On May 17, 2016 Navidea Biopharmaceuticals, Inc. (NYSE MKT:NAVB), reported financial results for the first quarter of 2016 (Press release, Navidea Biopharmaceuticals, MAY 17, 2016, View Source;p=RssLanding&cat=news&id=2168843 [SID:1234512458]). Navidea reported total revenue for the first quarter of 2016 of $4.7 million, including Lymphoseek (technetium Tc 99m tilmanocept) injection sales revenue to Navidea of $3.8 million. The net loss attributable to common stockholders was $3.7 million.
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"Since the start of the year there have been numerous changes at Navidea as we position the company for the best return on the commercialization of our Lymphoseek immunodiagnostic product and our exciting Manocept therapeutic platform," said Jed Latkin, interim Chief Operating Officer. "Lymphoseek Q1 2016 revenue grew 8% quarter-on-quarter and 106% versus the same quarter last year and we expect much stronger revenue growth in future quarters reflective of the addition of four key regional sales reps and positive utilization trends observed in some major medical accounts. Of note, our operating expenses continue to decline and are significantly reduced from 2015 as we seek to gain operational cash flow breakeven in 2016."
Mr. Latkin continued, "Additionally we are making progress in expanding the clinical application of Lymphoseek into new solid tumors in the U.S. and an expected Q4 2016 launch in Europe, as well as immunodiagnostic indications such as Rheumatoid Arthritis and cardiovascular diseases. We are also obtaining baseline proof of concept data for technology in therapeutic applications. These therapeutic pre-clinical studies will allow us to seek a foundational partnership in each key therapeutic area to help fund development while maximizing return and minimizing the dilution to our shareholders. We look forward to a strong, eventful 2016."
PRODUCT, PIPELINE & BUSINESS UPDATES
Lymphoseek
Grew Lymphoseek revenue 106% in Q1 2016 versus same quarter last year, maintained gross margins on sales of Lymphoseek in excess of 85%, maintained high reorder rates in excess of 80% and continued to accelerate trial and adoption in major cancer centers;
Added and trained four new regional sales reps, expanding our sales team from 12 to 16 sales professionals supported by four Medical Science Liaisons (MSLs);
Broadened access to Lymphoseek though the voucher program and vial consignment program within major multi-hospital chains who have high potential to adopt Lymphoseek and who are influential in the practices of other institutions. These large multi-hospital accounts have the potential to rapidly increase volume growth; and
Continued market development clinical activities with Navidea and investigator-initiated studies in cervical cancer, pediatric solid tumors, anal-rectal cancer, endometrial cancer, and for further confirmation of workflow efficiency compared to sulfur colloid, which are supported in part by National Institutes of Health (NIH) grant funding.
Manocept Immunodiagnostic Pipeline
Advanced development efforts for intravenous (IV) and subcutaneous delivery supported by NIH grant funds in order to expand the label of tilmanocept;
Submitted non-clinical data package and held successful Food and Drug Administration (FDA) meeting in March with agreed submission of an Investigational New Drug (IND) amendment to the FDA that will allow initiation of IV clinical studies of Lymphoseek;
Awaiting Institutional Review Board (IRB) approval to begin sub-cutaneous Phase 1 study in Rheumatoid Arthritis (RA). Expect to begin Phase 1/2 IV study in RA later in the year;
Completed enrollment in a pilot cardiovascular imaging study evaluating detection of vulnerable plaque at Massachusetts General Hospital. Preliminary results are very promising and are being prepared for publication in medical journals; and
Expect to begin grant-funded Phase 1/2 evaluation of Lymphoseek – IV in Kaposi’s Sarcoma patients in the second half of 2016.
