Research

Navidea (NAVB) Note 09-03-15

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5th NIH Grant in 6 Weeks for Manocept™ Platform – Now Funding KS

Download Full 8-Page Note with Important Disclosures: Morning Note 09-03-15 NAVB

Navidea Receives 5th NIH Grant in 6 Weeks – This Time for Kaposi’s Sarcoma: Navidea announced a notice of award for a Fast Track Small Business Innovation Research (SBIR) grant providing for up to $1.8M from the National Cancer Institute (NCI), National Institutes of Health (NIH), to fund 1.) preclinical studies examining the safety of intravenous (IV) injection of Tc99m tilmanocept, a Manocept™ platform product, 2.) followed by a human clinical study providing the initial evaluation of the safety and efficacy of SPECT imaging studies with IV Tc99m tilmanocept to identify and quantify both skin- and organ-associated KS lesions in human patients. The first six-month funding segment of $300,000, which has already been awarded, is expected to enable Navidea to secure necessary collaborations and Institutional Review Board (IRB) approvals. The second funding segment could provide for up to an additional $1.5M million to be used to accrue participants, perform the Phase I/II study and perform data analyses to confirm the safety and effectiveness of intravenously administered Tc99m tilmanocept. 

Preclinical Animal Studies: Preclinical animal studies and laboratory test development will investigate the feasibility and support clinical protocol development for intravenous administration of Tc99m tilmanocept in human patients with KS and will include method development and validation for dose solution analysis and various pharmacology, pharmacokinetic and toxicology analysis in animals.

Phase I/II Human Clinical Study: This study has been designed as a single center, open-label, non-randomized, Phase I/II Clinical Study to evaluate intravenous injection of Tc99m tilmanocept into KS patients. The study, using imaging with single-photon emission computed tomography (SPECT) and likely, SPECT/CT, will evaluate the ability of Tc99m tilmanocept to identify KS lesions and bind to CD206 on KS cells and their tumor-associated macrophages (TAMs). Various doses of Tc99m tilmanocept will be evaluated. The study is expected to involve up to 48 patients with HIV- or transplant-associated KS and last 2 years. The goal of the study is to provide evidence evaluating the safety and efficacy as well as optimal dosing and timing of Tc99m tilmanocept as a SPECT imaging agent for KS lesions.

Navidea Continues Unlocking Value with Non-Dilutive Funding: As Navidea continues their quest to unlock value using non-dilutive funding, investors should note that Navidea was also recently awarded 4 grants for Cervical Cancer, Alzheimer’s, Atherosclerosis and Rheumatoid Arthritis as shown below:

NIH Grants for Cervical Cancer and Alzheimer’s: On July 29, 2015, Navidea announced they received confirmation of funding parts 2 and 3 of previously awarded NIH SBIR grants supporting clinical studies for Lymphoseek® in cervical cancer ($1.5M) and for NAV4694 in Alzheimer’s Disease and Mild Cognitive Impairment ($1.7M).

NIH Grant using Lymphoseek® for Rheumatoid Arthritis (RA): On July 29, 2015, 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.

NIH Grant using Lymphoseek® for Atherosclerosis: On July 28, 2015, 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).

Reiterating 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 8-Page Note with Important Disclosures: Morning Note 09-03-15 NAVB

Navidea (NAVB) Note 09-02-15

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Navidea Expands Investor Base and Trading Hours with TASE Dual-Listing
Navidea Reiterates Sales Guidance for 2015 – Cash Flow Breakeven Q1’16

Download Full 7-Page Note with Important Disclosures: Morning Note 09-02-15 NAVB

Dual-Listing Expands Navidea’s Investor Base and Trading Hours: Navidea announced this morning that the Tel Aviv Stock Exchange (TASE) has approved the new dual-listing listing of Navidea’s common stock on the TASE beginning on Tuesday, September 8, 2015 under the ticker symbol NAVB. Importantly, Navidea expects its shares to be included in five TASE equity indexes (TA-75, TA-100, TA-BlueTech, TA-Tech-Elite and TA-Biomed) significantly expanding Navidea’s investor base and trading hours. Information on the benefits and mechanics of U.S. companies dual-listing on the Tel-Aviv stock exchange can be found at http://www.tase.co.il/Eng/Listings/DualListing/Pages/DualListing.aspx or downloaded as a PDF at http://www.tase.co.il/resources/pdf/booklets/booklet_duallistings_eng_104186.pdf 

Navidea Outperforming Biotech and NASDAQ: Over past 3 months, Navidea has outperformed both the iShares Nasdaq Biotechnology (IBB) and the NASDAQ index and we also note that the outperformance has accelerated during the recent weakness in the stock market. 


Lymphoseek Sales to Ramp Up Significantly in H2: On July 30, 2015, Management stated that Lymphoseek usage reached 19,000 surgical procedures during the first half of 2015 and previously stated expectations to reach 50,000 procedures for all of 2015. Based on this, the rough “back of the envelope” estimate from the first half to the second half of 2015 is as follows:

H2 versus H1
H1’15
H2’15
2015
H2/H1
Price per Procedure
$357
$497
+39%
# of Procedures
19,000
31,000
50,000
+63%
Revenue (at 50%)
$3.4M
$7.7M
$11.1M
+126%

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.

Macrophage Therapeutics – Undervalued Crown Jewel: We believe that Navidea’s Macrophage Therapeutics, which is developing a pipeline of Manocept™ drugs targeting the CD206 mannose receptor found on activated macrophages, represents Navidea’s crown jewel for transformation into a biotech company. Macrophage therapies remain a relatively untapped field that could yield multiple drug successes, even potential blockbusters. Macrophages play a role in multiple indications such as cancer, autoimmunity, infectious diseases and cardiology and the company is developing three drug classes (MT-1000, MT-2000 and MT-3000) to address the specific disease properties. We expect savvy investors to get ahead of the newsflow as development in these immunology drug classes progresses. Investors should note the parallel to monoclonal antibody development where they were used successfully as imaging agents before being 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 the company will eventually become a biotech drug company rather than “just” a diagnostic imaging company.

Reiterating 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 09-02-15 NAVB

Cellular Biomedicine (CBMG) Update Report 08-17-15

downloadreportLowering Target to $37 Pending New Plans for CD40LGVAX
CBMG Shares Hit by Weak Biotech Sector and China Market
CAR T-Cell EGFR/HER1 in Lung Cancer Data Soon
Adds Executives from MedImmune/AZN & GlaxoSmithKline

Download Full 41-Page Update Report with Important Disclosures: CBMG Update 08-17-15

CBMG Takes Over CD40LGVAX Vaccine Sponsorship: On June 29, 2015, CBMG announced their acquisition of CD40LGVAX, an “off-the-shelf” lung adenocarcinoma vaccine that would begin clinical trials by year-end 2015 and sponsored by the Moffitt Cancer Center in combination with Bristol-Myers Squibb’s (NYSE:BMY Not Rated) anti-PD-1 checkpoint inhibitor Nivolumab (Opdivo®). On August 11, 2015, Moffitt began transferring the sponsorship (ownership) of the trial to CBMG which is now evaluating both U.S. and non-U.S. options for CD40LGVAX clinical trials. Some possibilities are a multi-center trial, which would enroll faster than the single-center Moffitt trial, in combination with nivolumab or another checkpoint inhibitor and/or a co-stimulatory agent as well as trials in China. However, at this time the current uncertainty about the timing, design, locations and costs reduces our valuation of CD40LGVAX from $110M to $55M or $5.00 per share until we have more visibility for their development plans in the U.S and/or China. (see CD40LGVAX Lung Cancer Vaccine)

CBMG Shares Impacted by Weakness in both the Biotech Sector and China Stock Market: CBMG shares have been adversely affected by the recent weakness in Immuno-Oncology stocks, a biotech sector that we believe will regain strength as more newsflow and clinical trial results are reported in the future. Although CBMG shares are only traded in the U.S., the recent volatility in the China stock market has also impacted CBMG shares as seen below:


