Navidea Biopharmaceuticals, Inc. (AMEX:NAVB) Q3 2022 Earnings Call Transcript

Navidea Biopharmaceuticals, Inc. (AMEX:NAVB) Q3 2022 Earnings Call Transcript November 15, 2022

Operator: Greetings and welcome to the Navidea Biopharmaceuticals’ Quarter Three Earnings Call and Business Update. And as a reminder this conference call is being recorded. It is now my pleasure to introduce Dr. Michael Rosol, Chief Medical Officer. Thank you, Michael. You may begin.

Michael Rosol: Thank you. And welcome to everybody. Thank you for joining us here today on our earnings call. This call is being webcast live on our website, ir.navidea.com, and a replay will be made available. There is an accompanying €“ following prepared remarks, we will be conducting a live Q&A Session. Navidea’s Chair of its Board of Directors, Mr. Alex Cappello; its Vice Chair, Mr. Kim Scott; its Vice President of Finance and Administration, Erika Eves; and me are joining you on the call here today. During the course of this conference call, we will be making forward-looking statements regarding future events and the future performance of the company. These events relate to our business plans to develop Navidea’s molecular diagnostics and immunotherapeutics, which include clinical and regulatory developments and timing of clinical data readouts, along with capital resources and strategic matters.

All of these statements are based on the beliefs and expectations of management as of today. These statements involve certain assumptions, risks and uncertainties and could cause actual results to differ materially. We assume no obligation to revise or update forward-looking statements, whether as a result of new information, future events or otherwise. Investors should read carefully the risks and uncertainties described within the Safe Harbor section of our website as well as the risk factors included in the company’s most recent quarterly and annual filings with the SEC. As we begin our update, I thought it would be helpful to detail a few of our key areas of focus in our 2023 planning. One, we will continue the RA Phase 3 trial success to full enrollment, NDA submission and FDA approval.

Two, we’ll fully fund the Phase 3 trial. Company management and the Board of Directors are engaged with multiple potential capital providers in support of our mission to identify this full RA trial funding, our goal is to be fully funded in 2023. Three, we’ll attract and retain top biopharmaceutical talent. As our RA development program success grows, so does the need to grow our team to help support key milestone achievements, support key strategic relationships, and initiate new PR/IR efforts as a way to share our trial and milestone success. As we look at Q3 specifically, the company successfully received an additional $1 million in capacity bridge using the same bridge loan facility currently in place from the company’s Vice Chair of its Board of Directors, Mr. Scott.

The company also successfully raised $6.2 million in proceeds from its most recent rights offering with the investment banking arm of Maxim Group. If exercised, additional proceeds of up to $11.6 million may be received through the exercise of warrant that same rights offering. We also received an accelerated reimbursement payment of $800,000 for certain research and development expenses from a strategic partner. We have advanced our clinical trials in rheumatoid arthritis as well as our pipeline in other diagnostic indications and in therapeutic. We continue to make solid progress on our Phase 2b trial in rheumatoid arthritis or RA, comparing imaging to biopsy and this week presented at the international conference our up promising preliminary results supporting tilmanocept’s ability to distinguish the fibroid pathotype from the non-fibroid in the first participants evaluated by the time of the presentation finalization.

More on that in a moment. These strong early results do support our hypotheses and provide excellent data in support of tilmanocept imaging as a biomarker of CD206 expression in joints of patients with RA. We also continue to enroll into the Phase 3 and open up additional sites in August and early September, bringing our total open to 12. We also continue to advance our therapeutics and imaging applications through key existing collaborations with well-known institutions and investigators across the globe as we work to grow and advance the company’s intellectual property. We are very proud of the progress we have made and the planning we are putting in place to benefit our associates and our shareholders here at Navidea. Regarding the CRG and Dr. Goldberg litigation matters, the company has had two rulings that essentially bracket its exposure in both, the company will continue to minimize exposure.

