This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Biotech Stock Mailbag: Delcath, Navidea, Affymax, Ziopharm

Outside the clinical data package for Melblez, Delcath management is displaying a significant lack of confidence with its non-stop dilution of shareholders via At-The-Market (ATM) equity offerings. The company announced another $50 million ATM on Wednesday night.

Allen N. asks, "Did you notice Navidea Biopharmaceuticals (NAVB - Get Report) got OK'd by the feds today? Any comment?"

FDA approved Navidea Biopharmaceuticals' lymph node mapping agent Lymphoseek on Wednesday. The approval was expected but did come early. Navidea shares fell on the news, which caused some consternation and furrowed brows among the bulls. Any FDA approval is a positive, but Navidea fans fail to recognize Lymphoseek's small commercial potential relative to the company's super-sized market valuation. This disparity, more than anything, explains why Navidea is selling off on the Lymphoseek approval.

Lymphoseek is only going to generate $20 million to $40 million in revenue for Navidea, by my calculations. I realize the company's own revenue forecast is significantly higher, I just don't believe it. I discussed Lymphoseek's commercial sales model in detail last September.

On Wednesday's conference call, Navidea set Lymphoseek's price at $300, which is below the $400 I was assuming. That's still a significant cost premium to cheap blue dye, which is what doctors and hospitals use today for lymphatic mapping procedures in breast cancer and melanoma patients. Lymphoseek works, no doubt, but does it work that much better than blue dye or other similar lymph node mapping agents to justify a higher price? I don't believe it does. But, again, even if you assume wholesale switching from blue dye to Lymphoseek, the numbers still don't pencil out in Navidea's favor, especially given the revenue-sharing agreement with Cardinal Health.

Navidea may have been able to differentiate Lymphoseek from current standard of care had FDA approved it for "sentinel" lymph node detection. FDA, however, did not grant that broader approval. [For savvy investors, this was another reason to sell the stock Wednesday.]

I rehashed a lot of my thinking about Navidea on Twitter Wednesday, which prompted a discussion with @bracketanalytix. He tweeted:

"Can't you even write something new? The hardest thing to detach from is your own beliefs."

My response: "Since I already assumed Lymphoseek approval (which came today), why would the 'low sales' thesis change?"
3 of 4

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AFFY $0.09 0.00%
ZIOP $5.10 0.00%
DCTH $0.28 0.00%
NAVB $0.80 0.00%
TGTX $8.50 0.00%


Chart of I:DJI
DOW 16,204.97 -211.61 -1.29%
S&P 500 1,880.05 -35.40 -1.85%
NASDAQ 4,363.1440 -146.4150 -3.25%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs