Research

Navidea (NAVB) Note 2-27-15

downloadreportSAB Named for Macrophage Therapeutics as Initial Funding Nears Completion
Preliminary 2014 Revenues Exceed Our Estimates – 2015 Sales Push Begins
Data Shows Lymphoseek SNL Detection in H&N Accurate Even the Next Day
Data Shows Lymphoseek Requires Fewer SNL Removals in Breast Cancer

Download Full 10-Page Note with Important Disclosures: Morning Note 02-27-15 NAVB

NOTE: Navidea Q4 Conference Call is Thursday, March 5th at 8:30am EST /U.S. 1-800-708-4540/Int: 1-847-619-6397/Passcode: 39040655/ Webcast: http://edge.media-server.com/m/p/wnxb6jnn/lan/en

This morning, Navidea announced their initial scientific advisory board (SAB) for their Macrophage Therapeutics subsidiary consisting of 9 members with expertise in oncology, immunology, autoimmune diseases and macrophage biology. Of particular note to investors is the appointment of Siamon Gordon who is world-renowned for his expertise in macrophage research. It was also announced that the funding plan that was announced on January 21st is expected to close next week. (see Macrophage Therapeutics-Initial Funding Plan). The members are listed below and we have added links to their publicly accessible biographies:

Siamon Gordon, M.B., Ch.B., Ph.D.
Glaxo Wellcome Professor of Cellular Pathology (Emeritus), University of Oxford
http://en.wikipedia.org/wiki/Siamon_Gordon

Mark I. Greene, M.D., Ph.D., F.R.C.P.
John Eckman Professor of Medical Sciences, Vice Chair of Pathology, Division of Immunology and Experimental Pathology, University of Pennsylvania
http://www.afcri.upenn.edu/ourfaculty/green_bio.html

Wael Jarjour, M.D.
Associate Professor, Director, Division of Rheumatology & Immunology, The Ohio State University
http://internalmedicine.osu.edu/rheumatology/directory/faculty/waeljarjour/

Michael S. McGrath, M.D., Ph.D.
Professor, Departments of Laboratory Medicine, Pathology, and Medicine, University of California San Francisco
http://labmed.ucsf.edu/about/faculty/labmed-mmcgrath.html
http://cancer.ucsf.edu/people/profiles/mcgrath_michael.3373

Thomas J. Rosol, D.V.M., Ph.D.
Professor, Veterinary Sciences, The Ohio State University; Senior Advisor, Life Sciences, University Office of Technology Commercialization and Knowledge Transfer, The Ohio State University; Special Assistant to the Vice President for Research, The Ohio State University
http://vet.osu.edu/ThomasRosol

Eric K. Rowinsky, M.D.
Head of Research and Development and Chief Medical Officer, Stemline Therapeutics, Inc. and Director of Navidea Biopharmaceuticals
https://www.linkedin.com/in/ericrowinsky

Larry S. Schlesinger, M.D.
Chair, Department of Microbial Infection and Immunity, Director, Center for Microbial Interface Biology, The Ohio State University
http://internalmedicine.osu.edu/infectiousdiseases/directory/faculty/larryschlesinger/

David Sidransky, M.D.
Professor of Otolaryngology – Head and Neck Surgery, Professor of Oncology, Professor of Pathology, Professor of Cellular & Molecular Medicine, Professor of Urology, and Director, Head and Neck Cancer Research, The Johns Hopkins University
http://www.hopkinsmedicine.org/profiles/results/directory/profile/8627021/david-sidransky

Kenneth C. Williams, Ph.D.
Professor of Biology, Boston College
http://www.bc.edu/schools/cas/biology/facadmin/williams.html

Download Full 10-Page Note with Important Disclosures: Morning Note 02-27-15 NAVB

Navidea (NAVB) Note 02-17-15

downloadreportData Shows Lymphoseek SNL Detection in H&N Accurate Even the Next Day
Preliminary 2014 Revenues Exceed Our Estimates – 2015 Sales Push Begins
Data Shows Lymphoseek Requires Fewer SNL Removals in Breast Cancer
$2.5M Funding for Macrophage Therapeutics – Navidea Retains 99.5%

