Research

Navidea (NAVB) Note 10-30-14

downloadreportEU Presentations & CHMP Recommendation – Expect EU Approval in 60 Days
Broad FDA Approval Means Significant Price Increase Plus Larger Market
Lymphoseek® Becoming Gold Standard of Care in United States
New CEO Named with Market Execution Experience

Download Full 10-Page Note with Important Disclosures: Morning Note 10-30-14 NAVB

Navidea announced presentations for Lymphoseek® (technetium Tc 99m tilmanocept) injection in breast cancer, melanoma or head and neck cancer were recently presented at the European Association of Nuclear Medicine and at the European Society of Surgical Oncology-British Association of Surgical Oncology Congress. Positive and consistent results from the three successful Phase III studies in melanoma, breast cancer, and oral head and neck cancers in over 500 patients. To date, no clinically significant drug-related adverse reactions have been reported. Lymphoseek has no contraindications and the most common adverse reactions were injection site irritation and/or pain (<1%). The full abstracts are below:

27th Annual European Association of Nuclear Medicine (EANM) Congress – October 18-2,1 2014 – Gothenburg, Sweden

Abstract: OP589 

Title: 99mTc-tilmanocept (TcTm) provides precise correlation of lymphoscintigraphy with in vivo lymph node findings in a meta-analysis of [breast cancer (BC), melanoma (ME), head/neck SCC (HNSCC)]

Authors : W. Metz, F. O. Cope, C. Reininger, J. Shuping, B. Abbruzzese, D. Colborn, B. Potter, M. Blue; Navidea Biopharmaceuticals, Dublin, OH, United States

Objective: To evaluate the lymphatic mapping performance of TcTm for preoperative and intraoperative localization across breast cancer, melanoma (all sites), and head/neck SCC (cutaneous and oral including tongue, floor-of-mouth, gingiva and lip).

Methods: An evaluation of localization of TcTM in three Phase 3 studies was conducted. 384 patients were screened, consented and evaluable in the studies as Tis/T1-T4, N0, M0. Studies consisted of two Phase 3 studies for breast cancer and melanoma patients per NEO3-05 (N=149), NEO3-09 (N=152) and a head/neck SCC study (NEO3-06; N=83) with complete lymph node dissection. Patients were injected prior to surgery with 0.5-2.0 mCi of TcTm per protocol. Patients were imaged, and surgery was conducted at a timepoint up to 30 hours after injection. Results of imaging were correlated with intraoperative findings using pool analysis and meta-analysis methods.

Results: 361 of the patients had preoperative imaging performed, and 352 (97.5%) of those patients were localized by TcTM on scan (at least 1 SLN “hot spot”). In vivo localization by either pooled (98.2%; CI = 96.3% – 99.3%) or meta-analysis (99.9%; CI = 99.4% – 100%) indicates a high degree of TcTm localization in lymph nodes. The correlation of preoperative imaging and in vivo findings by TcTM by pooled analysis was 98.2% (95%CI = 96.3% – 99.3%) and by meta-analysis was 99.9% (95% CI = 99.4% – 100%). Localization of lymph nodes and correlation of imaging to in vivo findings was consistent across the three studies.

Conclusions: TcTm localized in >99% of patients, and provided a high correlation with preoperative lymphoscintigraphy, thus providing a significant degree of reliability in lymph node detection and potential for patients’ assessment.

European Society of Surgical Oncology-British Association of Surgical Oncology Congress – October 29-31, 2014 – Liverpool, UK

Abstract: 101 

Title: 99mTc-Tilmanocept (TcTm) provides stably localised detection of lymph nodes (LN) in melanoma across all anatomic locations regardless of body mass index (BMI), or day of surgery

Authors: W. Metz1, J. Shuping1, B. Abbruzzese1, M. Blue1, C. Reininger1, D. Colborn1, B. Potter1, F. Cope1 1Navidea Biopharmaceutical, Clinical, Dublin, USA

Background: Two Phase 3 studies evaluating the performance of TcTm for mapping LNs in melanoma patients were completed. Key components of this performance were localization concordance with vital blue dye (VBD), pathology assessment of the LNs and assessment of localization and degree of localization by anatomic region relative to the location of the tumor.