Maintaining Strong Speculative Buy – Lowering Target to $37.00: Despite solid progress in building a world-class scientific and clinical development team with a significant pipeline of cellular and immunology drug candidates under development, CBMG shares have been negatively impacted by the simultaneous sector-wide decline in the immuno-oncology space and the market concerns in China. We believe both issues are overdone and expect a more stable environment will be forthcoming. That said, the change in CD40LGVAX development plans now makes it difficult to value until the clinical pathway becomes better defined. For CBMG’s CAR T-cell program we are valuing at $145M ($12.00 per share) while we are valuing the CD40LGVAX program at $55M ($5.00 per share) as well $3.50 per share for their preclinical 3rd-generation anti-PD-1 checkpoint inhibitor program for a valuation of CBMG’s immuno-oncology programs of $20.50 per share. Our valuation for the technical services and clinical stem cell programs is $16.00 per share based on a 45x multiple on projected fiscal year 2020 EPS and discounted 35% for cumulative risk plus $0.50 per share for the preclinical Asthma and COPD programs for a total of $16.50 per share. (see Market Size and Financial Assumptions)

RECENT MANAGEMENT ADDITIONS:
Chief Scientific Officer from MedImmune/AstraZeneca: On August 8, 2015, CBMG announced the appointment of Yihong Yao, Ph.D., B.S. as Chief Scientific Officer to lead their Immuno-Oncology programs (CAR-T and CD40LGVAX) and the inflammatory/autoimmune disease programs as well as clinical trial design and bioinformatics. Dr. Yao received his B.S. degree in Biochemistry from the Department of Biochemistry, Fu Dan University, Shanghai, China, a Master’s Degree in bioinformatics from Boston University and his Ph.D. in Molecular Biology & Biochemistry from the Department of Biochemistry, University of Kansas, Lawrence, Kansas, USA. He completed his Postdoctoral Fellowship at Johns Hopkins University, School of Medicine, Baltimore, Maryland, USA. In addition to his strong academic background, he has over fifteen years of professional experience with pharmaceutical and biotechnology companies including MedImmune biologics research and development arm of AstraZeneca (NYSE:AZN Not Rated), and Abbott Bioresearch Center (NYSE:ABBV Not Rated). Dr. Yao is the co-inventor of twenty-six filed patents relating to tumor classification, degenerative muscle disease and autoimmune disease diagnostics and treatment. He has published over sixty papers in translational science peer-reviewed journals and has authored or co-authored two books on the subjects of inflammatory and autoimmune diseases and genomic biomarkers. Dr. Yao is a frequently invited speaker and panelist for many international conferences on biomarkers, personalized medicine, miRNA, rheumatology and oncology.

Chief Operating Officer from GlaxoSmithKline: 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.

Chairman of Scientific Advisory Board: On July 8, 2015, CBMG announced the appointment of Alan List, MD as Chairman of the Scientific Advisory Board. 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).

OTHER CBMG RECENT NEWS:
CFDA Certifies Preservation Kits: CBMG 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). On July 27, 2015, CBMG announced 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).

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.

RECENT CHINA AND SECTOR EVENTS:
On August 13, 2015, Merck (NYSE: MRK Not Rated) and The University of Texas MD Anderson Cancer Center announced they entered into a strategic clinical research collaboration to evaluate Merck’s anti-PD-1 therapy, KEYTRUDA® (pembrolizumab), in combination with other treatments, such as chemotherapy, radiation therapy and/or novel antitumor medicines. Under the terms of the agreement, collaborative studies will be conducted in the following tumor types: gastroesophageal adenocarcinoma, pancreatic adenocarcinoma, and hepatocellular carcinoma over the three year period of the collaboration. The first studies are scheduled to start enrolling later this year. Additional details at: http://www.mercknewsroom.com/news-release/oncology-newsroom/merck-and-md-anderson-cancer-center-announce-strategic-immuno-oncolog

On July 29, 2015, Merck (NYSE: MRK Not Rated) announced they will acquire cCAM Biotherapeutics (private) for $95M in upfront cash and up to $510M in milestone payments. cCAM Biotherapeutics’ lead pipeline candidate is CM-24, a monoclonal antibody (MAb) targeting the immune checkpoint protein CEACAM1 currently in a Phase I trial for advanced or recurrent malignancies, including melanoma, non-small-cell lung, bladder, gastric, colorectal, and ovarian cancers. Additional details at: http://www.mercknewsroom.com/news-release/oncology-newsroom/merck-enhances-immuno-oncology-portfolio-acquisition-ccam-biotherapeu