Download Full 9-Page Note with Important Disclosures: Morning Note 02-17-15 NAVB

Navidea announced the peer-reviewed publication of results from the NEO3-06 Phase III clinical trial of Lymphoseek® (technetium 99m tilmanocept) injection in patients with certain head and neck cancer (squamous cell carcinoma of the oral cavity) in the journal Annals of Surgical Oncology. While the FDA has already approved Lymphoseek for sentinel lymph node detection (October 15, 2014), it is nonetheless interesting that Lymphoseek appeared effective even if the surgery was done the next day:

Of note, the specificity of tilmanocept for lymphatic tissues assessed via in vivo imaging and in vitro analysis of its receptor binding properties suggest that tilmanocept does not move downstream to distal lymph nodes, permitting high confidence that a hot node found during nextday procedures is in fact an SLN. The present study supports that the SLN detection rate and FNR for nodal metastases were not significantly affected by the day of surgery relative to timing of [99mTc]tilmanocept injection. This attribute portends that the use of [99mTc]tilmanocept provides substantial leeway and scheduling flexibility with regard to time of injection and subsequent lymphoscintigraphy and SLNB procedures (i.e. next-day surgery) without compromising the reliability of results.

The full research paper may be downloaded in PDF form at: http://bit.ly/17dT8H1

Preliminary Lymphoseek Results for Year-End 2014
On February 9, 2015, Navidea announced preliminary unaudited total revenue of $6.3M for 2014, including Lymphoseek sales of $4.2M for 2014, exceeding our estimates of $5.4M and $4.1M, respectively. Navidea’s gross profit is expected to be $4.7M for 2014 and $1.9M for Q4 2014, exceeding our estimates of $3.8M and $1.0M, respectively. Key metrics for 2014 included:

- Approximately 22,000 procedures using Lymphoseek were performed in 2014
- Sustained average quarter-on-quarter growth rate of >20%
- Realized a reorder rate in excess of 80%
- Ended 2014 with more than 500 customers

For 2015, Navidea is implementing new commercial initiatives:
1.) Launch a new branding campaign based on the new FDA label that was approved in the fourth quarter of 2014, which includes sentinel lymph node biopsy for three types of cancers 2.) Increase engagement with surgical oncologists as the key target within the broader treatment team 3.) Deploy a direct sales force beginning in the first quarter of 2015 with focus on regions with the greatest concentrations of cancer diagnosis 4.) Coordinate nuclear medicine directed activities with Navidea’s US distribution partner 5.) Build upon the key performance indicators: Accelerate growth in existing accounts, Add new customers, Capitalize on the greater than 80% reorder rate and Drive patient education in partnership with advocacy groups

Download Full 9-Page Note with Important Disclosures: Morning Note 02-17-15 NAVB

Cellular Biomedicine Group (CBMG) Report 02-17-15

downloadreportRaising Target to $32.50 – CBMG Takes the Lead in CART
CBMG Aggressively Building Immuno-Oncology in China
Don’t Forget CBMG’s Stem Cell Program – KOA Data Soon
CBMG Emerging as a Leading Biotech in China

Download Full 26-Page Report with Important Disclosures: CBMG Target Change 02-17-15

Raising Target Price to $32.50 as CBMG Takes the Lead with New CAR T-Cell Acquisitions: Last week, CBMG announced their acquisition of all Phase I/IIa human clinical trial data, all pending patents, and all manufacturing rights for CAR T-Cell (chimeric antigen receptor T-cell) technology targeting CD19+, CD20+, CD30+ and EGFR+/HER1+ receptor status. These CAR T-cell drug candidates have already been administered to cancer patients in clinical trials conducted by Wei Dong Han, MD, PhD, a renowned key opinion leader in the cancer immunotherapy field, at PLAGH (Chinese PLA General Hospital in Beijing also known as the 301 Hospital). PLAGH is a top-ranking medical center in China with 125 clinical, medical and technological departments and 4,000 patient beds, with annual volumes of approximately 4 million patients and more than 65,000 surgeries. We are expecting all four CAR T-cell drug candidates to advance into Phase IIb/III clinical trials treating various forms of leukemia and lymphoma as well as lung cancer.

CBMG Takes the Lead in China for Immuno-Oncology: With 4 human clinical and 2 preclinical programs in immuno-oncology, CBMG is now the leader in China for this promising cancer technology. This latest acquisition follows CBMG’s January acquisition of 3rd generation CAR T-Cell technology and anti-PD-1 checkpoint inhibitor technology as well as last year’s Agreen acquisition and their technical services business for T Cell Receptors (TCR) clonality analysis technology and T Central Memory Cell (Tcm) and Dendritic Cell (DC) preparation methodologies. We expect CBMG to continue their aggressive acquisition strategy for immuno-oncology drugs in China as well as sign development partnerships with western pharma companies for the Chinese market. (see Immuno-Oncology – Background & Development Program)

Don’t Forget CBMG’s Stem Cell Programs: CBMG is currently conducting human clinical trials for ReJoin™, their autologous adipose stem cell therapy for Knee Osteoarthritis (KOA) and Cartilage Defects (CD). On December 5, 2014, CBMG presented the successful 48-week follow-up data from their Phase I/IIa clinical trial for Rejoin™ in KOA at the 10th Annual World Stem Cell Summit in San Antonio. We expect interim data this quarter (Q1) for their Phase IIb 48 patient randomized, controlled clinical trial with a primary endpoint of WOMAC score at 12 months. We also expect their 30 patient Phase II clinical trial in CD to complete enrollment in Q2 with interim data expected later this year. Finally, CBMG is expected to begin clinical trials for their allogeneic adipose stem cell therapies in Asthma and possibly Chronic Obstructive Pulmonary Disease during 2015. (see Stem Cells – Background & Development Program)

Strong Speculative Buy and $32.50 Target: The sum-of-the-parts valuation consists of our financial model valuation for technical services revenues, future revenues for ReJoin™ and pre-clinical and planning costs for the Asthma, COPD, CAR T-cell and anti-PD-1 programs of $20.75 per share based on a 45x multiple on projected fiscal year 2020 EPS and discounted 35% for cumulative risk. Added to this, we conservatively value the immuno-oncology pipeline at $11.75 per share ($129M or 25% of Bellicum Pharmaceuticals market value (Nasdaq: BLCM Not Rated)) for a total valuation of $32.50 per share. It is important to note that comparable valuations in the CAR T-cell space are significantly higher than our $129M valuation of CBMG’s CAR T-cell program and could represent significant upside to our target price as more details and timelines emerge. (see Market Size and Financial Assumptions)

Not a Biotech “Penny Stock”: CBMG trades on the NASDAQ Capital Market at $16.98 per share at a market capitalization of $187M and approximately $18M in cash (both September 30, 2014 pro forma with December warrant exercises), a significant patent portfolio (see Intellectual Property) and generating revenue from their recent Agreen technical services business acquisition. Investors should also note that with 11M common shares outstanding (also pro forma), significant changes in demand could result in outsized price movements.

Strong Management Team: CEO Dr. Wei (William) Cao has extensive research experience in the immune-pharmacology field at Harvard Medical School, Stanford University Medical Center Fudan University Medical College in Shanghai with 30 patents granted. He has also served at Bayer Diagnostics Asia Pacific and as China General Manager of Affymetrix (Nasdaq:AFFX). CFO Bizuo (Tony) Liu was formerly Corporate Vice President at Alibaba Group (NYSE:BABA) responsible for Alibaba’s overseas investments and as General Manager of Corporate Strategy for Microsoft (Nasdaq:MSFT) managing their China investment strategy and corporate strategic planning process. CBMG has a broad base of experience both within company management and on the Board of Directors (see Management)

