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Edited Transcript of NAVB earnings conference call or presentation 8-Aug-19 9:00pm GMT

Q2 2019 Navidea Biopharmaceuticals Inc Earnings Call

DUBLIN Oct 14, 2019 (Thomson StreetEvents) -- Edited Transcript of Navidea Biopharmaceuticals Inc earnings conference call or presentation Thursday, August 8, 2019 at 9:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Erika Gibson

Navidea Biopharmaceuticals, Inc. - Director of Finance & Administration

* Jed A. Latkin

Navidea Biopharmaceuticals, Inc. - CEO, COO, CFO & Director

* Michael Stanley Rosol

Navidea Biopharmaceuticals, Inc. - Chief Medical Officer

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Conference Call Participants

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* Jason Wesly McCarthy

Maxim Group LLC, Research Division - Senior MD

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Presentation

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Operator [1]

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Greetings, and welcome to the Navidea Biopharmaceuticals Q2 2019 Earnings Conference Call. (Operator Instructions) As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Jed Latkin, CEO. Please go ahead.

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Jed A. Latkin, Navidea Biopharmaceuticals, Inc. - CEO, COO, CFO & Director [2]

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Good afternoon, and welcome, everyone, to Navidea's Second Quarter 2019 Earnings Call. I'm Jed Latkin, Chief Executive Officer of Navidea Biopharmaceuticals. This call will cover Navidea's financial and operating results for the second quarter of 2019, which ended on June 30, 2019, along with a discussion of goals and milestones for the remainder of 2019. Following our prepared remarks, we will open up the conference call to a question-and-answer session.

With me today on the call is our Director of Finance and Administration, Erika Gibson; and our Chief Medical Officer, Dr. Mike Rosol.

Before we begin our formal remarks, I would like to remind everyone that some of the statements on this conference call may be considered forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 as amended and Section 21E of the Securities Exchange Act of 1934 as amended that concern matters involve risks and uncertainties that could cause actual results to differ materially from those anticipated or projected in the forward-looking statements. Words such as expects, anticipate, intends, plans, aims, targets, believes, seeks, estimates, optimistic, potential, goal, suggests and similar expressions identify forward-looking statements. These forward-looking statements relate to the effectiveness of the company's bodily fluid-based diagnostic tests as well as the company's ability to develop and successfully commercialize such test platforms for early detection of cancer and the diagnosis and monitoring of rheumatoid arthritis.

The company's actual results may differ materially from those indicated in these forward-looking statements due to numerous risks and uncertainties. For instance, if we fail to develop and commercialize diagnostic products, we may be unable to execute our plan of operation. Other risks and uncertainties include the company's failure to obtain necessary regulatory clearances or approvals to distribute and market future products in the clinical IVD market; a failure by the marketplace to accept the products in the company's development pipeline or any other diagnostic products the company might develop; the company will face fierce competition and the company's intended products may become obsolete due to the highly competitive nature of the diagnostics market and its rapid technological change; inability to maintain our listing with New York Stock Exchange, inability to maintain effective internal control over financial reporting, the outcome of any pending litigation and other risks identified in the company's most recent annual report on Form 10-K and quarterly reports on Form 10-Q as well as other documents that the company files with the Securities and Exchange Commission.

These statements are based on current expectation, estimates and projections about the company's business based, in part, on assumptions made by management. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Forward-looking statements are made as of the date of this conference call, and except as required by law, the company does not undertake an obligation to update its forward-looking statements to reflect future events or circumstances.

I would now like to start with a brief business introduction. First off, the comments this quarter once again will be relatively brief in order to allow for a longer Q&A session afterwards. Firstly, I would like to thank all the shareholders and Board members that attended our Annual Meeting earlier today in Newark, New Jersey.

As we look back on the last quarter, we need to emphasize some of the very significant strides the company has made towards not only bringing our proprietary RA imaging agent closer to realization but also progress that we've made towards stabilizing the company's financial condition for our path forward. This past quarter, we successfully raised $6 million in equity financing without the use of any warrants, which has given us the capital necessary to get to our next milestone, more specifically the interim look coming in the next quarter.

While the clinical team remains laser-focused on the NAV3-31 trial, I would also like to announce that this week, we have been given the notice of intent to fund on a grant that will help further develop our imaging of atherosclerosis, an area of great promise and possibly one of the largest potential future revenue sources for this company.

