NAVIDEA BIOPHARMACEUTICALS, INC. Forward-Looking Statements
This report contains 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. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends affecting the financial condition of our business. These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including, but not limited to:
? the impact of the global COVID-19 pandemic on our business, financial
condition or prospects, including a decline in the volume of procedures using
our product, potential delays and disruptions to global supply chains,
manufacturing activities, logistics, operations, employees and contractors,
the business activities of our suppliers, distributors, customers and other
business partners, as well as the effects on worldwide economies, financial
markets, social institutions, labor markets and healthcare systems;
? our history of operating losses and uncertainty of future profitability;
? our ability to successfully complete research and further development of our
drug candidates;
? the timing, cost and uncertainty of obtaining regulatory approvals of our drug
candidates, including delays and additional costs related to the ongoing
COVID-19 pandemic;
? our ability to successfully commercialize our drug candidates, including
delays or disruptions related to the ongoing COVID-19 pandemic;
? our ability to raise capital sufficient to fund our development programs,
including unavailability of funds or delays in receiving funds as a result of
the ongoing COVID-19 pandemic;
? delays in receipt of anticipated proceeds from our capital funding
transactions and other receivables;
? our dependence on royalties and grant revenue;
? our limited product line and distribution channels;
? advances in technologies and development of new competitive products;
? our ability to maintain effective control over financial reporting;
? the outcome of any pending litigation;
? our ability to comply with NYSE American continued listing standards; and
? other risk factors set forth in this report and detailed in our most recent
Annual Report on Form 10-K and other SEC filings.
In addition, in this report, we use words such as "anticipate," "believe," "estimate," "expect," "future," "intend," "plan," "project," and similar expressions to identify forward-looking statements.
We undertake no obligation to update publicly or revise any forward-looking statements, whether as a result of new information, future events or otherwise after the date of this report. In light of these risks and uncertainties, the forward-looking events and circumstances discussed in this report may not occur and actual results could differ materially from those anticipated or implied in the forward-looking statements.
The Company
Navidea's Manocept platform is predicated on the ability to specifically target
the CD206 mannose receptor expressed on activated macrophages. The Manocept
platform serves as the molecular backbone of Tc99m tilmanocept, the first
product developed and commercialized by Navidea based on the platform. Other
than Tc99m tilmanocept, which the Company has a license to distribute outside of
Our business is focused on two primary types of drug products: (i) diagnostic substances, including Tc99m tilmanocept and other diagnostic applications of our Manocept platform, and (ii) therapeutic development programs, including therapeutic applications of our Manocept platform. See Note 15 to the accompanying consolidated financial statements for more information about our business segments.
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Technology and Product Candidates
Our primary development efforts over the last several years were focused on
diagnostic products, including Tc99m tilmanocept, which the Company has a
license to distribute outside of
During the ongoing COVID-19 global pandemic, the Company's primary concern is
the safety of its employees, the employees of its clinical trial sites, and the
patients enrolled in its clinical trials. The Company is working hard to
mitigate any safety risk along with any long-term impact on its clinical
development programs. The spread of COVID-19 has impacted the global economy and
our operations, including the interruption of our clinical trial activities in
Manocept Platform - Diagnostics and Therapeutics Background
Navidea's Manocept platform is predicated on the ability to specifically target
the CD206 mannose receptor expressed primarily on activated macrophages. This
flexible and versatile platform serves as a molecular backbone for purpose-built
targeted imaging molecules that may significantly impact patient care by
providing enhanced diagnostic accuracy, clinical decision-making, and
target-specific treatment. This CD206-targeted drug platform is applicable to a
range of diagnostic modalities, including single photon emission computed
tomography ("SPECT"), positron emission tomography ("PET"), gamma-scanning and
intra-operative and/or optical-fluorescence detection, as well as delivery of
therapeutic compounds that target macrophages, and their role in a variety of
immune- and inflammation-involved diseases.
Activated macrophages play important roles in many disease states and are an
emerging target in many diseases where diagnostic uncertainty exists. Impairment
of the macrophage-driven disease mechanisms is an area of increasing and proven
focus in medicine. The number of people affected by all the inflammatory
diseases combined is estimated at more than 40 million in
The Company has developed processes for producing the first two therapeutic Manocept immuno-construct series, MT-1000 series, which is designed to specifically target and kill or modify activated CD206+ macrophages by delivering doxorubicin, and MT-2000 series, which is designed to inhibit the inflammatory activity of activated CD206+ macrophages by delivering a potent anti-inflammatory agent, dexamethasone. We have contracted with independent facilities to improve chemical syntheses and to produce sufficient quantities of the MT-1000 series and MT-2000 series agents along with the concomitant analytical standards, to provide material for current and planned preclinical animal studies and future clinical trials.
