted 20% for cumulative risk plus $0.25 per share based on our internal valuation for Macrophage Therapeutics.

Download Full 11-Page Note with Important Disclosures: Morning Note 07-28-15 NAVB

Cellular Biomedicine (CBMG) Note 07-27-15

downloadreportCBMG Receives CFDA OK for Non-Cryopreservation Cell & Tissue Kits
CBMG Closes Acquisition of CD40LGVAX Lung Cancer Vaccine
Combo Trial with Bristol-Myers Nivolumab PD-1 at Moffitt for U.S. Market

Download Full 11-Page Note with Important Disclosures: Morning Note 07-27-15 CBMG

The recent focus for CBMG has been on their immuno-oncology pipeline for CAR-T (CD19, CD20, CD30, EGFR/HER1) and the recently acquired CD40LGVAX combination with Bristol-Myers Squibb’s (NYSE:BMY Not Rated) anti-PD-1 checkpoint inhibitor drug nivolumab (Opdivo®) in non-squamous (adenocarcinoma) non-small cell lung cancer (NSCLC). However, CBMG also continues to progress in their clinical trials for their ReJoin™ adult mesenchymal stem cell candidate using a patient’s own (autologous) adipose (fat) tissue to treat Knee Osteoarthritis (KOA) and Cartilage Defect (CD).

CBMG announced today that they received 2 new certifications from the China Food and Drug Administration (CFDA) for their proprietary cell and tissue preservation media kits respectively, in accordance with the new CFDA regulations announced on June 1, 2015. The certified kits enable long-term preservation and long distance shipment of cells and tissue, without requiring cryopreservation (freezing) from and to the point of care for ready applications by physicians. This facilitates centralized processing and supply of autologous cell therapies under CBMG’s Vertically Integrated Cell Manufacturing System (VICMS).

Cell Preservation Media Kit: CBMG’s cell preservation media kit (CPMK) is a CFDA Class I Medical Device consisting of a proprietary media used to preserve the viability and vitality of both mesenchymal stem cells (MSC) and immune cells for longer than conventional solutions. When CBMG benchmarked its proprietary CPMK against other commercially available solutions, it was found that the cells in CPMK maintained their viability and vitality to a higher degree and for a longer duration than in other products. The kit is manufactured in CBMG’s certified cGMP manufacturing facilities and several China patents have been filed.

Tissue Preservation Media Kit: CBMG’s tissue preservation media kit (TPMK) is a CFDA Class I Medical Device used to maintain viable tissues for the extraction of MSCs. This proprietary invention of CBMG, for which a China patent and an international Patent Cooperation Treaty (PCT) patent have been filed, is manufactured in CBMG’s certified cGMP manufacturing facilities.

Strong Speculative Buy – Target $43.50: We believe the recent decline in the China stock market has excessively impacted CBMG shares creating a significant buying opportunity. Investors should also note that CBMG is no longer strictly a China domestic biotech as the CD40LGVAX clinical trial at the Moffitt cancer center is for the U.S. market. Our sum-of-the-parts valuation consists of our financial model valuation for technical services revenues, future revenues for ReJoin™ and R&D costs for the CAR T-cell and anti-PD-1 programs as well as the Asthma and COPD programs of $21.00 per share based on a 45x multiple on projected fiscal year 2020 EPS and discounted 35% for cumulative risk. Added to this, we value the immuno-oncology pipeline at $160M for the CAR T-cell program and $110M for the CD40LGVAX program for a total valuation of $43.50 per share.

Download Full 11-Page Note with Important Disclosures: Morning Note 07-27-15 CBMG

Cellular Biomedicine (CBMG) Note 07-13-15

downloadreportCBMG Buying Opportunity as Impact from China Stock Market Overdone
CBMG Closes Acquisition of CD40LGVAX Lung Cancer Vaccine
Combo Trial with Bristol-Myers Nivolumab PD-1 at Moffitt for U.S. Market

Download Full 11-Page Note with Important Disclosures: Morning Note 07-13-15 CBMG

While CBMG shares have outperformed the Dow Jones Shanghai Index over the past 2 months, we note that the recent weakness in CBMG shares resulting from the overall decline in the China stock market is overdone and represents an opportunity for savvy investors in CBMG shares. Although CBMG had been focused solely on the China domestic market, on June 29th they closed their acquisition of the CD40LGVAX lung cancer vaccine to be combined with Bristol-Myers Squibb’s (NYSE:BMY Not Rated) anti-PD-1 checkpoint inhibitor Nivolumab (Opdivo®) in a U.S. clinical trial at the Moffitt Cancer Center, representing CBMG’s first entry into the United States market. Finally, investors should note that the trial is sponsored by Moffitt and the cost to CBMG is expected to be under $1M. (see Human Clinical Trial for CD40LGVAX with Nivolumab for Lung Cancer)