On the partnering front, we continue to work under [CVA] with quite a few potential partners in both the RA and overall imaging space. We are also actively pursuing the extension of our existing approved product in new geographies not currently partnered.

We are very encouraged by the feedback and the progress being made on the business development front. Securing a partnership with the right partner under the right turn is a primary goal for this company in 2019. We will not agree to a deal that doesn't reflect the inherent value that our RA diagnostic agent hold. We understand very clearly the potential of what our product would mean to the health care industry and health care insurers and, most importantly, what it would mean for the nearly 1.5 million Americans suffering from this debilitating disease. Furthermore, with interim result of the trial coming up, we are considering that when it comes to making a partnership. I, once again, would like to say how proud I am of the clinical team. As Dr. Rosol will elaborate shortly, our trial enrollment is actually running ahead of schedule. While the initial startup was not what I would have liked, we have really picked up steam over the last few weeks. I am hoping that this momentum continues, and we can come back to investors soon with our first interim look.

With that, I'd like to turn the call over to Dr. Rosol for more details on the development front. Mike?

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Michael Stanley Rosol, Navidea Biopharmaceuticals, Inc. - Chief Medical Officer [3]

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Thank you, Jed, and hello, everyone. As always, I'm happy to participate in today's call and provide you with updates from the clinical side. We had an extremely successful Society for Nuclear Medicine and Molecular Imaging meeting in June in Anaheim where we presented data from our Phase I and II studies. The Phase I study demonstrated no adverse safety signals and showed that with subcutaneous injection of tilmanocept, we were able to see localization of signal to the joints of patients with active RA.

This empowered us to move to the Phase II where the results showed localization of intravenously injected tilmanocept to the joints of patients with active RA compared to healthy controls and allowed us to determine an optimized dose of tilmanocept and imaging window. The results actually exceeded our prestudy expectations and have us rheumatologists and obviously the SNMMI very excited about the potential of tilmanocept imaging in RA.

The SNMMI is an important meeting in the field of nuclear medicine imaging and research. And not only was the work recognized with a press release by the SNMMI, but it was also selected by their staff to be presented in the meeting highlight session. Neither of these were solicited by us. Rather, they reached out to us with these honors. This type of recognition and external validation reinforces the idea that we're onto something significant here for people suffering with RA.

I'm also happy to let you know that enrollment is on track with and indeed ahead of our aggressive projections that are running Phase IIb study. Remember that through the first 2 arms of the 3-arm study, we are evaluating the stability and reproducibility of our tilmanocept imaging readout in both healthy subjects and in patients with active RA. And in the third arm, we are mirroring our upcoming Phase III study in order to enable us obtain data to help validate our power calculations for this Phase III. To date, we've opened 4 sites and enrolled, I just learned earlier today, the 40th subject. And we expect to even see an acceleration in recruitment rate as several more sites come on board in the coming weeks and then these and the currently opened sites really hit their stride. That is all very good news from our perspective.

Importantly, we have built in interim looks or interim analyses into this trial. And in the fall, we expect to have these interim data in hand. We can then go back to the FDA and make sure we are still in alignment with the powering and plans for the Phase III. The kinds of data we will be getting at these analyses include: looks at how stable and reproducible the imaging readout is, robust quantification of how different the values are between healthy subjects and in the inflamed joints of RA patients and a look at how much our imaging readout changes with anti-TNF alpha treatment.

I want to be sure to thank our clinical trial operations team led by Bonnie Abbruzzese for their diligent work in getting this trial rolling and exceeding recruitment projections. Congratulations to all of them. Again, we continue to plan for the second Phase IIb study, the correlation of our imaging readout with histopathology and the Phase III later this year. We will keep you apprised of the situation as we move ahead and continue to converse with FDA.

While we are extremely focused on moving our RA program to FDA registration and commercialization, I want to assure you that research actively continues in other areas of our pipeline. Because of the importance and focus on the RA program, I'm just going to briefly touch on a few items here to give you an overview of where those projects are and what is coming up. If I leave anything out, it is simply in the interest of maintaining appropriate focus on this call.

So Kaposi sarcoma work at UCSF continues. You'll recall we have 2 ongoing NIH grants with them, one on the clinical diagnostic side and the other on the preclinical therapeutic side. On the clinical imaging side, we are on track to complete enrollment later this summer, early fall. Following full analysis and wrap-up, we would hope we can open up discussion with FDA about the path to an sNDA in Kaposi sarcoma.