On July 28, 2015, Regeneron (Nasdaq: REGN Not Rated) and Sanofi (NYSE: SNY Not Rated) entered into a global collaboration agreement for new antibody cancer treatments in immuno-oncology including the anti-PD-1 checkpoint inhibitor REGN2810 currently in a Phase I trial. Sanofi paid $640M upfront and the companies will invest a combined $1B through proof of concept development of monotherapy and novel combinations of immuno-oncology antibody candidates to be funded by Regeneron for $250M and Sanofi for $750M. The companies have also committed to fund an additional $325M each for development of REGN2810. In addition, Sanofi will pay Regeneron a one-time milestone of $375M in the event that sales of an anti-PD-1 product and any other collaboration antibody sold for use in combination with an anti-PD-1 product exceed, in the aggregate, $2B in any consecutive 12-month period. Finally, the two companies have agreed to re-allocate $75M over three years for immuno-oncology antibodies from Sanofi’s $160M annual contribution to their existing antibody collaboration, which otherwise continues as announced in November 2009. Beyond the committed funding, additional funding will be allocated as programs enter post-POC development. Additional details at: http://en.sanofi.com/NasdaQ_OMX/local/press_releases/sanofi_and_regeneron_launch_ma_1941594_28-07-2015!07_00_00.aspx

On July 24, 2015, the Chinese government approved the implementation of nationwide medical insurance for serious illness. Liang Wannian, vice-director of the medical reform office under the State Council and a senior official with China’s National Health and Family Planning Commission stated “By the end of this year, the medical insurance on serious illness will cover all residents, no matter in rural or urban areas, as long as they have taken part in the new rural cooperative medical care scheme or the urban medical care system. The burden on seriously ill patients will be effectively reduced, and by 2017, China will establish an efficient medical care scheme on serious illness as a supplement to medical assistance, disease emergency rescue, commercial medical care and social charity. All this will protect families from dramatic medical bills and improve the fairness of medical care.” The full transcript of the briefing in English can be accessed at http://english.gov.cn/news/policy_briefings/2015/07/24/content_281475153432411.htm

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 41-Page Update Report with Important Disclosures: CBMG Update 08-17-15

Navidea (NAVB) Update Report 08-13-15

downloadreportLymphoseek® Sales to Double in H2 – B/E by Q1’16
First Therapeutic Drug Candidate for Kaposi’s Sarcoma
Grants:Cervical Cancer,RA,Atherosclerosis & Alzheimer’s

Download Full 28-Page Update Report: NAVB Update 08-13-15

Lymphoseek® On-Track to Reach Breakeven Sales by Q1’16: Highlights from Navidea’s Q2 conference call were 1.) Management reiterated full year Lymphoseek® sales revenue at $10M-$12M, 2.) Management reiterated cash flow breakeven in Q1 2016, 3.) The pre-planned 39% price increase for Lymphoseek® from $357 to $497 will take effect on July 31st, 4.) The full 12 man salesforce was fully in-place starting in mid-May with a sales cycle of 4-6 months, 5.) Navidea trimmed their Operating Loss in Q2 to ($3,811) versus our estimate of ($4,694), 6.) Net Loss was larger than projected due to interest expense of $1,576 and large non-cash items and 7.) Navidea continues to develop new diagnostic and therapeutic markets for their CD206 Manocept™ platform using non-dilutive grant funding. Finally, Management stated that Lymphoseek usage reached 19,000 surgical procedures during the first half of 2015 and previously stated expectations to reach 50,000 procedures for all of 2015. Based on this, the rough “back of the envelope” estimate from the first half to the second half of 2015 is as follows:

H2 versus H1 H1’15 H2’15 2015 H2/H1
Price per Procedure

$357

$497

+39%

# of Procedures

19,000

31,000

50,000

+63%

Revenue (at 50%)

$3.4M

$7.7M

$11.1M

+126%

 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 Unveils their First Drug Candidate: On July 2, 2015, 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. 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. (see Update:Kaposi’s Sarcoma Kill Data)

EULAR 2015 – Manocept™ for Rheumatoid Arthritis: On June 11, 2015, 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. (see Update:EULAR 2015 – Manocept™ for Rheumatoid Arthritis)