China Stem Cell Regulations Approval Soon: While China’s Ministry of Health currently has a moratorium on “unapproved stem cell clinical trials and applications“, the PRC central government has issued proposed regulations for cell therapy development in China and we believe these regulations will become final during 2015 providing a regulatory pathway for approval and marketing well within the time horizon for ReJoin™ in KOA and CD (as well as Asthma and COPD). Investors should note that CBMG’s ongoing ReJoin™ clinical trials are registered and being conducted at Shanghai Renji Hospital in Shanghai which has 1,600 patient beds, performs 28,000 operations per year and is affiliated with the Shanghai Jiao Tong University School of Medicine. It is also worth noting the Chinese government declared stem cell technology to be a part of China’s national long-term scientific and technological development plan “Innovation 2020″. (see Other Information – Regulatory)

Download Full 26-Page Report with Important Disclosures: CBMG Target Change 02-17-15

Cellular Biomedicine Group (CBMG) Initiation 02-02-15

downloadreports Initiating CBMG with Strong Speculative Buy $23.75 Target
s Crouching Tiger: Strong Stem Cell Program – KOA Data Soon
s Hidden Dragon: Building Strong Immuno-Oncology Program
s This China Biotech is Under The Radar – But Not for Long

Download Full 25-Page Initiation Report with Important Disclosures: CBMG Initiation 02-02-15

Initiating Research Coverage on Cellular Biomedicine Group (CBMG) with a Strong Speculative Buy and $23.75 Target: CBMG focuses on the China healthcare market by developing and commercializing cellular therapies for degenerative joint diseases, airway diseases and immuno-oncology drugs as well as providing biomedical and cellular technical services to healthcare facilities in China. We believe this relatively unknown biotech is significantly undervalued as their clinical programs and aggressive acquisition strategy begins to unlock additional value during 2015 and beyond.

Crouching Tiger: Stem Cell Programs: CBMG is currently conducting human clinical trials for ReJoin™, their autologous adipose stem cell therapy for Knee Osteoarthritis (KOA) and Cartilage Defects (CD). On December 5, 2014, CBMG presented the successful 48-week follow-up data from their Phase I/IIa clinical trial for Rejoin™ in KOA at the 10th Annual World Stem Cell Summit in San Antonio. We expect interim data this quarter (Q1) for their Phase IIb 48 patient randomized, controlled clinical trial with a primary endpoint of WOMAC score at 12 months. We also expect their 30 patient Phase II clinical trial in CD to complete enrollment in Q2 with interim data expected later this year. Finally, CBMG is expected to begin clinical trials for their allogeneic adipose stem cell therapies in Asthma and possibly Chronic Obstructive Pulmonary Disease during 2015. (see Stem Cells – Background & Development Program)

Hidden Dragon: Immuno-Oncology Programs: CBMG is now starting to leverage their recent Agreen acquisition and their technical services business for T Cell Receptors (TCR) clonality analysis technology and T Central Memory Cell (Tcm) and Dendritic Cell (DC) preparation methodologies. In January 2015, they acquired 3rd generation CAR T-Cell (chimeric antigen receptor T-cell) technology and anti-PD-1 checkpoint inhibitor technology, which are both in pre-clinical studies. We expect CBMG to continue their aggressive acquisition strategy for immuno-oncology drugs in China as well as sign development partnerships with western pharma companies for the Chinese market. (see Immuno-Oncology – Background & Development Program)

Not a Biotech “Penny Stock”: CBMG trades on the NASDAQ Capital Market at $16.98 per share at a market capitalization of $187M and approximately $18M in cash (both figures pro forma with December warrant exercises), a significant patent portfolio (see Intellectual Property) and generating revenue from their recent Agreen technical services business acquisition. Investors should also note that with 11M common shares outstanding (also pro forma), significant changes in demand could result in outsized price movements.

Strong Management Team: CEO Dr. Wei (William) Cao has extensive research experience in the immune-pharmacology field at Harvard Medical School, Stanford University Medical Center Fudan University Medical College in Shanghai with 30 patents granted. He has also served at Bayer Diagnostics Asia Pacific and as China General Manager of Affymetrix (Nasdaq:AFFX). CFO Bizuo (Tony) Liu was formerly Corporate Vice President at Alibaba Group (NYSE:BABA) responsible for Alibaba’s overseas investments and as General Manager of Corporate Strategy for Microsoft (Nasdaq:MSFT) managing their China investment strategy and corporate strategic planning process. CBMG has a broad base of experience both within company management and on the Board of Directors (see Management)