On the preclinical front, work continues. We plan to wrap up that work later this year, including preclinical animal safety and efficacy data with the next step and other discussion with FDA about a possible IND. We also have the ongoing atherosclerotic plaque imaging study at Mass General Hospital. Dr. Grinspoon there is continuing to run this investigator-initiated study to look at the ability of tilmanocept to detect atherosclerotic plaques enriched with activated macrophages. He is actively recruiting additional subjects, and we are discussing next steps with them.

I'm also very happy to announce that we have received formal notification of intent to fund from the NIH/NHLBI our Phase I grant application submitted in collaboration with the University of Alabama to test Gallium 68 tilmanocept PET imaging of atherosclerosis plaques in a relevant mouse model, which fits in with our atherosclerosis pipeline and will allow us to test tilmanocept as a PET imaging agent and compare it to FDG PET imaging, a widely studied method of looking at macrophages and plaques, but one that we believe has significant deficiencies in comparison to tilmanocept.

So that is great news. And what remains for us to do now to convert that intent to fund to a formal notice of award is to submit several supporting materials. And at this point, the only documents remaining to submit is -- or are the Animal Welfare Committee's approval from the University of Alabama in Birmingham, which we expect to see shortly. And I'd like to congratulate our Senior Director of Drug Development, Dave Ralph, for working on that grant with collaborators at UAB.

The first handful of patients with TB have been imaged with Gallium 68 tilmanocept in South Africa, and we will soon be reviewing the results of the pilot phase of this study with the PI there, Mike Sathekge, and determining how best to proceed. We are also continuing to expand our IP portfolio with several provisional patents filed and more on the way this year. And as Jed mentioned, we continue to discuss possible partnerships and collaborations with pharma companies, imaging CLOs and radiopharmaceutical distribution companies that play in this space.

So in summary, our main focus remains on RA and in moving towards approval as a clinical product. Enrollment into our first Phase IIb is ahead of schedule. We continue to plan and prepare for the Phase III. We're also continuing to push ahead in other areas of our clinical pipeline and in preclinical research and continue to have success in securing support from NIH.

Thank you. Now I would like to turn the call back over to Jed. Jed?

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Jed A. Latkin, Navidea Biopharmaceuticals, Inc. - CEO, COO, CFO & Director [4]

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Thanks, Mike, and thanks for that summary. Keep moving the ball forward. Now let's move on to the financial updates. Erika?

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Erika Gibson, Navidea Biopharmaceuticals, Inc. - Director of Finance & Administration [5]

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Thank you, Jed. Our consolidated balance sheets, statements of operations and statements of stockholders' equity have been restated as required for all periods presented to reflect the reverse stock split as if it had occurred on January 1, 2018. Our consolidated statements of cash flows were not impacted by the reverse stock split.

So with that as background, total revenues for the second quarter of 2019 were $260,000 compared to $542,000 in the same period of 2018. Total revenues for the first 6 months of 2019 were $302,000 compared to $819,000 in 2018. The decrease was primarily due to a decrease in license revenue related to the sublicense of our NAV4694 technology, which included a nonrefundable upfront payment in 2018, coupled with a reduction in grant revenue related to SBIR grants from the NIH supporting Manocept development.

R&D expenses were approximately $1.1 million in each of the second quarters of 2019 and 2018. R&D expenses for the first 6 months of 2019 were $1.8 million compared to $2.1 million in the same period of 2018. The year-to-date decrease was primarily due to net decreases in drug project expenses, including therapeutics, Tc99m tilmanocept and NAV4694 development costs, offset by increased Manocept diagnostic development costs. The net decrease in R&D expenses also included decreased compensation costs resulting from net decreased salaries and head count.

Selling, general and administrative expenses for the second quarter of 2019 were $1.9 million compared to $1.8 million in the same period of 2018. SG&A expenses were approximately $3.6 million in each of the first 6 months of 2019 and 2018. Increased legal and professional services were offset by decreased compensation costs.

Navidea's net loss attributable to common stockholders for the second quarter of 2019 was $2.7 million or $0.24 per share compared to a net loss attributable to common stockholders of $2.4 million or $0.29 per share for the same period in 2018. Our net loss attributable to common stockholders for the first 6 months of 2019 was $5.1 million or $0.48 per share compared to a net loss of $9.1 million or $1.12 per share for the same period in 2018.

And finally, Navidea ended the second quarter of 2019 with $5.3 million in cash and investments.

And with that, I'll turn the call back over to Jed.