Methods: Two Phase 3, prospective, open-label, multicenter comparison studies of TcTm and VBD as lymphoid tissue targeting agents in patients with melanoma undergoing lymph node mapping were conducted. Both studies were performed in patients with cutaneous melanoma. Patients received TcTm (50mcg) by injection in close proximity to the primary tumor either the day of (0.5 mCi) or the day before surgery (1-2mCi) and VBD at time of surgery. All patients underwent preoperative imaging for TcTm localization and were probed intraoperatively. LNs were removed based either on localization of VBD, TcTm or both. An analysis of the overall performance of TcTm was conducted by anatomic region,

BMI, and day of surgery for localization time, degree, concordance with VBD and pathology assessment.

Results: When TcTm was assessed by anatomic region for time to localization, degree of localization (nodes/patient/region) and pathology assessment, there was no difference between any anatomic regions for any of the performance metrics for TcTm. TcTm significantly outperformed VBD on a basis of overall anatomic region diversity. Additionally, there was also no effect of BMI or day of surgery on TcTm performance.

Conclusions: 99mTc-Tilmanocept provides reliable and rapid lymphatic mapping with performance in melanoma patients independent of anatomic location, BMI, or day of surgery (relative to injection day).

Download Full 10-Page Note with Important Disclosures: Morning Note 10-30-14 NAVB

Navidea (NAVB) Mid-Day Note 10-15-14

downloadreportFDA Approves SLN for Breast & Melanoma Plus Mapping All Solid Tumors
Expecting Significant Price Increase with Expanded Addressable Market
Lymphoseek® Becoming Gold Standard of Care in United States
New CEO Named with Market Execution Experience

Download Full 9-Page Note with Important Disclosures: Mid-Day Note 10-15-14 NAVB

Conference Call Highlights: The major highlight from this morning’s conference call is that Navidea and partner Cardinal Healthcare (NYSE:CAH) will be increasing the price of Lymphoseek next year to better reflect the premium for the new FDA-approval for Sentinel Lymph Node detection in Breast, Melanoma and oral Head & Neck cancers as well as lymphatic mapping in all solid tumors. We expect to see the price increase from $300 to approximately $400 per procedure for at least the Breast, Melanoma and Head & Neck cancer patients. However, Lymphoseek may retain the lower price for non-SLN solid tumor patients to drive adoption in those patients. In our view, Lymphoseek is now the Gold Standard of Care for these patients. The main remaining challenge is now marketing execution by Navidea and Cardinal.

New CEO with Experience: To execute the marketing plan for Lymphoseek, Navidea announced the appointment of a new CEO, Rick Gonzalez, former Vice President, Global Operations at Spectrum Pharmaceuticals (Nasdaq:SPPI). Investors should note that Mr. Gonzalez already has experience in radiolabeled compounds like Lymphoseek as Spectrum’s Zevalin is a Yttrium-90 radiolabeled anti-CD20 monoclonal antibody for non-Hodgkin’s lymphoma. His bio is as follows:

Mr. Gonzalez most recently served as Vice President, Global Operations at Spectrum Pharmaceuticals, a biotechnology company focused in oncology and hematology. At Spectrum Pharmaceuticals, he had increasing responsibilities leading teams in the U.S. and abroad and played an active role in the evolution of the organization from a product development company to a global commercial enterprise. Most recently he was responsible for designing and leading the globalization and commercialization strategy for international markets including Europe, Asia, Middle East and Latin America. Of Mr. Gonzalez’s over 20 years of experience in the pharmaceutical industry, 14 years have been focused in specialty markets, including HIV/AIDS, Hematology and Oncology. Rick’s prior experience includes roles in all aspects of product commercialization including sales, marketing, operations, distribution, managed markets, contracting, reimbursement, pricing and government affairs with several companies including Abraxis Oncology, Genzyme, Ligand Pharmaceuticals, Roche Laboratories and GlaxoSmithKline. Mr. Gonzalez earned his Bachelor of Science in Business Logistics from Penn State University.

Reiterating Strong Speculative Buy: We believe Lymphoseek is finally emerging as the Gold Standard of Care patients. In addition to the larger patient population now approved for Lymphoseek, we will also see Lymphoseek pricing significantly increased by partner Cardinal Healthcare (NYSE:CAH) and approval by the EMA (European Medicines Agency) for Lymphoseek in Europe by year-end. We are also encouraged by Navidea’s new CEO, Rick Gonzalez, who has experience in both market execution and radiolabeled compounds. We are also optimistic now that Navidea is pursuing Lymphoseek partnerships such as the recent September 4, 2014 Lymphoseek partnership in China and the Manocept joint venture (on July 15th Navidea formed a joint enterprise called R-NAV, combining Navidea’s Manocept CD206 macrophage targeting platform and Rheumco’s proprietary Tin-117m radioisotope technology). 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 estimated upfront cash licensing values assuming deferred clinical trial enrollment ($15M NAV4694, $10M NAV5001, $3M NAV1800, $7M Manocept). Investors should note that there is significant upside to our financial model if Navidea successfully reduces cash burn on NAV4694 and NAV5001 while increasing Lymphoseek sales to become cash flow positive.

