Research

Navidea (NAVB) Note 11-20-14

downloadreportLymphoseek® Granted Full European Approval by EMA
Lymphoseek® Becoming Gold Standard of Care in United States
Broad Approval Means Significant Price Increase Plus Larger Market
New Manocept™ Platform Could Emerge as Game-Changer for Navidea

Download Full 9-Page Note with Important Disclosures: Morning Note 11-20-14 NAVB

Lymphoseek® Now Approved in Europe: Lymphoseek is now the first agent centrally approved in Europe for Sentinel Lymph Node (SLN) detection as the European Medicines Agency (EMA) granted Lymphoseek marketing authorization for use in imaging and intraoperative detection of sentinel lymph nodes draining a primary tumor in adult patients with breast cancer, melanoma, or localized squamous cell carcinoma of the oral cavity. Navidea plans launches during 2015 in the U.K., France, Germany, Spain and Italy with their distribution partner Norgine BV (http://www.norgine.com). Norgine was founded in 1906 and has subsidiaries in UK, Ireland, France, Germany, Belgium, The Netherlands, Nordic, Switzerland, Austria, Italy, Portugal and Spain. Outside Europe, there are Norgine companies in Australia and New Zealand, Middle East and North Africa and South Africa. Norgine also works through a number of distributors around the world. Norgine has a strong history in hospital practice and economics in Europe. Investors should note that pricing for Europe is expected to be lower than the U.S. as the local European healthcare facilities combine the radioisotope with a “cold” kit onsite instead of the U.S. practice where the combined “hot” radiopharmaceutical is shipped to the healthcare facility from a centralized nuclear medicine distributor.

Buy on Weakness: Lymphoseek only recently became the “gold standard” product on October 15th becoming the only FDA-approved radiopharmaceutical agent for sentinel lymph node detection and the only FDA-approved agent for lymphatic mapping of all solid tumors. As a result of this “gold standard” status, a 19% price increase will be going into effect on December 1st. Also on October 15th, Navidea named a new CEO, Rick Gonzalez, with the experience needed for sales, marketing, logistics and operations on a global scale. With full European approval expected within the next 6 weeks, we believe Navidea finally has the best product and the best opportunity to unlock the value of Lymphoseek. Investors should also note the recent September 4th China partnership announcement representing additional sales upside.

Game-Changer Coming: Navidea’s proprietary Manocept CD206 macrophage targeting platform can be leveraged as both a therapeutic and a diagnostic agent in multiple indications such as oncology, autoimmunity, infectious diseases, cardiology, and inflammation. While various Manocept constructs are currently undergoing strategic review, promising initial results have already been seen in Kaposi Sarcoma and rheumatoid arthritis (Navidea recently formed R-NAV joint venture to develop the rheumatoid arthritis indication). We expect to see multiple areas of Manocept opportunities in the near-future and investors should not be surprised if Navidea becomes a biotechnology company with multiple therapeutics instead of a diagnostic company. While currently unvalued by Wall Street, the Manocept platform could be a hidden game-changer for Navidea.

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 the recent broad FDA approvals for Lymphoseek, higher pricing, a new CEO with commercial experience and a potential game-changer in their Manocept platform, 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 (Manocept $15M, NAV4694 $10M, NAV5001 $8M, NAV1800 $2M).

Download Full 9-Page Note with Important Disclosures: Morning Note 11-20-14 NAVB

StemCells Inc. (STEM) Update 11-17-14

downloadreportMaintaining Neutral – Long Phase II Data Horizon
Live Investor & KOL Webcast Thursday
Phase II Trial Started for Cervical Spinal Cord Injury
Phase II Trial Starting Soon for Dry AMD

Download Full 35-Page Update Report with Important Disclosures: STEM Update 11-17-14

NOTE: StemCells, Inc. will host a live investor and analyst webcast on Thursday, November 20, at 12:00pm EST (9:00am PST). The live webcast is at: http://www.media-server.com/m/p/m8h3mw5w 

Initiated Controlled Phase II Trial for Cervical Spinal Cord Injury: StemCells Inc. initiated a controlled Phase II trial (“the Pathway Study”) of their HuCNS-SC in cervical spinal cord injury patients. The trial will enroll patients with cervical spinal cord injuries in the C5 to C7 region (representing 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 endpoints measured at one year post-transplantation. (see Human Trials of HuCNS-SC® for Chronic Spinal Cord Injury)