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Jed A. Latkin, Navidea Biopharmaceuticals, Inc. - CEO, COO, CFO & Director [6]

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Okay. Thank you all for joining us this afternoon. There really is great promise in what we're trying to do here. We're really excited about a lot of the developments in the 3-31 trial, and I hope that we've effectively conveyed that message to you today. I also am very excited to see what the interim look is going to look like within the next quarter or so.

I would like to now open up the line for questions. So let's give it over to Sashe. Can you please queue up for questions?

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Questions and Answers

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Operator [1]

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(Operator Instructions) The first question is from Jason McCarthy of Maxim Group.

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Jason Wesly McCarthy, Maxim Group LLC, Research Division - Senior MD [2]

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So as we're approaching the third-arm data from the Phase IIb trial, I'd like to see if you could give us a bit more color on what we could expect from the Phase III in terms of size, end points, time lines, and whether or not you're anticipating that the 33 trial will on its own be sufficient to seek FDA approval?

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Michael Stanley Rosol, Navidea Biopharmaceuticals, Inc. - Chief Medical Officer [3]

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Yes. Good question. So this is Mike Rosol. So the projected size right now based on our assumptions for the Phase III is 107 subjects. The pilot arm of the currently running NAV3-31 will help us verify, confirm or let us know if we need to inflate those numbers to some degree. And the initiation of that trial should begin in Q4, and the enrollment that the -- with everything all in, our goal is to have the -- that trial is running successfully. And at that level of recruitment to 107, the goal would be to have it completed in Q4 of 2020 and then go towards the NDA with the FDA.

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Jason Wesly McCarthy, Maxim Group LLC, Research Division - Senior MD [4]

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All right. And then on the partnership side, actually I'd like to see if you could just give me a bit more of an idea of what you're kind of looking for in a partner for tilmanocept because you're going across a few different spaces here. So like would you be looking for someone with an established sales force in the diagnostic imaging space, in nuclear medicine? Or would it make more sense to go for a partner in the RA space in general?

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Jed A. Latkin, Navidea Biopharmaceuticals, Inc. - CEO, COO, CFO & Director [5]

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Jason, that's a good question. So we're currently looking at both actually. We're looking at companies that are already in the RA space, so they have the distribution network throughout the rheumatologists. But we're also looking at some of the larger diagnostic players who might not have any exposure to the rheumatoid arthritis space right now but have the necessary funds to get there. It's important that when we launched Lymphoseek, we had -- we built up a sales force along with that. That's something we're not going to look to do at this juncture. What we really like to do is find a partner that has the financial muscle, even if they don't have the client-established RA platform, they have what it would take to build up an RA sales-force and hit all the rheumatologists.

But I can assure you that the people that we're talking to are all larger diagnostic players that do have enough of a presence and enough of a financial backing that they would be able to build up a sales force and build up the presence amongst all the rheumatologists.

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Jason Wesly McCarthy, Maxim Group LLC, Research Division - Senior MD [6]

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All right. And then one more for me if you guys don't mind. So I mean one of the things we've been noticing is a bit of a buzz in the RA space around the new anti-inflammatory drugs, specifically JAK inhibitors for patients who are no longer responding to TNF drugs. So my question is how are you expecting the presence of this newer later class of drugs to impact the need for something like Tc-til?

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Michael Stanley Rosol, Navidea Biopharmaceuticals, Inc. - Chief Medical Officer [7]

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This is Mike. So the -- there are several things to comment on here. So indeed there are JAK inhibitors as well as some other types of therapeutics in the pipeline. They are anti-GM-CSF agents that work to inhibit the promotion of macrophage activity and recruitment to new macrophages. So some of these indications -- let me answer this kind of broadly, and then we'll move it down to your question. Some of these indications fit exactly into the wheelhouse of what our imaging readout provides, right? And so the for example dose of the anti-macrophage kind of stimulating factor therapeutics, we could have a significant impact on determining if that patient would or would not benefit from those.

More broadly, even in the JAK space, because one of our indications that we're going for in the Phase III is to potentially help determine or give an imaging readout that can point towards the subtype of RA that the patient has. So you might have -- you might recall from earlier discussions and some of the information that we've given you, there are 3 subtypes of RA and 2 of them, the lymphomyeloid and myeloid are macrophage enriched, and both have different levels of macrophage involvement.