Manocept Immunotherapeutic Development Pipeline (Macrophage Therapeutics)
Completed an 8-week, preclinical mouse study in an arthritis mouse model with a Manocept anti-inflammatory targeted therapeutic product, MT2002, with initial results reporting clear anti-inflammatory activity with no apparent significant side effects;
Completed an animal study in an asthma model that measured the ability of MT2002 to decrease all three markers of pro-inflammatory markers secreted by disease-causing macrophages that successfully demonstrates an anti-inflammatory effect;
Completed dosing in two studies using a neuro-inflammation model and an animal model for NASH, nonalcoholic steatohepatitis, with results expected in coming weeks; and
Initiated a number of studies evaluating the performance of compounds from the MT1000 class of compounds designed to deplete tumor associated macrophages (TAMs) in a number of different cancer models.
Business
Named Jed Latkin as interim Chief Operating Officer to direct the Company’s day-to-day operations and act as principal executive officer and principal financial and accounting officer until replacements are hired following the departure of Rick Gonzalez as President and CEO and a medical leave by Brent Larson, EVP and CFO;
Named Marcum LLP as corporate independent registered public accounting firm following resignation of BDO USA, L.L.P.;
Announced appointment of Mark I. Greene, M.D., Ph.D. FRCP, Tony Fiorino, M.D., Ph.D. and Michael Rice to the Board of Directors and the departure of Brendan Ford, Anton Gueth, Rick Gonzalez and Gordon Troup; and
Capital Royalty Partners II L.P. (CRG) commenced a lawsuit alleging that events of default have occurred under the Company’s loan agreement with CRG. The Company intends to vigorously defend against these claims. The Company is evaluating its options, including the possible assertion of counterclaims.
FINANCIALS
Total revenues for the quarter ended March 31, 2016 were $4.7 million compared to $2.1 million in the first quarter of last year. First quarter 2016 product revenues recognized from the sale of Lymphoseek were $3.8 million, compared to $3.5 million in the fourth quarter of last year and $1.8 million in the first quarter of last year. This represents a sequential quarter-on-quarter growth of 8% and year-over-year growth of approximately 106%. Q1 2016 revenue for licensing milestones, various federal grants and other revenue were $940,000 compared to $791,000 in the fourth quarter of last year and $273,000 in the first quarter of last year.
Gross margins on Lymphoseek product sales remain strong at 86% for the first quarter of 2016 compared to 76% for the first quarter of 2015.
Total operating expenses were $6.8 million, compared to $9.5 million in the first quarter of last year. Research and development expenses for the first quarter of 2016 were $2.7 million, compared to $4.0 million in the first quarter of last year. The net decrease from 2015 to 2016 was primarily a result of reductions in NAV4694, NAV5001 and Lymphoseek product development costs coupled with reduced headcount and related support costs, offset by increased therapeutics product development costs. Selling, general and administrative expenses for the first quarter of 2016 were $4.1 million, compared to $5.5 million in the first quarter of last year. The net decrease was primarily due to decreased general and administrative headcount following the first quarter 2015 reduction in force coupled with decreased costs for contracted medical science liaisons, business development consulting services, market development expenses related to Lymphoseek, and license fees, offset by increased commercial and medical headcount coupled with increased legal and professional services.
Navidea’s net loss attributable to common stockholders for the quarter ended March 31, 2016 was $3.7 million, or $0.02 per share, compared to $7.3 million, or $0.05 per share, for the same period in 2015.
Based on CRG’s claims that the Company is in default under the terms of the CRG Loan Agreement, and in accordance with current accounting guidance, the Company has classified the net balance of the CRG Term Loan as a current liability on the consolidated balance sheet as of March 31, 2016.
Navidea ended the quarter with $5.5 million in cash.
The Company reiterates its 2016 total revenue estimate of $23 million to $25 million. Margins on Lymphoseek product sales are expected to continue to exceed 80% in the coming quarters. The Company also expects, following completion of the partnering activities for NAV4694, that cash operating expenses on a quarterly basis will continue to decrease to the point necessary for the Company to achieve its goals of cash flow breakeven from operations. This guidance excludes therapeutic-related research and development costs for the Manocept platform which are expected to be funded separately by Macrophage Therapeutics, Inc.