 RECENT NEWS:

CBMG Adds Chairman to Scientific Advisory Board: On July 8, 2015, CBMG announced the appointment of Alan List, MD as Chairman of the Scientific Advisory Board. Dr. List is currently the President and Chief Executive Officer of Moffitt Cancer Center and Research Institute. We believe his expertise in Immuno-Oncology will be of significant benefit for CBMG’s CAR T-Cell program as well as their recently acquired next-generation cancer vaccine, CD40LGVAX which is expected to begin human clinical trials at Moffitt Cancer Center soon. His biography is shown below:

Dr. Alan List is currently the President and Chief Executive Officer of Moffitt Cancer Center and Research Institute in Tampa, FL. Dr. List is internationally recognized for his many contributions in the development of novel, more effective treatment strategies for myelodysplastic syndrome (MDS) and acute myeloid leukemia (AML). His pioneering work led to the development of lenalidomide (Revlimid®) from the laboratory to clinical trials, which went on to receive fast-track designation from the U.S. Food and Drug Administration and approval for the treatment of patients with MDS and multiple myeloma. This work transformed the natural history of MDS from a premalignant condition that progressed to malignancy requiring aggressive treatment to a condition managed in the outpatient setting with oral agents. Previously Dr. List served as Executive Vice President and Physician-in-Chief, the Vice Deputy Physician-in-Chief, and the Chief of the Malignant Hematology Division at Moffitt, where he holds the Morsani Endowed Chair. Before joining Moffitt in 2003, Dr. List was a Professor of Medicine at the University of Arizona, Tucson, where he also served concurrently as the Director of the Leukemia and Blood and Marrow Transplant Program and Director of the Division of Translational/Clinical Research Program. After earning a medical degree in 1980 from the University of Pennsylvania, Philadelphia, Dr. List completed an internship and residency in internal medicine at the Good Samaritan Medical Center in Phoenix, Arizona. He then completed fellowships in hematology and medical oncology at Vanderbilt University Medical Center in Nashville, Tennessee. Dr. List receives peer-reviewed NIH support for his work and publishes extensively in the areas of MDS and acute leukemia. He is the author of more than 280 peer-reviewed articles and the Clinician’s Manual on Myelodysplastic Syndromes (2008). His biography may be accessed at: http://moffitt.org/providers/alan-list/

CBMG Added to the Russell 3000 Index: CBMG was selected for inclusion into the Russell 3000 Index (RUA) with automatic inclusion in the small-cap Russell 2000 Index (RUT) effective June 26, 2015. The Russell 3000 Index is weighted by market capitalization and consists of the 3,000 largest U.S.-traded stocks by objective, market-capitalization rankings and style attributes. As a result, CBMG is automatically included in the small-cap Russell 2000 Index as well as the appropriate growth and value style indexes. Investors should note that the Russell indexes are widely used by investment managers and institutional investors for index funds and as benchmarks for active investment strategies.

Much Ado About Nothing- Anonymous SeekingAlpha Article: As of the June 22, 2015 class action deadline set by the Court, no additional lawsuits had been filed, and only one other shareholder, who owned the stock for less than 2 weeks and sold the day the anonymous blogger article was published, had come forward seeking to serve as lead plaintiff. The original lawsuit was filed by a single shareholder who bought 100 shares of CBMG stock the day before an anonymous blogger published a false and misleading article about the company. Investors should note the overall lack of response despite 18 law firms sending out 39 press releases in an attempt to recruit lead plaintiffs.

RECENT MEDIA INTERVIEWS:
Cellular Biomedicine Group (CBMG) Ready to Hire After Snapping Up Cancer Vaccine:
http://www.biospace.com/News/exclusive-cellular-biomedicine-group-ready-to-hire/382572

RECENT CHINA AND SECTOR EVENTS:
On June 29, 2015, Celgene (Nasdaq: CELG Not Rated) and Juno Therapeutics (Nasdaq: JUNO Not Rated) announced 10 year strategic collaboration for CAR-T and T Cell Receptor (TCR) technologies. Cellgene paid $150M in upfront cash and bought $850M of Juno common stock (approximately 10%) at a price of $93.00 (closing price was $46.30). For Juno-originated programs, Juno will be responsible for R&D in North America and retains commercialization rights there. Celgene will be responsible for development and commercialization in the rest of the world, and will pay Juno a royalty. For Celgene-originated programs under the collaboration they will share global costs and profits with 70% to Celgene and 30% to Juno. Celgene will lead global development and commercialization, subject to a Juno co-promote option in the US and certain EU territories. Additional details at http://ir.celgene.com/releasedetail.cfm?ReleaseID=919929