Manocept Platform - Immuno-Diagnostics Clinical Data
Rheumatoid Arthritis
Two Tc99m tilmanocept dose escalation studies in RA have been completed. The
first study was completed and included 18 subjects (nine with active disease and
nine healthy subjects) dosed subcutaneously ("SC") with 50 and 200 µg/2mCi Tc99m
tilmanocept (ClinicalTrials.gov NCT02683421). The results of this study were
presented at five international meetings, including
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In
In
In
Cardiovascular Disease
In collaboration with researchers at
A nine-subject study to evaluate diagnostic imaging of emerging atherosclerosis
plaque with the Tc99m tilmanocept product dosed SC was performed
(ClinicalTrials.gov NCT02542371). The results of this study were presented at
two major international meetings (Conference on Retroviruses and Opportunistic
Infections and SNMMI, 2017) and published in early release in the
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A second Phase 1/2 investigator-initiated study in cooperation with
Navidea has also been awarded a
Kaposi's Sarcoma
We initiated and completed a study of KS in 2015 (ClinicalTrials.gov
NCT022201420) and received additional funding from the
Tuberculosis ("TB")
In
Biomarker Application and Qualification
In
Manocept Platform - In-Vitro and Pre-Clinical Immunotherapeutics Data
The Company has been developing Manocept platform drug delivery constructs that
carry various payloads including doxorubicin and dexamethasone. Chemical
synthesis techniques have advanced considerably, resulting in more robust and
reproducible synthesis protocols that provide products with chemical attributes
indicative of enhanced in vivo activity. The most advanced drug delivery
construct carries a doxorubicin payload and is now in its third generation of
chemical synthesis protocol design. This third generation doxorubicin carrying
construct has been extensively evaluated in human macrophage cell culture assays
and in three experiments using syngeneic mouse cancer models. These experiments
show that at treatment doses below what is required to kill macrophages, the
doxorubicin carrying constructs dramatically alters the immunological behavior
of macrophages, making them more proinflammatory. In one of the syngeneic mouse
tumor experiments, the Manocept doxorubicin construct significantly synergized
the activity of another anticancer therapy producing anti-tumor activity that
was greater than either treatment alone. Results from this study will be
presented at the
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Kaposi's Sarcoma
The novel MT-1000 class constructs are designed to specifically deliver
doxorubicin, a chemotoxin, which can kill KS tumor cells and their
tumor-associated macrophages, potentially altering the course of cancer. We have
received additional funding to continue therapeutic studies in this disease with
the goal of completing an investigational new drug ("IND") submission for a
Manocept construct (MT-1000 class of compounds) consisting of tilmanocept linked
to doxorubicin for the treatment of KS. The first part of the grant, now
complete, supported analyses including in vitro and cell culture studies, to be
followed by Parts 2 and 3 FDA-required preclinical animal testing studies. The
information from these studies can be combined with other information in an IND
application that can be submitted to the FDA requesting permission to begin
testing the compound in selected KS subjects (supported by
Other Immunotherapeutic Applications
The Company continues to evaluate emerging data in other disease states to define areas of focus, development pathways and partnering options to capitalize on the Manocept platform, including ongoing studies in KS, RA and infectious diseases. The immuno-inflammatory process is remarkably complex and tightly regulated with indicators that initiate, maintain and shut down the process. Macrophages are immune cells that play a critical role in the initiation, maintenance, and resolution of inflammation. They are activated and deactivated in the inflammatory process. Because macrophages may promote dysregulation that accelerates or enhances disease progression, diagnostic and therapeutic interventions that target macrophages may open new avenues for controlling inflammatory diseases. There can be no assurance that further evaluation or development will be successful, that any Manocept platform product candidate will ultimately achieve regulatory approval, or if approved, the extent to which it will achieve market acceptance.
Outlook
Our operating expenses in recent years have been focused primarily on support of
both diagnostic and therapeutic applications of our Manocept platform, and Tc99m
tilmanocept. We incurred approximately
Three Months Ended
March 31,
Development Program (a) 2021 2020
Manocept Platform - Diagnostics
7,557 (550 )
(a) Certain development program expenditures were offset by grant reimbursement
revenues totaling $1,000 and $141,000 during the three-month periods ended
March 31, 2021 and 2020, respectively.
We expect to continue the advancement of our efforts with our Manocept platform during 2021. We currently expect our total research and development expenses, including both out-of-pocket charges as well as internal headcount and support costs, to be higher in 2021 than in 2020. However, the ongoing global COVID-19 pandemic has impacted the global economy and may impact our operations, including the potential interruption of our clinical trial activities and our supply chain. For example, the COVID-19 pandemic may delay enrollment in our clinical trials due to prioritization of hospital resources toward the outbreak, and some patients may be unwilling to enroll in our trials or be unable to comply with clinical trial protocols if quarantines impede patient movement or interrupt healthcare services, which would delay our ability to conduct clinical trials or release clinical trial results. The spread of an infectious disease, including COVID-19, may also result in the inability of our suppliers to deliver clinical drug supplies on a timely basis or at all. In addition, hospitals may reduce staffing and reduce or postpone certain treatments in response to the spread of an infectious disease. Such events may result in a period of business disruption, and in reduced operations, or doctors and medical providers may be unwilling to participate in our clinical trials, any of which could materially affect our business, financial condition and results of operations.