Now I would like to provide a brief update specific to our clinical results. I will begin with the progress in our rheumatoid arthritis program. So we continue to enroll into our Phase 3 trial, as I just mentioned in RA. We’ve recently announced that we’ve opened up those nine additional sites. The initial indications we’re pursuing for FDA approval are: one, early prediction of treatment response to a new or first-time anti-TNFα therapy. And two, to identify RA patients with low levels of localization who are less likely to respond to anti-TNFα therapy. As we have discussed previously, there is a large unmet need for reliable early predictor of whether a therapy is working in a patient with RA because if a drug is not working, the patient’s disease is not being treated and this can lead to long-term health consequences along with unnecessary high drug costs for ineffective therapies that bring with them possible side effects.

Our Phase 3 trial will establish the ability of tilmanocept imaging to serve as an early predictor of treatment response in RA patients switching to an anti-TNFα therapy addressing that unmet medical need. NAV3-32, our comparison study of tilmanocept imaging to joint biopsy, remains an active recruitment. As we’ve announced and discussed previously, the preliminary results of this trial are promising. Our aim is to recruit patients with each of the three patho types of RA to obtain comparative imaging and pathology results. And the trial is designed so that we enroll a minimum of four subjects in each of the three subtypes of RA, fibroid, diffuse myeloid and lympho-myeloid. So overall trial size has been expected to range between 12 and 24 participants.

To-date, we have enrolled 14 participants and achieve the minimum of more or more in two out of three of those pathotype buckets with patients having had both their imaging and joint biopsies completed. The primary objective of this study is to assess the relationship between joint-specific tilmanocept uptake values and the pathobiology of RA involved joint tissue. Knowledge of an individual RA patient’s pathotype may be clinically important because it may predict to which RA therapy a patient is likely to respond. There’s a growing body of literature suggesting that those patients with the fibroid type of RA are much less responsive to the anti-TNF-alpha drugs, and so a means of determining whether or not a patient has this particular pathotype is seen as extremely important to a number of key opinion leaders in rheumatology.

As of this time, there is no reliable way of assessing a patient’s pathotype of RA other than by doing an invasive biopsy, and we have hypothesized that tilmanocept could provide this information by providing a way to do a virtual biopsy of a patient’s RA. We just finished showing updated preliminary results on the first 13 patients at this week’s American College of Rheumatology Meeting. This is the largest rheumatology conference in the world. These results indicated that tilmanocept uptake in RA inflamed joints is able to discreetly differentiate patients with the fibroid pathtype i.e., those with low macrophage involvement from those having either the diffuse myeloid or lympho-myeloid pathotypes of RA i.e., those with higher macrophage involvement.

As of this time today, we’ve been able to clearly classify patients as either fibroid or non-fibroid based on our imaging results taken before biopsy in all 15 participants. These data also provides support for one of our indications in the Phase 3 trial, that ability to predict from a baseline scan alone whether a patient is likely to receive a meaningful clinical benefit from an anti-TNF-alpha therapy. Since, as I mentioned, there is increasing evidence that if a patient has the fibroid type of RA, they’re less likely to receive significant benefit from anti-TNF-alphas. You might recall in our previously completed Phase 2b study, NAV 331, where we looked at the efficacy of tilmanocept imaging at early prediction of treatment response. Those patients in that trial who exhibited a low level of tilmanocept uptake in their joints on their baseline scan alone had an almost 90% non-response rate to anti-TNF-alpha therapy using the clinical gold standard assessment.

Importantly, these promising early results have opened up conversations with pharmaceutical companies developing therapeutics for RA with the possibility of tilmanocept imaging being used as a biomarker in drug development pipeline. The key differentiator between now and prior discussions we have had is that we have these additional promising data in hand and as we move forward to trial completion, if these current results hold will be in an even better position for discussions with companies with which to work, we continue to make very good progress in automating the image quantification as well, which will have significant benefit for the commercial product. We have the letter of intent and continue to work €“ letter of intent and continue to work closely with MIM software on the full agreement for them to be our commercial partner for image quantification of tilmanocept imaging in RA.