Initiating Controlled Phase II in Dry AMD in Q4/Q1: StemCells Inc. stated they expect to initiate a controlled Phase II efficacy proof-of-concept study by year-end 2014 (or possibly Q1) and complete enrollment in approximately one year. Trial design details have not yet been disclosed. Investors should note that 85% of all AMD patients currently have the Dry form and 100% of patients with the more serious Wet form progressed from the initial Dry form. The dry form can also cause vision loss without turning into the wet form. (see Human Clinical Trial of HuCNS-SC for Dry AMD)

Patent Infringement Suit Against Neuralstem Scheduled for December: StemCells Inc. ongoing patent infringement lawsuit against Neuralstem (NYSE MKT:CUR) has now completed the discovery phase and the first phase of the bench trial is expected to commence in December 2014. Investors should note that there are no claims of patent infringement against StemCells, Inc. by Neuralstem. (see Intellectual Property)

Licenses and Exits SC Proven Business: On November 10, 2014, StemCells Inc. granted certain licenses and sold certain assets to Takara Bio Inc. so that it could sell the “SC Proven” research tools on a worldwide and exclusive basis beginning January 1, 2015. StemCells Inc. will receive $800,000 and anticipates winding down the Stem Cell Sciences businesses after disposing of remaining inventory and complete tech transfer to Takara Bio.

Maintaining Neutral: While we remain enthusiastic about StemCells Inc.’s science and clinical prospects, we note the stock price will now 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. We further note 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.

Download Full 35-Page Update Report with Important Disclosures: STEM Update 11-17-14

Navidea (NAVB) Update 11-12-14

downloadreports Buy on Weakness – Lymphoseek now Gold Standard
s Navidea now has Best Product with Best Opportunity
s Manocept Platform Hidden Game-Changer

Download Full 31-Page Update Report with Important Disclosures: NAVB Update 11-12-14

What Happened? While sales of Lymposeek for Q3 were up 22% sequentially (excluding the transfer price adjustment for Q2), management lowered their 2014 sales guidance to $4M from the previous $5M-$6M. In addition, inventory manufactured during the initial FDA validation batches expired resulting in a $539K inventory write-down to cost of sales. The result was a loss of investor confidence reflected in the weakness in Navidea’s share price.

Buy on Weakness: Lymphoseek only recently became the “gold standard” product on October 15th becoming the only FDA-approved radiopharmaceutical agent for sentinel lymph node detection and the only FDA-approved agent for lymphatic mapping of all solid tumors. As a result of this “gold standard” status, a 19% price increase will be going into effect on December 1st. Also on October 15th, Navidea named a new CEO, Rick Gonzalez, with the experience needed for sales, marketing, logistics and operations on a global scale. With full European approval expected within the next 6 weeks, we believe Navidea finally has the best product and the best opportunity to unlock the value of Lymphoseek. Investors should also note the recent September 4th China partnership announcement representing additional sales upside.

Game-Changer Coming: Navidea’s proprietary Manocept CD206 macrophage targeting platform can be leveraged as both a therapeutic and a diagnostic agent in multiple indications such as oncology, autoimmunity, infectious diseases, cardiology, and inflammation. While various Manocept constructs are currently undergoing strategic review, promising initial results have already been seen in Kaposi Sarcoma and rheumatoid arthritis (Navidea recently formed R-NAV joint venture to develop the rheumatoid arthritis indication). We expect to see multiple areas of Manocept opportunities in the near-future and investors should not be surprised if Navidea becomes a biotechnology company with multiple therapeutics instead of a diagnostic company. While currently unvalued by Wall Street, the Manocept platform could be a hidden game-changer for Navidea.

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 the recent broad FDA approvals for Lymphoseek, higher pricing, a new CEO with commercial experience and a potential game-changer in their Manocept platform, 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 (Manocept $15M, NAV4694 $10M, NAV5001 $8M, NAV1800 $2M).

Download Full 31-Page Update Report with Important Disclosures: NAVB Update 11-12-14

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

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