China Stem Cell Regulations Approval Soon: While China’s Ministry of Health currently has a moratorium on “unapproved stem cell clinical trials and applications“, the PRC central government has issued proposed regulations for cell therapy development in China and we believe these regulations will become final during 2015 providing a regulatory pathway for approval and marketing well within the time horizon for ReJoin™ in KOA and CD (as well as Asthma and COPD). Investors should note that CBMG’s ongoing ReJoin™ clinical trials are registered and being conducted at Shanghai Renji Hospital in Shanghai which has 1,600 patient beds, performs 28,000 operations per year and is affiliated with the Shanghai Jiao Tong University School of Medicine. It is also worth noting the Chinese government declared stem cell technology to be a part of China’s national long-term scientific and technological development plan “Innovation 2020″. (see Other Information – Regulatory)

Initiating with a Strong Speculative Buy and $23.75 Target: Our financial model valuation for technical services revenues, future revenues for ReJoin™ and pre-clinical and planning costs for the Asthma, COPD, CAR T-cell and anti-PD-1 programs is $20.75 per share based on a 45x multiple on projected fiscal year 2020 EPS and discounted 35% for cumulative risk. We then add $2.50 per share (approximately $25M valuation) for the CAR T-Cell/anti-PD-1 immuno-oncology preclinical programs and $0.50 per share (approximately $5M) for the Asthma and COPD programs for a total valuation of $23.75 per share. It is important to note that our valuations for the pre-clinical programs are conservative relative to current market conditions and could represent significant upside to our target price as the programs mature, especially with respect to the CAR T-cell program where valuations in the CAR T-cell space are significantly higher than our current $25M valuation of CBMG’s CAR T-cell program. (see Market Size and Financial Assumptions)

Download Full 25-Page Initiation Report with Important Disclosures: CBMG Initiation 02-02-15

Navidea (NAVB) Note 01-29-15

downloadreportData Shows Lymphoseek Requires Fewer SNL Removals in Breast Cancer
Lymphoseek® Begins 2015 US Sales Push with New Commercialization Team
Gold Standard Lymphoseek® Plus Game-Changer Macrophage Therapeutics
$2.5M Funding for Macrophage Therapeutics – Navidea Retains 99.5%

Download Full 8-Page Note with Important Disclosures: Morning Note 01-29-15 NAVB

The results of a study comparing Lymphoseek (99mTc tilmanocept) against sulfur colloid (fTcSC) in breast cancer patients was published in “Annals of Surgical Oncology”. The paper titled “Comparison of [99mTc]Tilmanocept and Filtered [99mTc]Sulfur Colloid for Identification of SLNs in Breast Cancer Patients”, which showed that significantly fewer Sentinel Lymph Nodes were removed using Lymphoseek while maintaining comparable identification of node-positive patients and the number of positive nodes. A PDF of the paper may be accessed here: http://bit.ly/1DjQfi9 

Comparison Number of Sentinel Lymph Nodes Removed

clip_image002

SLN mapping with [99mTc]tilmanocept/VBD (blue) resulted in the
removal of fewer total lymph nodes compared to fTcSC/VBD (yellow)

Source: Baker, JL et al, “Comparison of [99mTc]Tilmanocept and Filtered [99mTc] SulfurColloid for Identification of SLNs in Breast Cancer Patients” Ann Surg Oncol (2015)
22:40–45

 Highlights:
Fewer nodes were removed among patients mapped with TcTM compared to fTcSC (mean TcTM: 1.85 vs. fTcSC: 3.24, p < 0.001).

Logistic regression analysis adjusted for tumor characteristics showed that injection of fTcSC (p < 0.001) independently predicted removal of greater than 3 nodes.

A similar proportion of patients was identified as node-positive, whether mapped with TcTM or with fTcSC (TcTM: 24 % vs. fTcSC: 17 %, p = 0.3)

TcTM detected a greater proportion of positive nodes among node-positive patients compared with fTcSC (0.73 vs. 0.43, p = 0.001).

Download Full 8-Page Note with Important Disclosures: Morning Note 01-29-15 NAVB

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