Research

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

Navidea (NAVB) Note 01-21-15

downloadreport$2.5M Funding for Macrophage Therapeutics – Navidea Retains 99.5%
Macrophage Therapeutics Attractive Across Broad Spectrum of Diseases
Lymphoseek® Begins 2015 US Sales Push with New Commercialization Team

Download Full 7-Page Note with Important Disclosures: Morning Note 01-21-15 NAVB

Navidea announced that Board member and CEO of Navidea’s Macrophage Therapeutics subsidiary submitted a non-binding term sheet to raise $2.5M to fund Macrophage Therapeutics. The investment would represent 0.5% ownership yielding a $500M valuation. Proceeds will be used for pipeline development, general working capital and recruitment of a scientific advisory board, who will take the lead in the design and management of foundational animal studies funded through a combination of government grants, corporate and not-for-profit partnerships. Closing is subject to completion of definitive written agreements.

We believe the proposed transaction represents a good value for Navidea shareholders who would retain 99.5% ownership of Macrophage Therapeutics. We believe the internal implied $500M valuation for Macrophage Therapeutics is a result of other immunology company valuations such as Juno Therapeutics $4.3B (Nasdaq:JUNO Not Rated), Kite Pharma $3.2B (Nasdaq: KITE Not Rated), NewLink Genetics $1.1B (Nasdaq:NLNK) and Bellicum Pharmaceuticals $683M (Nasdaq:BLCM Not Rated).

Reiterating Strong Speculative Buy: With the recent broad FDA approvals for Lymphoseek, higher pricing, a new CEO with commercial experience and a potential game-changer in their Macrophage Therapeutics subsidiary, we believe savvy investors will give Navidea a fresh look in light of the weakness in the share price. 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 estimates for program valuations (Macrophage Therapeutics $20M, NAV4694 $8M, NAV5001 $5M, NAV1800 $2M).

Download Full 7-Page Note with Important Disclosures: Morning Note 01-21-15 NAVB

Navidea (NAVB) Note 01-05-15

downloadreportNavidea Adds More Heft to the Lymphoseek® Commercialization Team
Macrophage Therapeutics Attractive Across Broad Spectrum of Diseases
Manocept™ De-Risked More than Typical Biotechs at this Stage
FDA Gold Standard Lymphoseek® to Begin 2015 Sales Push in U.S.

Download Full 7-Page Note with Important Disclosures: Morning Note 01-05-15 NAVB

Navidea’s CEO Rick Gonzalez announced two additions to his Lymphseek® commercialization team by naming Thomas J. Klima as Senior Vice President and Chief Commercial Officer and Michael Tomblyn, M.D., M.S. as Executive Medical Director. Investors should note that both were previously with Norway-based Algeta, which developed Xofigo (formerly called Alpharadin) radium-223 chloride drug is an alpha emitter radiotherapeutic for castration-resistant prostate cancer that has metastasized to the bone. Subsequent to Xofigo’s FDA and EMA approvals in 2013, development partner Bayer AG acquired Algeta for $2.6B in February 2014. While Lymphoseek® is a radiodiagnostic, we believe their experience in the radioisotope and oncology markets should help boost adoption and sales in 2015 and beyond. Their bios from the press release are as follows:

Thomas J. Klima joins Navidea having held numerous commercial leadership positions, including Head of Sales for oncology company, Algeta (recently acquired by Bayer AG) and Senior Director of Marketing at Dendreon Corporation. Mr. Klima also led various U.S. and global commercial efforts at Eli Lilly, including U.S. Marketing for the Cymbalta Brand Team. Mr. Klima has a B.A. degree in Business Administration and Marketing from Western State College.

Michael Tomblyn, M.D., M.S. served as Senior Medical Director of Bayer Healthcare/Algeta focusing on targeted-radiation therapies. Prior to this Dr. Tomblyn was Assistant Member and Director of Clinical Research, Department of Radiation Oncology, at H. Lee Moffitt Cancer Center and Assistant Professor, Department of Oncologic Science, at University of South Florida. Dr. Tomblyn has a M.D. degree from Rush Medical College, a M.S. in Toxicology from University of Kentucky, a M.A. in Biomedical Sciences from Marshall University, and a B.A. in Medical Ethics from Carnegie Mellon University.

