Research

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

Navidea (NAVB) Note 06-24-15

downloadreportNavidea European Partner Norgine BV Pursuing Premium Pricing Strategy
Macrophage Therapeutics to Present Data on Kaposi’s Sarcoma Next Week
Buy Ahead of Macrophage Newsflow and Lymphoseek Sales

Download Full 7-Page Note with Important Disclosures: Morning Note 06-24-15 NAVB

European Lymphoseek Launch in H2’16 as Norgine Pursues Premium Pricing – No Change to Our Model: We note that Navidea’s European partner Norgine BV is currently conducting medical use studies for Lymphoseek to provide support for premium pricing in Europe. Based on the timing and country negotiations, we now expect European launch in H2 2016. Investors should note that this has no net impact on our projected 2018 EPS as the premium pricing is expected to offset the later launch.

Norgine BV: On March 5, 2015, Navidea and SpePharm AG (an affiliate of Norgine BV http://www.norgine.com), a European specialist pharmaceutical company with an extensive pan-European presence, entered into an exclusive sublicense agreement for the commercialization and distribution of Lymphoseek® 250 microgram kit for radiopharmaceutical preparation (tilmanocept) in the European Union. Navidea received an upfront payment of $2M and is eligible to receive additional milestone payments up to $5M, as well as royalties on European net sales. The initial territory covered by the agreement includes all 28 member states of the European Economic Community with the option to expand into additional geographical areas. Under terms of the exclusive license agreement, Navidea will supply Lymphoseek product to Norgine and will transfer responsibility for regulatory maintenance of the Lymphoseek Marketing Authorization to Norgine. Norgine will also be responsible for pricing, reimbursement, sales, marketing, medical affairs, and regulatory.

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 7-Page Note with Important Disclosures: Morning Note 06-24-15 NAVB

Navidea (NAVB) Note 06-11-15

downloadreportNavidea Collaborates with BIND Therapeutics for Drug Delivery Technology
EULAR 2015 Data Demonstrates Rheumatoid Arthritis Targeting
Buy Ahead of Macrophage Newsflow and Lymphoseek Sales

Download Full 9-Page Note with Important Disclosures: Morning Note 06-11-15 NAVB

This morning, Navidea announced a collaboration with BIND Therapeutics (Nasdaq:BIND Not Rated) to enhance drug delivery by combining Manocept™ with BIND’s Accurins. Navidea also announced preclinical data for Rheumatoid Arthritis (RA) imaging using Manocept presented at 2015 European Congress of Rheumatology (EULAR) demonstrating accurate binding representing a first step toward developing targeted drug for RA. See below for details:

Collaboration with BIND Therapeutics (Nasdaq:BIND)
Navidea announced a research collaboration with BIND Therapeutics (Nasdaq:BIND Not Rated) combining Navidea’s Manocept™ backbone that targets CD206 on activated disease-associated macrophages with BIND’s Accurins, novel nanoparticles to enhance drug delivery (prolonged circulation with controlled and tunable release) with targeting of a therapeutic payload. Upon achievement of proof-of-concept, the companies anticipate expanding the collaboration to develop Manocept-linked Accurins as a novel, potent approach to impact the tumor microenvironment which, in many forms of cancer, is a barrier to immune effector cells. We anticipate additional partnerships for Navidea’s Macrophage Therapeutics in the future as therapeutic drug development efforts begin ramping up. Investors should also note that BIND has ongoing collaborations with AstraZeneca (NYSE:AZN Not Rated), Pfizer (NYSE:PFE Not Rated) and (Merck NYSE:MRK Not Rated).

EULAR 2015 – Manocept™ for Rheumatoid Arthritis
Navidea announced the presentation results from several pre-clinical CD-206 targeting Manocept™ studies in Rheumatoid Arthritis (RA) were presented at the EULAR 2015 European Congress of Rheumatology in Rome, Italy. The results demonstrated that Manocept can detect immune-mediated inflammation in RA which could be used diagnostically, to monitor therapeutic efficacy or as a potential therapeutic platform. Investors should note that the currently used laboratory assays can show false-negatives in up to 20% of affected patients.

Oral Presentation Abstract: OP0154
Manocept, A Derivative of FDA-Approved 99mTc-Tilmanocept, Exhibits Diagnostic Potential by Specifically Identifying Macrophages In Rheumatoid Arthritis: A Novel Application Of An Existing Drug
N. A. Young1,*, T. J. Rosol2, L. S. Schlesinger2, F. O. Cope3, R. E. Toribio2, W. N. Jarjour1
1Rheumatology and Immunology, 2the Ohio State University Wexner Medical Center, Columbus, 3Navidea Biopharmaceuticals, Inc., Dublin, United States

Background: 99mTc-Tilmanocept is a radiopharmaceutical currently used in humans to facilitate preoperative lymphoscintigraphy and more accurate intraoperative lymphatic mapping with discrete sentinel node detection (SLN) of solid tumors. This SLN target specificity is the result, in part, of 99mTc-Tilmanocept binding to CD206 on tumor-associated macrophages. CD206 is a mannose-binding receptor that is highly expressed by alternatively activated macrophages.