And then the third type, the fibroid types are -- don't involve macrophages much at all. And so with our readout focusing on macrophages, it actually might be that those folks who have the fibroid subtype, our scan should be able to give us information on that at the baseline, right? So if the scan looks relatively like the healthy control, and we'll learn this through the course of our study if this is true or not, then those folks may be that subtype. That subtype won't benefit from the anti-TNF alphas. That subtype may indeed benefit from the JAK inhibitors or some of these other ones. And that subtype might be about 1/3 of the patients with rheumatoid arthritis across the globe.

So right there one kind of simple answer to your question that we could initially -- if all of that holds true, we could then point those folks to something else other than the anti-TNF alphas, which do have a -- they have a heavy footprint in the game and it is unlikely that the JAK inhibitors and others are going to upset those in the very near future. So first going forward as we move along with other indications and we'll look to expand our indications with specific trials related to different therapeutics. The reason, as you know, we haven't started with the anti-TNF alpha is because there are 90% of folks across the world who have RA will go through those at some point.

And indeed as other drugs might come into play, we'd expect that to change. And we actually think tilmanocept will help lead the way towards those paths, right? So as I said, 1/3 of the patients you might right away say [bucket] those after our imaging scan and say, "Hey, put those on something other than anti-TNF alpha." So in our discussions, without revealing too much, but with pharma companies, these are the kinds of things we discussed with those pharma companies that are invested in these different kinds of therapeutics because it would benefit them in multiple ways to have our imaging agent at the ready.

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Operator [8]

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The next question is from [Rick Drew], a private investor.

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Unidentified Participant, [9]

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This is for Erika, and Jed, if you want to pipe in of course. Erika, based on the cash on hand as of June 30 relative to the cash burn at present, how long is the runway to fund operations?

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Erika Gibson, Navidea Biopharmaceuticals, Inc. - Director of Finance & Administration [10]

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Jed?

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Jed A. Latkin, Navidea Biopharmaceuticals, Inc. - CEO, COO, CFO & Director [11]

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[Rick], I'll take that. So I think that depending on how we're doing, we're looking with the cash on hand probably getting us to about the end of the year, maybe a little bit further. We'll adjust based on what we have coming in, what potential partnerships we make. But we are prepared to adjust our spending to make sure that we can make the cash last as long as possible as we look to the potential partnerships and whatever sort of upfront payments we would bring in.

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Unidentified Participant, [12]

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Well, in the past, as you -- that you have done that quite well, I certainly expect you'd be able to do that in the future. Relative to the partnership and the funding of operations going forward, are there alternate plans if that partnership is -- doesn't come into play at this time?

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Jed A. Latkin, Navidea Biopharmaceuticals, Inc. - CEO, COO, CFO & Director [13]

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We are exploring all options right now just to make sure that we can keep the business funded. I mean I think that with the interim looks coming up over the next several months, I think that will give us a much better sense of where we stand in terms of the progress of the trials and how the RA drug is progressing and whether or not it is meeting our expectations. And if that is the case, then we would anticipate that would potentially lead to other options as well.

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Unidentified Participant, [14]

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Okay. Got it. Last question. Realizing that you guys are pursuing partnerships from an international perspective, any light shining more than maybe other partnerships internationally in terms of getting some type of upfront moneys, if not even recognizing any sales in the not too distant future -- not too distant being less than a year?

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Jed A. Latkin, Navidea Biopharmaceuticals, Inc. - CEO, COO, CFO & Director [15]

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Well, that's a good point. So as -- if you noticed in my remarks, we did add that. We are actively pursuing the expansion of the use of Lymphoseek in current countries that are not covered on the partnership. So we are in active discussions in several regions that are not covered by either the (inaudible) or emerging contract. So that is a potential. And hopefully we can have something to report on that within the next quarter or 2.

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Operator [16]

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The next question is from [Mike Raphael], a private investor.

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Unidentified Participant, [17]

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Yes. I have several of them here. The first one relates to the last topic you were discussing, drilling down a little more into any potential marketing agreements. I noticed that Australia and New Zealand, medical agencies approved Lymphoseek in those countries. Are those 2 countries something that is moving along on a potential marketing agreement that could provide some upfront funding?

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Jed A. Latkin, Navidea Biopharmaceuticals, Inc. - CEO, COO, CFO & Director [18]

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No. So Australia and New Zealand are actually covered under the Norgine license. And so Norgine, we've been working with them on getting the product launched in Australia so we can start selling it there.

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Unidentified Participant, [19]

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Okay. So it would be under the current terms of the current agreement?