Once again, MIM is a leading medical imaging software company with a large footprint in the nuclear medicine space. They completed a pilot study using data from our earlier trials demonstrating that they can develop a fully automated application that can robustly reproduce our quantitative imaging readouts using our proprietary algorithm. This will be important for rollout of a commercial product. The ability to perform quantitative reads of our images rapidly and reproducably and at large scale through automated means is critical to widespread use and adoption of tilmanocept for RA. Keep in mind that all of this, the image analysis methodology as well as the data upon which it is built, including the normative database you’ve discussed before, is not only critical to deriving the most accurate and sensitive read of our RA images, but it also serves as a significant barrier to entry to possible competitors in this space.

We will continue to work with MIM to finalize terms of our partnership and will make an announcement when completed so in other areas of our diagnostics pipeline development in cardiovascular disease. The group at the Massachusetts General Hospital in Boston published the results of the investigator-initiated atherosclerotic plaque imaging study that we help to support. The data are promised in terms of localization of tilmanocept to sites of atherosclerotic plaque and we’re line with what was reported in the pilot study we co-published with them previously. We press released this publication in the most recent publication and you can find reference to it in that release. Preclinical studies on Gallium 68 tilmanocept for PET imaging and related next-generation Manocept imaging agents have progressed significantly through internal work here at Navidea and through extramural collaborations with researchers at the University of Alabama at Birmingham or UAB.

We have completed work on our NIH funded preclinical studies for evaluating Gallium 68 tilmanocept and various new imaging agents, similar to tilmanocept in a mouse model of atherosclerosis. Work with UAB on another important set of preclinical imaging studies was completed and presented at the Society of Nuclear Medicine and Molecular Imaging meeting last summer. A manuscript is currently in the second round of peer-review. This work looked at a method to increase the localization of our imaging agent to target tissues, while additional technology was designed to block off-target imaging agent localization to the liver, which is a major site of localization when tilmanocept is administered by intravenous injection. These studies were highly successful showing that we can dramatically increase localization of a new tilmanocept-like imaging agent to tumors while simultaneously and significantly blocking off-target localization to the liver.

This has important implications for our therapeutics as well. On the therapeutic asset front, we are advancing our candidates in the oncology and anti-inflammatory spaces in preclinical studies with the goal of filing investigational new drug applications or INDs to advance to human studies in 2024. These filings will be significant inflection points and opportunities for licensing and partnering deals, work on new drug delivery constructs and new targeted payloads has progressed. These new constructs carry new drug payloads that may be more effective than doxorubicin for beneficially altering the immune status of tumor macrophages for example. Results in mice have demonstrated that when administered alone or in combination with another cancer drug, these therapeutic constructs significantly reduced the rate of tumor growth by an average of 76%.

Some of our results covering new bisphosphonate payload constructs were recently presented at the Tumor Myeloid-Directed Therapies Summit meeting. More recently on November 10 in fact, the full spectrum of results for both our paclitaxel and novel bisphosphonate constructs were presented at the Annual Meeting of the Society for Immunotherapy of Cancer or SITC held in Boston, Mass. This work is about advancing to a lead candidate for macrophage phenotype altering drugs for oncology indications. I can tell you the work presented at SITC was well received and we had a steady stream of attention. In vitro studies examining the ability of our dexamethasone constructs for inflammatory indications have shown positive results as well demonstrating macrophage phenotype change, these constructs will soon be tested in preclinical models.

Preclinical studies are also ongoing in Leishmaniasis. Leishmaniasis is a vector-borne chronic disease caused by a protozoan parasite that replicates in CD206-positive macrophages. It is transmitted to humans through the bite of infected sand flies found in parts of the tropics, subtropics and Southern Europe. Its is rare in the U.S., but in more tropical countries where the sand fly vectors are found, it is a common, serious and potentially life-threatening disease. The FDA has designated Leishmaniasis as a neglected tropical disease, making new therapeutics potentially eligible for a priority review voucher that in our case, we could sell potentially for more than enough to back cover costs of development as well as accelerate the number of other pipeline candidates.