Objectives: Using a fluorescently-labeled derivative of 99mTc-Tilmanocept, Manocept-Cy3, we examined the potential efficacy of this pharmaceutical in rheumatoid arthritis (RA). Identification of CD206 positive macrophages in RA would enable theranostic application of Manocept as an early diagnostic and in therapeutic monitoring, and also as a therapeutic platform for drug delivery.

Methods: Synovial fluid and tissue were acquired from RA patients for comparison to normal frozen archival tissue and synovial tissue procured from patients with osteoarthritis (OA). Tissues were probed with Manocept-Cy3 (red), DAPI nuclear stain (blue), and anti CD206-cyanine green. Mononuclear cells were isolated from RA synovial fluid and analyzed by flow cytometry. Arthritis was induced in Dba1 mice with anti-cartilage monoclonal antibodies followed by injection with E. coli LPS. Manocept-Cy3 was injected intravenously and epifluorescent imaging was conducted.

Results: Immunohistochemistry (IHC) of synovial tissue from RA patients showed significantly greater fluorescent detection of cellular Manocept-Cy3 signals relative to healthy control and OA tissue, which displayed little to no fluorescence. This RA tissue also demonstrated CD206 and Manocept-Cy3 co-localization. To confirm macrophage specific labeling, flow cytometry was performed on RA synovial fluid and positive detection was observed in conjunction with CD14, CD16, CD11b, and CD163. Feasibility of Manocept as a diagnostic imaging agent in RA was subsequently evaluated in an animal model; epifluorescent imaging ex vivo and in vivo indicated significantly greater signals in both the knees and elbows of arthritic mice.

Conclusions: The results of this study: i) indicate that alternatively activated macrophages expressing CD206 are novel biomarkers of RA inflammation and ii) suggest that Manocept is a viable candidate to pursue clinically as an imaging biomarker for disease activity in RA patients by labeling inflammatory macrophages in inflamed joints. The versatility of the Manocept backbone will be a focus of future congener development using additional reporter types to exploit CD206 in RA, including therapeutics to modulate the inflammatory response.

Download Full 9-Page Note with Important Disclosures: Morning Note 06-11-15 NAVB

Cellular Biomedicine (CBMG) Update Report 06-10-15

downloadreportIncreasing Target to $43.50 on Vax/PD-1 & CAR-T CD30
Acquisition of CD40LGVAX+Nivolumab in 1st U.S. Trials
CAR T-Cell CD30 Early Data Promising–EGFR/HER1 Next
CBMG Continues Building a Leading China Biotech

Download Full 37-Page Update Report with Important Disclosures: CBMG Update 06-10-15

Raising Target Price to $43.50 as CBMG Acquiring First U.S. Program: Yesterday, CBMG announced they are acquiring CD40LGVAX, an “off-the-shelf” lung adenocarcinoma vaccine in combination with Bristol-Myers Squibb’s (NYSE:BMY Not Rated) anti-PD-1 checkpoint inhibitor Nivolumab (Opdivo®) for clinical trials at the Moffitt Cancer Center. This represents CBMG’s first program in the United States, which will be led by the inventor, Scott Antonia, MD, Ph.D., of the Department Chair of Thoracic Oncology and Program Leader of the Immuno-Oncology Program at the Moffitt Cancer Center and a member of CBMG’s Scientific Advisory Board. The addition of CD40LGVAX to Nivolumab therapy may result in longer overall survival for non-squamous non-small cell lung cancer (NSCLC) patients that are PDL1 negative and may be synergistic for patients that are PDL1 positive. (see CD40LGVAX Vaccine in Combination with Nivolumab (Opdivo®))

Clinical Trials: CBMG’s lung adenocarcinoma vaccine CD40LGVAX will be combined with Bristol-Myers Squibb’s anti-PD-1 checkpoint inhibitor Nivolumab (Opdivo®) in a 3 patient lead-in Phase I clinical trial followed by a randomized Phase II clinical trial in patients with Stage IV unresectable non-small cell lung (NSCLC) cancer. The clinical trials are expected to commence in H2’15.