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Jed A. Latkin, Navidea Biopharmaceuticals, Inc. - CEO, COO, CFO & Director [20]

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Those are included under Norgine. So Norgine's agreement is that part of the world and Europe.

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Unidentified Participant, [21]

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Okay. Previously...

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Jed A. Latkin, Navidea Biopharmaceuticals, Inc. - CEO, COO, CFO & Director [22]

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So that...

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Unidentified Participant, [23]

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Okay. Previously, you've mentioned earlier in the year that you were working on additional NIH grants and needs to submit a certain number of applications. Is there any more NIH grants working right now?

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Michael Stanley Rosol, Navidea Biopharmaceuticals, Inc. - Chief Medical Officer [24]

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Yes. So right now running, we still have the 2 at UCSF and we -- once we get that final just in time, that's the category they call those -- that supplementary information that I said we need to transition the intents of fund into the notice of award. Once we get that in, we'll have that grant funded. We do have another application that we plan to submit in this next go-round as well.

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Unidentified Participant, [25]

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Okay. Dr. Vera published 2 studies over the last couple of years using Lymphoseek. One was in diabetic kidney mesangial cells and the other was in neuroinflammation, and in both, he had suggested moving forward into clinical studies using tilmanocept/Lymphoseek. Is he working, do you know, in moving those forward? Is he working with you guys or anybody and giving those into clinical trials?

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Michael Stanley Rosol, Navidea Biopharmaceuticals, Inc. - Chief Medical Officer [26]

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Yes to all of the above on the kidneys. And then in the neuroinflammation, there are still discussions to be had there. So for one thing, the evidence is not convincing to me at least that the -- that tilmanocept crosses the intact blood-brain barrier. And that isn't necessarily the end of the story. So we need to certainly -- if we're going to move into that space, we'll have further discussions with David. We're very closely affiliated with him for obvious reasons, and we speak with him quite frequently. And so indeed, there are plans in the kidney space as well and those also do include seeking NIH funds.

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Unidentified Participant, [27]

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So you're saying the kidney, yes, something's in the works there on neuroinflammation.

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Michael Stanley Rosol, Navidea Biopharmaceuticals, Inc. - Chief Medical Officer [28]

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Yes.

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Unidentified Participant, [29]

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That's for sure right now?

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Michael Stanley Rosol, Navidea Biopharmaceuticals, Inc. - Chief Medical Officer [30]

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Yes. Maybe.

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Unidentified Participant, [31]

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Okay. I've read some reports recently out of Europe where in the -- being able to treat RA is having real positive effect on cardiovascular events. Are you seeing that in your preclinical trial even though you're not doing therapeutics on it? Are you seeing a duplicative or a carryover effect on cardiovascular from your RA studies?

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Michael Stanley Rosol, Navidea Biopharmaceuticals, Inc. - Chief Medical Officer [32]

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No, for...

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Unidentified Participant, [33]

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That came out of Europe?

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Michael Stanley Rosol, Navidea Biopharmaceuticals, Inc. - Chief Medical Officer [34]

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Yes, I hear you. So it turns out that in the preclinical stage, usually the way things work is this, right? So if you want a model of RA, you induce the model of RA. So there are different ways to do that. But there's one you inject an allergen basically and it creates an immune response, inflammatory response that mimics RA in people. So the models are -- for RA are pretty specific. And those mice are typically mice where you do those studies, they are not good models for human atherosclerosis unless you also to either take -- knock out mice or to induce them to have atherosclerosis in some way and kind of stacking the models like that is something that's done infrequently. We could argue that maybe it should be done more.

So usually, we're not going to be -- even if we've done something in the therapeutic space for example in mice, we won't know what's going on in the cardiovascular space because that model wasn't good for that purpose. Yes, it wasn't being used as a model for that. And there -- and those mice are unlikely to have any atherosclerosis, right, to speak of. So in that sense, no, but it doesn't surprise me, right? So if you're -- since -- at a high level since atherosclerosis heavily involved macrophages and in fact there's growing -- there's a growing body of evidence suggesting it's a macrophage-driven disease process. If you are treating the macrophages knocking them out or down or changing them from one phenotype to another, or one macrophage-related disease, it makes perfect sense to me that you would have a kind of cascade effect and affect other diseases positively as well. So yes.

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Unidentified Participant, [35]

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Okay. That leads into the Massachusetts General Hospital CV studies in AIDS patients. I noticed on their very last update, they extended their studies into 2020. And they also added as a collaborator the Harvard AIDS group. Can you give us more color on that and if you see that as a positive step?