Download Full 7-Page Note with Important Disclosures: Morning Note 01-05-15 NAVB

Echo (ECTE) Note 12-22-14

downloadreportThe Legacy Directors Become the “Resigning Directors”
Platinum and Other Investors Commit to $4M in Fresh Funding
Echo Shares Regain Compliance with NASDAQ for Continued Listing

Download Full 4-Page Note with Important Disclosures: Morning Note 12-22-14 ECTE

Now this is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning.
- Winston Churchill – November 10, 1942

The Tide Turns: Investors are now feeling like Winston Churchill, when after losing every battle for 3 years, the British finally had their first victory of WWII at the second battle of El Alamein. Friday’s 8-K filing brought news that a.) the Legacy Directors are now the “Resigning Directors”, b.) Platinum and others are providing $4M in financial support and c.) Echo has regained compliance with NASDAQ listing requirements.

Maintaining Avoid/Sell Rating for Now: We understand speculators may view Echo shares as a trading idea with the view that “things can only get better” and we might agree. However, we require a financial model with a reasonable basis to determine valuation. In the coming days, weeks and months we expect Echo to announce a new management team, a new product development plan, new timeframes, new market plans, cash requirements and audited year-end financial statements, which will allow for such a new model. We also suggest that when the Resigning Directors actually resign, that Echo change all the locks just in case “to protect the interests of all stockholders“.

It may almost be said, “Before Alamein we never had a victory. After Alamein we never had a defeat.
- Winston Churchill – History of the Second World War, vol. 4 (1951)

Guilty Conscience? Legacy Board members Vincent D. Enright, William F. Grieco and James F. Smith delivered an irrevocable resignation letter stating they will resign from the Board by the earlier of (i) the company obtaining an extended directors and officers insurance policy covering all actions taken by past and present officers and directors while they served in such capacities, which policy will be similar in all material respects to the current D&O policy and (ii) January 15, 2015. Any accrued and unpaid director fees earned by the directors prior to their resignations will be applied toward the cost of the D&O Policy.

$4M Financing Terms:
Cash: On December 18, 2014, Platinum and other investors agreed to purchase Series F Convertible Preferred Stock for $4M with $1M invested upon the execution (840,336 shares at $1.19) with the remaining in 3 consecutive monthly installments of $1M when the new director and officer insurance commences. The Preferred Stock will be equal to the dollar amount of each investment divided by the lesser of (i) the closing bid price of the Common Stock immediately preceding the execution of the respective installment or (ii) $1.50, provided that the Preferred Stock will not be convertible if the conversion would result in the holder beneficially owning more than 19.9% of the then outstanding shares, unless stockholder approval has been obtained for the issuance of the shares of Common Stock issuable upon conversion of the Preferred Stock in accordance with Nasdaq rules. There are customary provisions as well as an additional restriction on conversion such that the Preferred Stock will not be convertible if the conversion would result in the holder beneficially owning more than 9.9% of the then outstanding shares. Affiliates of Platinum agreed to exchange the number of shares of Common Stock owned by them for shares of Preferred Stock, such that the number of shares of Common Stock owned by each Investor following the exchange shall be less than 9.9% of the then outstanding shares of Common Stock.

Warrants: A 5-year Warrant for each share of Preferred Stock was issued with a $3.00 per share exercise price (840,336 Warrants issued upon execution). The Warrants will not be exercisable if the exercise would result in the holder beneficially owning more than 19.9% of the then outstanding shares, unless stockholder approval has been obtained for the issuance of the shares of Common Stock issuable upon exercise of the Warrants.

Regains Compliance with NASDAQ: On December 18, 2014, Echo was notified by NASDAQ that the Company had regained compliance with NASDAQ’s Marketplace Rule 5450(a)(2) because the bid price of the company’s common stock closed at or above the required minimum $1.00 per share for ten consecutive business days.

Download Full 4-Page Note with Important Disclosures: Morning Note 12-22-14 ECTE

Navidea (NAVB) Note 12-15-14

downloadreportMacrophage Therapeutics Attractive Across Broad Spectrum of Diseases
Manocept™ De-Risked More than Typical Biotechs at this Stage
FDA Gold Standard Lymphoseek® to Begin 2015 Sales Push in U.S.
Recent European Approval to Drive Country Sales Rollouts During 2015 

Listen to Complete Conference Call:

