Navidea Biopharmaceuticals' CEO Discusses Q2 2012 Results - Earnings Call Transcript

Navidea Biopharmaceuticals, Inc. (NAVB)

Q2 2012 Earnings Call

August 7, 2012 8:00 AM ET


Brent Larson – SVP, CFO, Treasurer and Secretary

Mark Pykett – President and CEO

Fred Cope – SVP, Pharmaceutical Research and Clinical Development

Tom Tulip – EVP and Chief Business Officer


Charles Duncan – JMP Securities

Kevin DeGeeter – Ladenburg Thalmann

Mike King – Rodman & Renshaw

Stephen Dunn – Life Tech Capital

Steve Brozak – WBB Securities

Dalton Chandler – Needham & Co

Spencer Nam – ThinkEquity



Greetings and welcome to the Navidea Biopharmaceuticals, Incorporated Second Quarter 2012 Conference Call. At that time, all participants are in a listen-only mode. A brief question-and-answer session will follow the following presentation. (Operator Instructions) As a reminder, this conference is being recorded. Also management would like to alert you that today’s conference will be no more than one hour in duration.

It is now my pleasure at this time to introduce your host, Brent Larson, CFO of Navidea Biopharmaceuticals, Incorporated. Thank you, Mr. Larson. You may now begin.

Brent Larson

Thank you, Rob. Good morning, everyone. My name, as Rob said, is Brent Larson. I’m the CFO of Navidea Biopharmaceuticals, and I’ll be moderating this morning’s call.

Before we get started with the formal comments, we’d like to remind you that during the course of this call management may make projections or other forward-looking remarks regarding future events or the future financial performance of the company.

It’s important to note that such statements about Navidea’s estimated or anticipated future results or other non-historical facts are forward-looking statements and reflect Navidea’s current perspective on existing trends and information. Navidea disclaims any intent or obligation to update these forward-looking statements. Actual results may differ materially from Navidea’s current expectations depending on a number of factors affecting Navidea’s business.

These factors include among others, the inherent uncertainties associated with the financial projections, timely and successful implementation of strategic initiatives, the difficulty of predicting the timing or outcome of product development efforts, and FDA or other regulatory approvals or actions, market acceptance and continued demand for new Navidea’s products, clinical and regulatory pathways, the impact of competitive products and pricing, patents or other intellectual property rights held by competitors, the availability and pricing of third-party sourced products and materials, successful compliance of government regulations, and such other risks and uncertainties as detailed in Navidea’s periodic public filings on file with the Securities and Exchange Commission.

Now, I’d like to turn the call over to Dr. Mark Pykett, President and Chief Executive Officer of Navidea. Mark?

Mark Pykett

Thank you, Brent. We appreciate the participation of everyone on today’s call and look forward to sharing business update and quarterly financial results. We have a number of important topics to discuss today including updates on the Lymphoseek NDA, the outlook for Lymphoseek commercialization, the plan filing of the Marketing Authorization Application for Lymphoseek in the EU, progress with our Alzheimer’s disease amyloid imaging program, and a review of the license we completed last week for the CFT neuroimaging agent. Tom, Fred, Brent and I will share these topics.

We continue to make very good progress in multiple dimensions of our business. We are executing well and we believe the outlook for Navidea continues to be promising. As one looks at the landscape of biotech companies headed toward important events such as a PDUFA date, a range of factors often contributes to a company’s value. I would like to highlight a number of parameters that we believe put Navidea in a strong position, and which we believe should give investors confidence in the potential of our company.

We have a strong product in Lymphoseek. Lymphoseek has demonstrated encouraging clinical performance not only against the requisite and valid comparator required for U.S. registration, vital blue dye, but also against recognized current standards of care consisting of blue dye plus radiolabeled colloids. The Lymphoseek PDUFA date remains on track. Lymphoseek is used in lymph node mapping procedures that are already widely performed in surgical oncology. This is not a new practice. We believe we are well positioned to address this market with an outstanding partner in the U.S., Cardinal Health.

Our partnership with Cardinal Health provides attractive economics to both organizations through our revenue sharing agreement on Lymphoseek sales with mutual incentives to perform to the best of our capabilities. Lymphoseek has attractive cost of goods and gross margins, which we believe will facilitate promising net cash flows to Navidea.

In fact, the gross margins on our portion of Lymphoseek revenues are expected to be approximately 75% to 80%, meaning that about 35% to 40% of end customer revenue drops to Navidea’s EBITDA, an encouraging pre-tax return. There are clear avenues to reimbursement for Lymphoseek in the U.S., initially through a statutory pass-through code meaning there are established well recognized Medicare, Medicaid procedures for payment for the agent.

We have also advanced and diversified our pipeline of late stage assets. Over the course of the last eight months, we have not only made important progress with our two oncology agents, Lymphoseek and RIGS, but also added two potential best-in-class candidates in the neuroimaging space, 4694 and CFT, providing us with two premier franchises. Encouraging findings for 4694 continue to be generated in Phase II.

We are looking forward to commencing our own Phase IIb study later this quarter and to beginning Phase III in early 2013. We are addressing important medical needs in large markets including cancer, Alzheimer’s disease and dementia, and Parkinson’s disease and movement disorders, which we believe will remain medical areas of global significance for years to come. Our technical programs are supported by strong intellectual property and sustainable proprietary positions.

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