Download Full 9-Page Note with Important Disclosures: Mid-Day Note 10-15-14 NAVB

Navidea (NAVB) Note 10-15-14

downloadreportUpside Surprise #1: FDA Approves SLN for Breast Cancer & Melanoma
Upside Surprise #2: FDA Approves Lymphatic Mapping for All Solid Tumors
Lymphoseek® Becoming Gold Standard of Care in United States
Expecting EMA European Approval for Lymphoseek® by Year-End

Download Full 9-Page Note with Important Disclosures: Morning Note 10-15-14 NAVB

Note: Navidea will be holding a conference call this morning at 8:30 AM Eastern Time. U.S. dial-in 1-877-407-0789 / International dial-in 1-201-689-8562 / Live Webcast http://public.viavid.com/index.php?id=111146

Significant Upside Surprise: Navidea announced that the FDA has approved their sNDA (Supplemental New Drug Application) for the expanded use of Lymphoseek® (technetium Tc 99m tilmanocept) injection for lymphatic mapping in all solid tumors. In addition, the FDA approved adding the Sentinel Lymph Node detection claim for Lymphoseek in breast cancer and melanoma (H&N Cancer was already approved in June). In summary, 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.

· FDA-Approved guiding Sentinel Lymph Node Biopsy (SLNB) using a handheld gamma counter in patients with clinically node negative squamous cell carcinoma (SCC) of the oral cavity, breast cancer or melanoma.

· FDA-Approved lymphatic mapping using a handheld gamma counter to locate lymph nodes draining a primary tumor site in patients with solid tumors for which this procedure is a component of intraoperative management

· FDA-Approved expanded utilization of Lymphoseek with or without scintigraphic imaging, known as lymphoscintigraphy, to enable pre-operative imaging and mapping of lymph nodes to facilitate node localization during surgical procedures.

· Lymphoseek is immediately available using existing reimbursement codes for this expanded population of cancer patients.

· A post-marketing pediatric study in solid tumor cancer with a target date for submission in 2018 will be conducted.

Reiterating Strong Speculative Buy: We believe Lymphoseek is finally emerging as the Gold Standard of Care for these patients. In addition to the additional patient population now approved for Lymphoseek, we would not be surprised to see Lymphoseek pricing increased by partner Cardinal Healthcare (NYSE:CAH). We also expect approval by the EMA (European Medicines Agency) for Lymphoseek in Europe by year-end. We are further encouraged that Navidea is pursuing additional indications for Lymphoseek as well as the recent September 4, 2014 Lymphoseek partnership in China and the Manocept joint venture (on July 15th Navidea formed a joint enterprise called R-NAV, combining Navidea’s Manocept CD206 macrophage targeting platform and Rheumco’s proprietary Tin-117m radioisotope technology). 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 estimated upfront cash licensing values assuming deferred clinical trial enrollment ($15M NAV4694, $10M NAV5001, $3M NAV1800, $7M Manocept). Investors should note that there is significant upside to our financial model if Navidea successfully reduces cash burn on NAV4694 and NAV5001 while increasing Lymphoseek sales to become cash flow positive.

Download Full 9-Page Note with Important Disclosures: Morning Note 10-15-14 NAVB

StemCells Inc. (STEM) Note 10-07-14

downloadreportStemCells Inc. Initiates Phase II Clinical Trial for Cervical Spinal Cord Injury
Phase II Clinical Trial for Dry AMD to Begin Soon
Remaining Neutral – No Significant Near-Term Catalysts

Download Full 7-Page Note with Important Disclosures: Morning Note 10-07-14 STEM

StemCells, Inc. announced they initiated the Phase II proof of concept clinical trial (The Pathway Study) using their proprietary HuCNS-SC® platform of human neural stem cells for the treatment of cervical spinal cord injury (SCI). The Pathway Study is the first clinical study designed to evaluate both the safety and efficacy of transplanting stem cells into patients with traumatic injury to the cervical spinal cord. The trial will be conducted as a randomized, controlled, single-blind study and efficacy will be primarily measured by assessing motor function according to the International Standards for Neurological Classification of Spinal Cord Injury (ISNCSCI). The primary efficacy outcome will focus on change in upper extremity strength as measured in the hands, arms, and shoulders. The trial will follow the patients for one year from the time of enrollment.