DOWNLOAD THE COMPLETE SLIDESHOW: MACROPHAGE THERAPEUTICS 12-15-14

Download Full 6-Page Note with Important Disclosures: Mid-Day Note 12-15-14 NAVB

Macrophage Therapeutics is Real: Macrophage Therapeutics (division of Navidea) showed data underpinning their Manocept™ CD206 mannose receptor science and mechanism of action in targeting activated macrophages for immunotherapy. Specifically, pre-clinical data for Manocept was shown for Kaposi Sarcoma, HIV and HCV by Dr. Michael McGrath (UCSF), Cardiovacular Vulnerable Plaque and Atherosclerosis by Dr. Steven Grinspoon (Harvard) and Rheumatoid Arthritis and Tuberculosis by Dr. Fredrick Cope (Macrophage Therapeutics/Navidea). Disease-modifying agents targeting the innate immune system (the body’s first line of defense) have been focused on the cell signaling chemokines and cytokines produced by activated macrophages. In contrast, Macrophage Therapeutics is focusing on the activated macrophages themselves. We believe investors should also note that a.) Manocept could be used in many more macrophage-involved diseases than just those presented and b.) Manocept is already used in the FDA-approved Lymphoseek® imaging agent for sentinel lymph node detection in cancer.

The high-level takeaways from the presentation was that Manocept:

· Can target, with high-affinity, CD206 on activated macrophages
· Can kill the activated macrophages
· Can distinguish between CD206+ (activated) and CD206- macrophages
· Can deliver an active drug payload to a desired target
· Can deliver double drug payloads to a desired target (imaging & therapeutic)
· Patent portfolio is being expanded with multiple proprietary linkers
· Existing manufacturing process is low cost and proven (FDA-approved)

Attractive Today: Although Macrophage Therapeutics’s gameplan is still in the planning stages, we believe the investment proposition is unusually favorable today. 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 makes it especially attractive for NIH grants and partnerships, both which are sources of non-dilutive financing. Savvy investors will get ahead of the expected significant 2015 newsflow while Navidea remains below the radar as a “biotech” on Wall Street.

Parallels to Monoclonal Antibody Development: Investors should note that monoclonal antibodies were first developed and used successfully as imaging agents before they were developed into successful therapeutics, spawning dozens of drugs and billions in sales. While Manocept™ has a fixed target it can theoretically carry multiple payloads. Combined with the fact that macrophages are involved in such a broad range of diseases, Macrophage Therapeutics could quickly build a pipeline of drug candidates. Therefore, we believe Navidea will eventually become a biotech drug company rather than “just” a diagnostic imaging company.

Funding: Navidea stated that Macrophage Therapeutics will remain under Navidea’s control so existing shareholders benefit, “but also allow funding of future development in a standalone, non-dilutive manner to Navidea’s existing shareholders“. We believe this ultimately means one or more spin-offs to unlock and maximize value.

Lymphoseek® Sales Just Getting Started: Navidea’s Lymphoseek only recently (October 15th) became the “Gold Standard” on October 15th with the first and only FDA approval for Sentinel Lymph Node detection in Breast, Melanoma and Oral head & Neck cancers and also for use in all solid tumors. Lymphoseek was also just recently (November 20th) approved in Europe. With CEO Rick Gonzalez specializing in commercialization, we now believe that Navidea has the pieces in place to begin driving Lymphoseek into the marketplace successfully. The September 4th China partnership announcement also represents additional sales upside.

Cash Management: Navidea has reduced cash burn on their neuroimaging programs NAV4694 and NAV5001 resulting in a 20% reduction in sequential research and development expenses and they are actively seeking out partnerships to continue these programs. With expected Lymphoseek sales increases, the recent $1.1M FDA refund for the PDUFA filing fee as a result of Lymphoseek gaining orphan drug status along with $32M available under their $35M credit line, Navidea stated that they do not expect to raise money through a stock offering in the near future.

Reiterating Strong Speculative Buy: With Lymphoseek only recently achieving broad FDA and European approval, we expect commercialization will begin in earnest during 2015. We also believe Macrophage Therapeutics will begin to bring previously unlocked value to shareholders during 2015. Furthermore, with 29.5 million shares short, 19.9% of the float, a significant short squeeze is possible should these value drivers emerge in a timely fashion. We recommend savvy investors to give Navidea a fresh look. 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 estimates for program valuations (Manocept $15M, NAV4694 $10M, NAV5001 $8M, NAV1800 $2M).

Download Full 6-Page Note with Important Disclosures: Mid-Day Note 12-15-14 NAVB

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