Download Full 11-Page Note with Important Disclosures: Morning Note 07-13-15 CBMG

Navidea (NAVB) Note 07-06-15

downloadreportNavidea / Macrophage Therapeutics Unveils Kaposi’s Sarcoma Data
First Steps in Unlocking Manocept as a Disease-Modifying Drug Platform
Buy Ahead of Macrophage Newsflow and Lymphoseek Sales

Download Full 10-Page Note with Important Disclosures: Morning Note 07-06-15 NAVB

NOTE: On Tuesday, July 7, 2015 at 1:00 pm EDT, Navidea / Macrophage Therapeutics will hold a webcast to provide investors with a complete look at the data presented at the International Workshop on Kaposi’s Sarcoma Herpesvirus (KSHV) and Related Agents conference. Access information will be announced on the Navidea website.

What Happened? Last week, Navidea / Macrophage Therapeutics revealed encouraging data with 3 posters and an oral presentation underpinning their first therapeutic drug candidate, MT-1001, an immuno-oncology construct designed to selectively induce apoptotic cell death of activated macrophages and Tumor-Associated Macrophages (TAMs). Kaposi’s Sarcoma (KS) is a type of cancer that mainly affects the skin, mouth, and lymph nodes, the infection-fighting glands, but can also affect other organs. Due to weakened immune systems, HIV (human immunodeficiency virus) infection has become the most common cause of Kaposi’s Sarcoma.

Our Take: We believe the results from this integrated research effort utilizing Manocept (and doxorubicin) provides a solid foundation for the development of MT-1001 in Kaposi’s Sarcoma. We further believe that the data also provides a basis for much larger indications such as HIV (long-lived macrophages as HIV reservoirs during HAART treatment), diseases of the central nervous system (CNS) such as multiple sclerosis (Manocept passes through the blood-brain barrier) as well as various solid tumor cancers-types. We view this data as a significant first step in unlocking the value of Manocept as a disease-modifying drug platform. Some of the key results were (download the full note for complete abstracts):

Abstract/Poster #1 demonstrated that Manocept’s CD206 binds not only to Kaposi’s Sarcoma (KS) lesions near the injection site but also migrates and binds to distant KS lesions as well (linked within the lymphatic ducts). Furthermore, these KS lesions were anatomically linked to regional lymph nodes that likely harbor KS.

Abstract/Poster #2 demonstrated that only a very small dose is needed to not only bind to KS lesions in the skin (cutaneous lesions) but also internal organs/tissues (non-cutaneous lesions) such as the nasopharynx, lymph nodes as well as the brain (Manocept was shown to cross the blood/brain barrier). The results indicate a high target effect with low off-target concerns (binds to activated macrophages only) in other solid tumors.

Abstract/Poster #3 demonstrated that KS is a HHV8 macrophage fusion tumor and that all KS cells are CD206 positive (activated macrophages) providing evidence that CD206 positive activated macrophages are responsible for KS (it was previously believed that HHV-induced transformation of lymphatic endothelial cells were the cause of KS).

Abstract/Oral Presentation #4
translated the effects seen in #1 through #3 above into a therapeutic drug for KS. When Manocept was linked with the chemotherapy drug Doxorubicin, 85% of the CD206 positive macrophages were killed. In addition, it killed CD163 positive Tumor-Associated Macrophages (TAMs) and HHV8 positive tumor cells. The mechanism of cell death was shown to be apoptosis (programmed cell death).

Maintaining Strong Speculative Buy as Shares Remain Undervalued: While those investors focusing on Lymphoseek® will need to wait for Q4’15/Q1’16 for significant revenue growth as the new salesforce completes their initial sales cycle, we would not be surprised for Navidea shares to begin trading higher in advance of Macrophage Therapeutics drug pipeline newsflow. The investment proposition is unusually favorable as the Manocept scaffold is already de-risked for safety, efficacy and manufacturing as it is already FDA-approved in Lymphoseek®. The unique mechanism of action and utility in a wide variety of diseases also makes it especially attractive for NIH grants and partnerships, both of which are sources of non-dilutive financing. Therefore, we believe Navidea will eventually become a biotech drug company rather than “just” a diagnostic imaging company. Our model values the Lymphoseek program at $3.00 per share based on a 35x multiple on projected fiscal year 2018 EPS and discounted 20% for cumulative risk plus $0.25 per share based on our internal valuation for Macrophage Therapeutics.

Download Full 10-Page Note with Important Disclosures: Morning Note 07-06-15 NAVB

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