Deal Terms: CBMG will pay $2.5M cash and $1.75M in common stock to Blackbird Bio Finance, licensee of University of South Florida. CBMG will be the exclusive global licensee of related technologies and know-how and the progeny manufacturing rights with access to a master vaccine bank originating from the University of South Florida. CBMG may also pay more than $25M in future milestones and sales royalty payments should the program be successful.

Early-Stage CAR T-Cell CD30 Data Looks Promising: On May 22, 2015, CBMG announced CD30 Phase I/IIa clinical data from their recently acquired CAR T-cell immuno-oncology clinical development programs at the 10th Annual World Stem Cells & Regenerative Medicine Congress in London, UK. The open-label trial enrolled relapsed/refractory CD30 positive lymphoma patients who received escalating doses of autologous T cells transduced with a CD30-directed chimeric antigen receptor moiety for a consecutive 3-5 days. We believe the early-stage data in relapsed/refractory CD30 positive lymphoma patients who have failed previous therapies is very encouraging. It also appears well-tolerated with no severe adverse events (SAE). We also expect CBMG’s Phase I/IIa data for their EGFR/HER1-positive advanced lung cancer in Q3. (for details see CART CD30 Phase I/IIa Results)

Patients: Seven relapsed/refractory CD30 positive lymphoma patients had a heavy treatment history (ranging from 8 to 24 previous treatments with an average of 16 previous treatments) and/or multiple tumor lesions with no available curative treatment options (such as autologous or allogeneic stem cell transplant) and with limited prognosis (several months to < 2 year survival) using currently available therapies.

Results: Results showed that 28.6% (2/7) adult patients achieved partial response (PR) and 42.9% (3/7) patients obtained stable disease (SD) resulting in an overall disease control rate of 71.4% (5/7) and an objective response rate of 28.6% (2/7) in the patients with relapsed/refractory Hodgkin’s lymphoma.

Safety: There were no severe adverse events (SAE). One patient experienced an adverse event (AE) of a 5-day self-limiting arthralgias (joint pain), myalgias (muscle pain) and dual knee swelling 2 weeks after cell infusion. Other adverse events were mostly fever and were manageable with medical intervention.

CBMG Adds Experienced Large Pharma Chief Operating Officer: On May 27, 2015, CBMG announced the appointment of Richard L. Wang Ph.D., MBA, PMP as Chief Operating Officer. Dr. Wang most recently held the position of senior site leader of GlaxoSmithKline’s (NYSE:GSK Not Rated) Research & Development in Shanghai, China, since 2013, and also held the position of Senior Director and Head of Operations of GSK R&D since 2011. From 2007 to 2011, Dr. Wang was the Director, Head of Strategic Alliance (Asia), and Portfolio and Operation Management of Innovation Center China & Global Oncology, AstraZeneca (NYSE:AZN Not Rated) Global R&D in Shanghai, China. From 2004 to 2007, Dr. Wang was Associate Director, Discovery Portfolio and Early Development Project Management, R&D Operations Pharmaceutical Research Institute, Bristol-Myers Squibb (NYSE:BMY Not Rated), in Wallingford, Connecticut. He holds a bachelor’s degree in Cell Biology from University of Science & Technology of China, a PhD in Molecular Biology from University of Maryland, Baltimore, and an MBA from Xavier University. Dr. Wang is a frequent invited speaker and panelist for many international scientific and pharmaceutical R&D and business forums in China and Asia, and a Lecturer of Drug Discovery and Development courses at the University of Science & Technology of China and Shanghai Jiaotong University. CBMG continues to strengthen their management team with experienced personnel with the naming of Dr. Wang as COO and the recent additions of Scott J. Antonia, MD, PhD at Moffitt Cancer Center and Guoping Fan, PhD at UCLA to their new U.S. Scientific Advisory Board.

Strong Speculative Buy – Raising Target Price to $43.50: 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 (22% of Bellicum Pharmaceuticals market value (Nasdaq: BLCM Not Rated)) and $110M for the CD40LGVAX program (5% of Aduro Biotech market value (Nasdaq:ADRO Not Rated)) for a total valuation of $43.50 per share. Investors should note that we anticipate our immuno-oncology valuation for CBMG may increase substantially in the future as more details, timelines and data are announced by the company over the coming months. (see Market Size and Financial Assumptions)

Download Full 37-Page Update Report with Important Disclosures: CBMG Update 06-10-15

Navidea (NAVB) Note 06-09-15

downloadreportPost-Marketing Phase IV Trial Shows Less Pain Using Lymphoseek®
Lymphoseek® 2015 Sales to Double 2014 – B/E by Q1’16
Buy Ahead of Macrophage Newsflow and Lymphoseek Sales