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Michael Stanley Rosol, Navidea Biopharmaceuticals, Inc. - Chief Medical Officer [36]

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Yes, that's definitely positive. So we're obviously in touch with those folks. And they are -- they did that for a reason. They're expanding. We want to continue enrolling so that we can accumulate more data to make a strong case for how tilmanocept might be used in atherosclerosis. And so they're pretty bullish on the results that they've achieved so far that are going on right now and frankly so are we. Now atherosclerosis is a giant opportunity, but it's a tough space to play in terms of a diagnostic imaging modality and even in a therapeutic space because these studies tend to be and need to involve large numbers of people and you need to follow them over the course of years in order to see what outcomes may be, or may be averted, right?

So that would be quite a road to hold, but it's a giant opportunity. And there's a real need for an imaging readout that is sensitive to atherosclerotic plaque detection in folks who are maybe in the moderate risk domain as well as a therapeutic that can -- doesn't have all the side effects of high-dose statins. So it's a very promising domain. It will take us some time to get there to the end of the road, but to an FDA-approved diagnostic and/or therapeutic. But these studies are going on with MGH and we're pretty excited about them, and so is Steven Grinspoon.

And so the fact that -- I don't know the nitty-gritty details of bringing in the Harvard AIDS Institute, but Steven is likely affiliated with that indirectly, if not directly. And so he may be using that to help them recruit more HIV-positive folks.

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Unidentified Participant, [37]

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Okay. All right. Now my last question, and this goes back to the biomarker registration with the FDA that you've been working with them on. Can you give us any update on that registration process...

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Michael Stanley Rosol, Navidea Biopharmaceuticals, Inc. - Chief Medical Officer [38]

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Sure.

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Unidentified Participant, [39]

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And where you're at?

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Michael Stanley Rosol, Navidea Biopharmaceuticals, Inc. - Chief Medical Officer [40]

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Yes. So I've made this misuse of words myself. So just straightening you and me out here, it's qualification, not registration for the biomarker.

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Unidentified Participant, [41]

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Right.

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Jed A. Latkin, Navidea Biopharmaceuticals, Inc. - CEO, COO, CFO & Director [42]

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And no, it's a reminder to me as well, I do that all the time. So we are continuing our fighting our -- crafting our letter of intent. And what that is, it's basically a -- it's an application, it's almost a filing, it can be a relatively large document, where we outline what we think the indication, the qualifications should be, what it should cover and all of our supporting data that we either have or we are going to accumulate to get us there. And we're working with the Critical Path Institute and we have regular meetings with those folks where we're updating this document.

Now I do have to say though, and I mentioned it on the last call, in order to get over that goal line, we're going to need the phase -- the second Phase IIb study results, where we're correlating our imaging readout with the CD206 number in density, the CD206 macrophages from pathology. So we'll have the actual pathology to correlate with our imaging read. And that will be the -- that's -- that will be the final dotting of the Is and crossing of the Ts to get us over that qualification day line I think.

But we are continuing to meet with those folks and pushing that letter of intent forward. And it might sound -- the reason I said the letter of intent is a way to document, I don't want you to think that that's a 1-page letter, basically a grant application. It's a giant thing where you -- you say this is what we're going for and this is why. And it really -- it fosters the case and it gives the FDA a chance to give you feedback about what they think about where you are and where you need to go to get that qualification, but it is proceeding.

And when we get it, we do believe that will be helpful for discussions for example with pharma companies who are looking for in the trials registrable end point after the Phase III. And by the way, the earlier questions about the Phase III I'll get back to you in a second, but we -- you can never know for sure, but I was asked a little while ago, do we think this will -- this Phase III we're starting would be enough to -- for the FDA to register? We've had communications with the FDA and it is our belief that they will -- that if our Phase III as proposed and as they have in principle agreed to the design of, if we get that over the goal line into the positive, that that should be sufficient for FDA approval.

Now having said that, they always reserve the right to change their minds and say you need to do another Phase III or [confirm] Phase III. And we're going to keep asking them that. But so far, that is where we stand that we think this will get us to the goal line. So back to you, [Mike].

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Unidentified Participant, [43]

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Well, your clarification there was appreciated. The gentleman before had asked, but in that, you'd said there's 107 participants. Your current -- Jed said you -- that we're roughly at 40. So is the difference between the 40 and the 107 basically the third arm of the IIb study? Or is that the Phase III?