We have earlier work we published in 2017 showing that high CD206 expressing macrophages play a role in the dominant form of the disease, and we recently renewed preclinical studies with one of the world leaders in Leishmaniasis at the NIH. And we now have promising results from several preclinical studies. The last of these studies was just recently replicated demonstrating that one of the company’s therapeutic constructs could dramatically reduce the growth of Leishmania parasites in a mouse model of the disease. These exciting results indicate a new mechanism of action for our therapeutic constructs and set the stage for further in vivo preclinical studies with these collaborators at NIH. If these continue to hold, we will perform preclinical safety and toxicity studies in advance towards IND status application as well.

And so our therapeutic pipeline is robust and moving forward. That brings me to our overall intellectual property front. We receive notification of issuance of patent from the USPTO as well as the state of Israel for our patent application, covering the Manocept-based therapeutic for Leishmaniasis. We continue to submit new provisional applications and work on our pending ones. We have filed two new provisional patent application describing a novel degradable linker for the therapeutic payloads dexamethasone and paclitaxel containing Manocept therapeutic constructs. This linker was used in some of the studies I just mentioned a few moments ago. These constructs are being evaluated preclinically for effects on macrophages and in animal models of oncology and inflammatory indications.

All told, we have filed five new provisional patents since the end of last year. In partnership with our excellent patent attorneys, we have an active IP protection strategy for the company that will provide needed protections and rights to both our current diagnostic and therapeutic agents as well as to our next generation molecules and disease indications. Regarding Lymphoseek Europe and the rest of the world, our strategy has been and remains to find the right partners for marketing and distribution for Lymphoseek and other company pipeline candidates in Europe and beyond. The reason for this is we are focusing on a long-term strategy of partnering for marketing and distribution. On that drug manufacturing and supply front for both Lymphoseek and the RA product, we have been and continued to work with a new active pharmaceutical ingredient or API supplier as well as a final drug product supplier.

Progress continues and as of this time, we are advancing towards completion of these and readiness for clinical and commercial supply. This work has implications for Lymphoseek in China and Lymphoaim in India as we need to be able to supply a steady and reliable stream of product to our partners in these countries. You might have seen our press release announcing publication of a manuscript by an Australian investigator using tilmanocept, this was the first such study coming out of Australia and this investigator and his colleagues are enthusiastic about using Lymphoseek in Australia going forward. So these are just some of the highlights of the last quarter that I wanted to touch on for this update. We remain largely focused on the RA pipeline, specifically the Phase 2 imaging to biopsy trial as well as the Phase 3, while we continue to support and push for progress on our other diagnostic and therapeutic indications.

As always, I want to thank the team here for their tireless efforts to keep things moving, our network of clinical trial sites and academic research collaborators for all of their hard work. Our strategy remains to advance our pipeline products to key inflection points and seek appropriate partnerships for commercialization and marketing. With that, I’ll now turn it over to Erika for financial updates. Erika?

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Erika Eves: Thank you, Mike. Consistent with peers focused on the successful completion of Phase 3 trials, our revenues for Q3 were minimal. Total revenues for the third quarter of 2022 were approximately $8,000 compared to $96,000 for the same period in 2021. Total revenues for the first nine months of 2022 were $65,000 compared to $481,000 for the same period in 2021. The decrease was primarily due to the 2021 partial recovery of debts that were previously written off in 2015, the 2021 receipt of reimbursement from Cardinal Health of certain R&D costs, decreased grant revenue related to small business innovation research grants from the National Institutes of Health supporting Manocept development, and decreased license revenue from transitional sales of to tilmanocept in Europe.

Research and development expenses for the third quarter of 2022 were $1.2 million compared to $1 million for the same period of 2021. R&D expenses for the first nine months of 2022 were $4.1 million compared to $3.8 million for the same period in 2021. Selling, general and administrative expenses for the third quarter of 2022 were $3.6 million compared to $1.5 million for the same period in 2021. SG&A expenses for the first nine months of 2022 were $6.7 million compared to $5.1 million for the same period in 2021. Following the ruling by the Texas Court in August 2022, the company recorded $2.6 million in legal fees pursuant to the CRG judgment, and that was recorded in SG&A. Navidea’s net loss attributable to common stockholders for the third quarter of 2022 was $7.7 million or $0.25 per share compared to $2.4 million or $0.08 per share for the same period in 2021.