Download Full 7-Page Note with Important Disclosures: Morning Note 06-09-15 NAVB

Phase IV Results Show Less Pain with Lymphoseek®: After yesterday’s close, Navidea announced the Phase IV post-marketing clinical trial results from the investigator-initiated comparative study of Lymphoseek® (technetium Tc 99m tilmanocept) injection versus filtered Tc-99m Sulfur Colloid (fTcSC) measuring injection site pain in patients with breast cancer undergoing lymphoscintigraphy were presented at the 2015 Society of Nuclear Medicine and Molecular Imaging (SNMMI) conference. The results of the randomized, double-blinded trial showed that overall, patients receiving Lymphoseek experienced statistically significant less change in pain scores compared to patients receiving fTcSC at 1-3 minutes post-injection. The poster titled, “A Randomized Double-Blinded Comparison of Injection Site Pain of Tc-99m Tilmanocept versus Filtered Tc-99m Sulfur Colloid in Patients Undergoing Lymph Node Mapping for Breast Cancer” showed results of the randomized, double-blind clinical trial comparing post-injection site pain using fTcSC versus Lymphoseek in 52 breast cancer patients (25 Lymphoseek and 27 fTcSC) undergoing lymphoscintigraphy. Pain was evaluated with a visual analogue scale (VAS) and short form McGill Pain Questionnaire at 1, 2, 3, 4, 5, 15 and 30 minutes post-injection. Baseline pain scores were similar between groups and at one minute post-injection, patients receiving fTcSC experienced a mean change in pain of 16.8mm (standard deviation (SD) 19.5) compared to 0.2mm (SD 7.3) in the Lymphoseek group (p =0.0002). The trial led by Anne Wallace, M.D., professor of surgery at University of California, San Diego School of Medicine. Additional clinical trial details are at http://www.clinicaltrials.gov/ct2/show/NCT02065232 

Lymphoseek® is the first and only FDA-approved radiopharmaceutical agent for sentinel lymph node detection and the only FDA-approved agent for lymphatic mapping of all solid tumors. Since Lymphoseek® is the first new drug for lymph node mapping in over 30 years, treatment decision inertia needs to be overcome using a targeted salesforce. We believe this study showing statistically significant lower levels of pain using Lymphoseek® in breast cancer patients adds to the marketing efforts by Navidea’s new dedicated salesforce focusing on the surgical oncologists who drive the lymphatic mapping decisions.

In addition, Navidea is supporting a number of efforts in various cancer indications with investigator-sponsored studies to provide additional data to support expansion of the Lymphoseek opportunity.

Lymphoseek Post-Marketing Studies

Cancer Type

Description

Status

Colorectal Cancer Investigator Initiated Pilot Study

Ongoing

Kaposi’s Sarcoma Investigator Initiated Study –Grant-funded

Complete

Comparative Study in Breast Cancer

Head to Head patient study vs Sulfur colloid– Pain levels and performance

Complete

Cervical Cancer Multi-center study -Grant-funded

Planned 2015

Pediatric -Solid Tumor Multi-center study -Grant-funded

Planned 2015

Anal/Rectal Single site study -Grant-funded

Planned 2015

Endometrial Cancer Investigator Initiated Study

Planned 2015

Source: Navidea June 1, 2015 Presentation

 Lymphoseek® On-Track to Reach Breakeven Sales by Q1’16: Navidea reiterated guidance of 50,000+ Lymphoseek® procedures and $10M to $12M in Lymphoseek sales revenue in 2015 and the company remains on-track to reach the breakeven run-rate by Q1 2016. Investors should note that Lymphoseek® is the first and only FDA-approved radiopharmaceutical agent for sentinel lymph node detection and the only FDA-approved agent for lymphatic mapping of all solid tumors.

Navidea’s Subsidiary Macrophage Therapeutics Unveiling their First Drug Candidate: Data for Macrophage Therapeutics MT-1000 drug class in Kaposi’s Sarcoma (KS) will be presented at the 18th International Workshop on Kaposi’s Sarcoma Herpesvirus (KSHV) and Related Agents in Hollywood, Florida from June 30 – July 3, 2015. The poster sessions will highlight and provide support for a new disease pathway for Kaposi’s Sarcoma based on preclinical and clinical imaging studies. The oral session will present data on their first therapeutic drug candidate, MT1001, demonstrating that it can target cells expressing the mannose receptor (CD206) and destroy the cell and its contents. While Kaposi’s sarcoma is an orphan indication with approximately 2,500 cases annually in the United States, investors should note that success with MT1001 provides validation for larger additional indications.

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 7-Page Note with Important Disclosures: Morning Note 06-09-15 NAVB

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