Collaboration with BIND Therapeutics (Nasdaq:BIND): On June 11, 2015 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. BIND Therapeutics also has ongoing collaborations with AstraZeneca (NYSE:AZN Not Rated), Pfizer (NYSE:PFE Not Rated) and (Merck NYSE:MRK Not Rated). (see http://ir.navidea.com/phoenix.zhtml?c=68527&p=irol-newsArticle&ID=2058494 )

Unlocking Value with Non-Dilutive Funding: Navidea continued their quest to unlock value using non-dilutive funding landing 4 grants for Cervical Cancer, Alzheimer’s, Atherosclerosis and Rheumatoid Arthritis:

NIH Grants for Cervical Cancer and Alzheimer’s: On July 29, 2015, Navidea announced they received confirmation of funding parts 2 and 3 of previously awarded NIH SBIR grants supporting clinical studies for Lymphoseek® in cervical cancer ($1.5M) and for NAV4694 in Alzheimer’s Disease and Mild Cognitive Impairment ($1.7M).

NIH Grant using Lymphoseek® for Rheumatoid Arthritis (RA): On July 29, 2015, 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.

NIH Grant using Lymphoseek® for Atherosclerosis: On July 28, 2015, 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).

Macrophage Therapeutics – Undervalued Crown Jewel: We believe that Navidea’s Macrophage Therapeutics, which is developing a pipeline of Manocept™ drugs targeting the CD206 mannose receptor found on activated macrophages, represents Navidea’s crown jewel for transformation into a biotech company. Macrophage therapies remain a relatively untapped field that could yield multiple drug successes, even potential blockbusters. Macrophages play a role in multiple indications such as cancer, autoimmunity, infectious diseases and cardiology and the company is developing three drug classes (MT-1000, MT-2000 and MT-3000) to address the specific disease properties. We expect savvy investors to get ahead of the newsflow as development in these immunology drug classes progresses. Investors should note the parallel to monoclonal antibody development where they were used successfully as imaging agents before being 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 the company will eventually become a biotech drug company rather than “just” a diagnostic imaging company.

High Short Interest Could Provide Boost: Navidea has been carrying a high short interest rate of approximately 20% as a result of previous management teams, Lymphoseek pre-approval delays with limited labeling and near-term cash needs. Investors should note that all of these issues have been resolved with a solid commercialization team, FDA and EU approval with sentinel lymph node labeling plus a new credit line with a separate funding mechanism for Macrophage Therapeutics. With an estimated 50 days to cover, any significant material news, especially from the Macrophage Therapeutics pipeline, could provide a share price boost due to short covering.

Reiterating 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 28-Page Update Report: NAVB Update 08-13-15

Navidea (NAVB) Note 07-30-15

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Navidea Reiterates Sales Guidance for 2015 – Cash Flow Breakeven Q1’16
Navidea Continues Unlocking the CD206 Manocept Platform via Grants

Download Full 6-Page Note with Important Disclosures: Mid-Day Note 07-30-15 NAVB

Highlights from this morning’s Conference Call:

a.) Management reiterated full year Lymphoseek® sales revenue at $10M-$12M
b.) Management reiterated cash flow breakeven in Q1 2016
c.) The pre-planned 39% price increase for Lymphoseek® from $357 to $497 will take effect on July 31st
d.) The full 12 man salesforce was fully in-place starting in mid-May with a sales cycle of 4-6 months

The rough “back of the envelope” growth from the first half to the second half of 2015 is as follows:

H2 versus H1

H1’15

H2’15

2015

H2/H1

Price per Procedure

$357

$497

39%

# of Procedures

19,000

31,000

50,000

63%

Revenue (at 50%)

$3.4M

$7.7M

$11.1M

126%

e.) Navidea trimmed their Operating Loss in Q2 to ($3,811) versus our estimate of ($4,694)
f.) Net Loss was larger than projected due to interest expense of $1,576 and large non-cash items
g.) Continuing to develop new diagnostic and therapeutic markets for their CD206 manocept platform using non-dilutive grant funding.

Our Take: Navidea’s operating results for Q2 were roughly in in-line with our expectations with no changes to management’s sales and cash breakeven guidance. Perhaps more importantly, there were no negative surprises.

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 6-Page Note with Important Disclosures: Mid-Day Note 07-30-15 NAVB

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