Our net loss attributable to common stockholders for the first nine months of 2022 was $13.7 million or $0.45 per share compared to $8.1 million or $0.28 per share for the same period in 2021. And finally, Navidea ended the third quarter of 2022 with $4.6 million in cash and cash equivalents. Back to Mike.

Michael Rosol: Thank you, Erika. And now I’ll turn the call over to any questions that might be out there we’d be happy to address. Once again, joining me on the call is, our Chair of the Board, Alex Cappello, as well as Mr. Kim Scott, our Vice Chair, and Erika Eves. So I think we should be able to handle any questions that come our way.

Q&A Session

Operator: Thank you. We will now be conducting a question-and-answer session. And our first question comes from the line of Michael Okunewitch with Maxim Group. Please proceed with your questions.

Michael Okunewitch: Hey guys. Thank you for taking the questions and congrats on the progress this quarter.

Michael Rosol: Thanks, Michael.

Michael Okunewitch: So I guess, I just wanted to first touch on, for those nine additional sites for any of those used in prior studies for Tc-Til and has €“ how has the above average rate of recruitment held up as you’ve added in these new sites?

Michael Rosol: Yes, great question. So yes, we have €“ we took advantage of the kind of conglomeration of research centers in certain geographic areas as well as the imaging centers that we’ve worked with before. So there’s an imaging center, for example, that we’ve worked with in prior trials that has €“ is fed into by several different rheumatology practices. So we took advantage of that and so that is happening. So it’s an imaging center we’ve used before as well. We have a couple of rheumatology sites we’ve used previously that we’ve opened up into the study. So we try to take advantage of prior experience with sites that have been excellent recruiters to bring them in. There are several other sites that are in the queue to come into the Phase 3 that we worked with in prior studies and they’re €“ should to come in.

We just need the accelerant of increased capital into the company, so we can go full bore on that front. And yes, right now we’re still €“ we’re above the average recruitment rate for RA trials Phase 2 and Phase 3 in North America historically. We continue to maintain that. And we’re doing that even with the fact that we just opened nine of these sites, as I mentioned, end of August, early September, and very frequently it’ll take a month or two or more for sites to really get rolling. And some of the sites are in that boat to be frank, other sites just started enrolling rapidly right away and there are different reasons for that. Overall, we’re maintaining above the average recruitment rate significantly. So things are looking very good.

Michael Okunewitch: All right. Thank you for that. And just one follow-up from me. I wanted to see if you could give an update on either how many or the proportion of responders versus non-responders, which have enrolled in the study so far since this could impact the overall trial size.

Michael Rosol: Great question. Yes, we are tracking that. And what we’re doing is without unblinding the study, we’re able to see the clinical response rates at three and six months. Then right now we have a good number of patients at the three month milestone. And so we can look at their clinical responses. And without going into the details, without releasing too much information here, we’re trending more towards the lower end of the trial size possibilities, which would be great. So as you know, maybe not others on the phone here, the Phase 3 trial size could range from about 200 to 672, and we’re trending more towards the mid to lower end of that based on the response rate. So things are looking really good there.

Michael Okunewitch: All right. Thank you very much. And again, thanks for taking my questions.

Michael Rosol: You’re welcome. Thank you.

Operator: Thank you. And our next question comes from the line of Mike Rigali, a Private Investor. Please proceed with your question.

Mike Rigali: Yes, Dr. Rosol, appreciate the concise strategic outlook you presented at the beginning. That was very useful. My first question is, are you able to share how many people have been enrolled in the Phase €“ the 333 so far.

Michael Rosol: Thanks, Mike. Good question. I’m not going to share that today. What we’ll do is we’re tracking that and when we hit certain milestones, we’ll make announcements as appropriate when those are hit. So stay tuned is what I’d say, but enrollment is going well.