The extent to which the ongoing global COVID-19 pandemic impacts our business will depend on future developments, which are highly uncertain and cannot be predicted, including new information that may emerge concerning the severity and spread of COVID-19, the actions taken by federal, state and local governmental authorities, both domestic and foreign, as well as private parties, to contain or treat its impact, and other events outside of our control. The COVID-19 pandemic has adversely affected economies and financial markets worldwide, resulting in an economic downturn that could impact our business, financial condition and results of operations, including our ability to obtain additional funding, if needed.
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Tc99m tilmanocept is approved by the EMA 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 in the EU. We anticipate that we will incur costs to support our product, regulatory, manufacturing and commercial activities related to the sale of Tc99m tilmanocept in the EU, as well as related to the potential marketing registration and sale of Tc99m tilmanocept in markets other than the EU. There can be no assurance that Tc99m tilmanocept will achieve regulatory approval in any market other than the EU, or if approved in those markets, that it will achieve market acceptance in the EU or any other market.
We continue to evaluate existing and emerging data on the potential use of Manocept-related agents in the diagnosis, disease-staging and treatment of disorders in which macrophages are involved, such as RA, KS, NASH and other disease states, to define areas of focus, development pathways and partnering options to capitalize on the Manocept platform. We will also be evaluating potential funding and other resources required for continued development, regulatory approval and commercialization of any Manocept platform product candidates that we identify for further development, and potential options for advancing development. There can be no assurance of obtaining funding or other resources on terms acceptable to us, if at all, that further evaluation or development will be successful, that any Manocept platform product candidate will ultimately achieve regulatory approval, or if approved, the extent to which it will achieve market acceptance.
Results of Operations
Our pharmaceutical products and product candidates are not yet generating significant commercial revenue, therefore the discussion of our revenue focuses on the grant and other revenue and our operating variances focus on our product development programs and the supporting general and administrative expenses.
Three Months Ended
Royalty Revenue. During the first quarter of 2020, we recognized royalty revenue
of
License Revenue. During the first quarter of 2021, we recognized license revenue
of
Grant and Other Revenue. During the first quarters of 2021 and 2020, we
recognized grant and other revenue of
Research and Development Expenses. Research and development expenses increased
Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased
Other Income (Expense). Other income, net, was
Liquidity and Capital Resources
Cash balances increased to
Operating Activities. Cash used in operations was
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Accounts and other receivables decreased to
Inventory decreased to
Prepaid expenses and other current assets decreased to
Accounts payable remained steady at
Investing Activities. Investing activities used
Financing Activities. Financing activities provided
Paycheck Protection Program Loan
The Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act") was
enacted on
Private Placement
On
Series D Preferred Stock
On
Series E Preferred Stock
On
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CRG Litigation
See Notes 2 and 11 to the accompanying consolidated financial statements.
Platinum Litigation
See Notes 2 and 11 to the accompanying consolidated financial statements.
Goldberg Agreement and Litigation
See Notes 2, 7 and 11 to the accompanying consolidated financial statements.
Summary
Our future liquidity and capital requirements will depend on a number of factors, including the ability of our distribution partners to achieve market acceptance of our products, our ability to complete the development and commercialization of new products, our ability to obtain milestone or development funds from potential development and distribution partners, regulatory actions by the FDA and international regulatory bodies, the ability to procure required financial resources, the outcome of any pending litigation, and intellectual property protection.
We plan to focus our resources during 2021 primarily on development of products based on the Manocept platform. Although management believes that it will be able to achieve this objective, it is subject to a number of variables beyond our control, including the nature and timing of any partnering opportunities, the ability to modify contractual commitments made in connection with these programs, and the timing and expense associated with suspension or alteration of clinical trials, and consequently we may need to seek additional financing in order to support our planned development programs.
We will continue to evaluate our timelines, strategic needs, and balance sheet requirements. If we attempt to raise additional capital through debt, royalty, equity or otherwise, we may not be successful in doing so on terms acceptable to the Company, if at all. Further, we may not be able to gain access and/or be able to secure new sources of funding, identify new development opportunities, successfully obtain regulatory approval for and commercialize new products, achieve significant product revenues from our products, or achieve or sustain profitability in the future.