Remaining Neutral: While we remain enthusiastic about StemCells Inc.’s science and clinical prospects, we note the stock price will be facing headwinds during our next 12-18 month forecast period. Based on our estimated events and milestone timelines, we do not foresee significant upward news catalysts during our forecast period. We also believe that the company will be required to raise additional funds before results from their controlled Phase II trials become available. Finally, the company has had difficulty maintaining the stock price over $2.00 during the past 3 years as capital requirements have created constant pressure on the stock due to dilution. Finally, we believe investor sentiment for the company’s shares has turned cautious due to these factors and we expect it to remain so until the controlled Phase II data is announced. Our Neutral rating and 12-18 month target price of $2.00 is based on 35x estimated 2020 EPS discounted 50% for cumulative risks.

Trial Design: The “Pathway Study” trial will enroll patients with cervical spinal cord injuries in the C5 to C7 region (this region represents the majority of cervical spinal cord injuries). The patients will be randomized to either a HuCNS-SC treatment arm or a non-treatment arm with blinded outcome assessment in approximately 12 centers in North America. It is expected to complete enrollment within one year with the endpoints measured one year post-transplantation. Final data in all patients is currently expected in May 2017 however interim data analysis may be possible during the trial. Details of the trial design can be found at: http://www.clinicaltrials.gov/ct2/show/NCT02163876 

Download Full 7-Page Note with Important Disclosures: Morning Note 10-07-14 STEM

Echo (ECTE) Note 10-03-14

downloadreportEcho Out of Ideas – Calls in PwC While Fighting Platinum’s Game Plan & Cash
Platinum Calls for Shareholder Vote to Remove Board Members “for Cause
Platinum Calls Echo Board “Worst in Class Corporate Governance

Download Full 11-Page Note with Important Disclosures: Morning Note 10-03-14 ECTE

Echo Therapeutics issued two announcements yesterday with the first stating that Board members Michael Goldberg M.D. and Shepard Goldberg, both nominees from Platinum Management (Echo’s largest shareholder owning 20% or 30% on a fully converted basis) were engaging in “numerous unauthorized public communications targeted at Echo stockholders, the trading markets and the media” specifically, the recent investor forum, investor conference calls and press releases. This announcement disclaiming the Goldberg’s actions due to “the potential to confuse and mislead our stockholders as well as the stock market” is unnecessary in our opinion as we have not encountered any confusion among investors outside of their bewilderment with the behavior of the legacy Board.

We also find this ironic considering two of the more “confusing” events from Echo were their press release of June 5, 2014 titled “Positive Clinical Trial Results of Echo Therapeutics Symphony CGM System to be Presented at the 74th Scientific Sessions of the American Diabetes Associationwhen in fact the trial results were not “positive” as it failed to achieve a CE Mark as they stated a month earlier on May 9, 2014. It was also “confusing” when Ms. Burke, Echo’s general counsel, was named interim CEO on June 30th for 60 days expiring August 30th but the company remained silent when August 30th passed and no CEO, interim or otherwise, was announced leading investors to believe Ms. Burke was still interim CEO. To this day we are unaware of anyone who is acting CEO and we must assume that there is an unannounced executive committee of some kind.

To further underscore the investor confusion with the legacy Board, Echo also announced that they have retained PricewaterhouseCoopers LLP’s Restructuring and Recovery Services Practice (PwC) as a financial and restructuring consultant to explore “financial and strategic alternatives that could sufficiently address its liquidity needs and allow it to resume operations. Such financial and strategic alternatives could include, but are not limited to, a sale of intellectual property and other assets, a merger, other business combination, a capital transaction and/or a voluntary petition for reorganization or liquidation pursuant to the U.S. Bankruptcy Code.In our opinion, this demonstrates to investors that after 50 board meetings, proxy battles and numerous lawyers, Echo’s legacy Board has finally admitted they do not know how to run the company or even what to do next. 

We are reiterating our Avoid/Sell rating as we believe the company remains uninvestable as it continues its death spiral as shown below:

[CLICK ON IMAGE TO ENLARGE] EchoChart100314

Download Full 11-Page Note with Important Disclosures: Morning Note 10-03-14 ECTE

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