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Jed A. Latkin, Navidea Biopharmaceuticals, Inc. - CEO, COO, CFO & Director [44]

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No, so that's 2 different things. So the currently running Phase IIb has 3 arms. The total of all 3 of those arms enrollment is going to be 105. It actually -- it might be less because the interim analyses of the first 2 arms, the healthy control and the active RA folks is typically significant at the interim analysis. In theory, we could stop that recruitment and just focus on the arm 3. So that trial right now the objective is, is to recruit up to 105 subjects and we have 40 in that trial. And they're mostly in the arms 1 and 2, but there are folks in the arm 3 and indeed we're pushing the sites to accumulate the folks in the arm 3 as well. That's a longer -- there's a longer duration participation in that arm.

We have a number of active sites coming on board that are super-duper jazzed about that arm specifically. So we anticipate that the enrollment in that arm is going to be picking up soon. And the enrollment in (inaudible) has already started to explode in the last couple of weeks because a couple of sites that we had opened up really started to awaken. And people came back from vacations and some other nuances small and large, if you could have a large nuance having worked on. So improvement is growing and it's actually, I'm really happy about the recruitment in that trial.

The Phase III is the one that has 107. And that Phase III do not looks like or looks like that arm 3 of the pilot -- the pilot arm of the NAV3-31 that has a total of 105, in that pilot arm, we're looking for 29 subjects. So 29 in the pilot arm, 107 in the Phase III. Makes sense?

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Unidentified Participant, [45]

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And they will run somewhat concurrently as long as everything moves along in this 3 31, right?

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Jed A. Latkin, Navidea Biopharmaceuticals, Inc. - CEO, COO, CFO & Director [46]

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Exactly. Yes.

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Unidentified Participant, [47]

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Okay. All right. Well, as a shareholder, I sure appreciate this. And I -- my own private observation is I'm glad you guys are not rushing into a joint venture or a partnership for the sake of doing one. I hope you take whatever avenue you have to, do not jump into one because you only get one good chance at these things. So I appreciate your patience. And I hope the shareholders are tolerant even with the share price vacillating significantly.

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Operator [48]

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The next question is from [Joe Ski], a private investor.

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Unidentified Participant, [49]

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Yes. I was just wondering about the litigation, where we are with CRG? And can we -- can you talk about that please?

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Jed A. Latkin, Navidea Biopharmaceuticals, Inc. - CEO, COO, CFO & Director [50]

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Okay. Got you. That's a good question. So CRG, we've submitted a brief for summary judgment in Ohio, and we're currently waiting for the court to get back to us in terms of decision or when we might appear in front of the judge in Ohio again. So that's what we're waiting on right now.

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Unidentified Participant, [51]

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Okay. Is there any talk about delisting from the exchange?

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Jed A. Latkin, Navidea Biopharmaceuticals, Inc. - CEO, COO, CFO & Director [52]

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No, we work with the exchange on a weekly basis. So we're currently talking with them. So we are -- we prepared the plans. We show them our projections, and so we are having an active dialog with them. And for now we have a clearance until around the February time frame to make sure that we're in full compliance. So we're still working with them and they've been very helpful in terms of our plan. They've showed -- we've shown them our projections, what we expect to see over the next several quarters. And so far we're okay.

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Unidentified Participant, [53]

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Okay. Great. And you said till February, you said 2020?

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Jed A. Latkin, Navidea Biopharmaceuticals, Inc. - CEO, COO, CFO & Director [54]

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Yes. So we have another more fulsome update at the end of February with them, and we're still working on that. But for now everything is okay. We are meeting. We presented all projections to them and those have been accepted. And so as long as we can continue to deliver, we'll be okay.

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Operator [55]

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There are no further questions at this time. I would like to turn the floor back over to Jed Latkin for closing comments.

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Jed A. Latkin, Navidea Biopharmaceuticals, Inc. - CEO, COO, CFO & Director [56]

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I just want to thank everybody for calling in on a midsummer day. So I appreciate all of the questions and comments from everybody. I look forward to updating you guys again very soon. We are going to be presenting in a bunch of conferences in September. Those we'll issue some press release on to where and then we will be there. And hopefully, I look forward to the interim look coming up, which should be a big catalyst for the company in the next couple of months. Thank you. That's it.

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Operator [57]

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This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.

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Jed A. Latkin, Navidea Biopharmaceuticals, Inc. - CEO, COO, CFO & Director [58]

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Thank you.