The Company is currently engaged in litigation with
The Company has experienced recurring net losses and has used significant cash
to fund its operations. The Company has considerable discretion over the extent
of development project expenditures and has the ability to curtail the related
cash flows as needed. The Company also has funds remaining under outstanding
grant awards, and continues working to establish new sources of funding,
including collaborations, potential equity investments, and additional grant
funding that can augment the balance sheet. Based on our committed equity
investments, current working capital, and our projected cash burn, management
believes that the Company will be able to continue as a going concern for a
period of one year from the filing of this Quarterly Report on Form 10-
Off-Balance Sheet Arrangements
As of
Recent Accounting Standards
See Notes 1(f) and 1(g) to the accompanying consolidated financial statements.
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Critical Accounting Policies
We base our management's discussion and analysis of financial condition and
results of operations, as well as disclosures included elsewhere in this
Quarterly Report on Form 10-Q, upon our consolidated financial statements, which
we have prepared in accordance with
Revenue Recognition. We currently generate revenue primarily from grants to support various product development initiatives. We generally recognize grant revenue when expenses reimbursable under the grants have been paid and payments under the grants become contractually due.
We also earn revenues related to our licensing and distribution agreements. The consideration we are eligible to receive under our licensing and distribution agreements typically includes upfront payments, reimbursement for research and development costs, milestone payments, and royalties. Each licensing and distribution agreement is unique and requires separate assessment in accordance with current accounting standards.
Research and Development. Research and development ("R&D") expenses include both internal R&D activities and external contracted services. Internal R&D activity expenses include salaries, benefits, and stock-based compensation, as well as travel, supplies, and other costs to support our R&D staff. External contracted services include clinical trial activities, chemistry, manufacturing and control-related activities, and regulatory costs. R&D expenses are charged to operations as incurred. We review and accrue R&D expenses based on services performed and rely upon estimates of those costs applicable to the stage of completion of each project.
Series D and Series E Convertible Preferred Stock. The Company evaluated the
provisions of the Series D and Series E Preferred Stock under Accounting
Standards Codification ("ASC") 480, Distinguishing Liabilities from Equity, ASC
815, Derivatives and Hedging, ASC 470, Debt, and Accounting Series Release
("ASR") 268, Presentation in Financial Statements of "Redeemable Preferred
Stocks." Based on this evaluation, the Company determined that the Series D and
Series E Preferred Stock are not mandatorily redeemable financial instruments
and any obligation to issue a variable number of shares of Common Stock is not
unconditional. Accordingly, the Series D and Series E Preferred Stock should be
classified as equity. Neither the embedded conversion option nor the embedded
call option meet the criteria to be separated from the Series D or Series E
Preferred stock and thus these features should not be bifurcated and accounted
for as derivatives. Additionally, the Series D Preferred Stock contains a
beneficial conversion feature ("BCF"). Prior to the adoption of Accounting
Standards Update ("ASU") No. 2020-06, Accounting for Convertible Instruments and
Contracts in an Entity's Own Equity, effective
Use of Estimates. The preparation of financial statements in conformity with
? Stock-Based Compensation. Stock-based payments to employees and directors,
including grants of stock options and restricted stock, are recognized in the
statements of operations based on their estimated fair values on the date of
grant, subject to an estimated forfeiture rate. The fair value of each option
award with time-based vesting provisions is estimated on the date of grant
using the Black-Scholes option pricing model to value such stock-based
payments and the portion that is ultimately expected to vest is recognized as
compensation expense over either (1) the requisite service period or (2) the
estimated performance period. The determination of fair value using the
Black-Scholes option pricing model is affected by our stock price as well as
assumptions regarding a number of complex and subjective variables, including
expected stock price volatility, risk-free interest rate, expected dividends
and projected employee stock option behaviors. The fair value of each option
award with market-based vesting provisions is estimated on the date of grant
using a Monte Carlo simulation to value such stock-based payments and the
portion that is ultimately expected to vest is recognized as compensation
expense over either (1) the requisite service period or (2) the estimated
performance period. The determination of fair value using a Monte Carlo
simulation is affected by our stock price as well as assumptions regarding a
number of complex and subjective variables, including expected stock price
volatility, risk-free interest rate, expected dividends and projected employee
stock option behaviors.
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We estimate the expected term based on the contractual term of the awards and
employees' exercise and expected post-vesting termination behavior. Restricted
stock awards are valued based on the closing stock price on the date of grant
and amortized ratably over the estimated life of the award.
Since stock-based compensation is recognized only for those awards that are
ultimately expected to vest, we have applied an estimated forfeiture rate to
unvested awards for the purpose of calculating compensation cost. These
estimates will be revised, if necessary, in future periods if actual
forfeitures differ from estimates. Changes in forfeiture estimates impact
compensation cost in the period in which the change in estimate occurs.© Edgar Online, source
