On March 29, 2017 Navidea Biopharmaceuticals, Inc. (NYSE MKT:NAVB) reported business and financial highlights for the fourth quarter and year ended December 31, 2016 (Press release, Navidea Biopharmaceuticals, MAR 29, 2017, View Source;p=RssLanding&cat=news&id=2257395 [SID1234518381]).

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2016 Top Highlights

Achieved $1 million in Lymphoseek (technetium Tc 99m tilmanocept) injection commercial milestones upon sale of 100,000th patient dose and receipt of European approval to manufacture a reduced-mass vial
Completed sale of Lymphoseek to Cardinal Health 414, LLC ("Cardinal Health 414") and received approximately $83 million in upfront payments including an advance of $3 million of future earnout payments, with up to $227 million in potential additional earnout payments through 2026
Initiated intravenous ("IV") dose escalation Phase 1 imaging/disease-finding study in rheumatoid arthritis ("RA") of ten cohorts with three dose cohorts completed with major escalations and imaging of active RA
Completed nine-subject cardiovascular imaging disease-finding study in HIV/CV patients and published clinical results in The Journal of Infectious Diseases
Awarded $1.8 million Fast-track Small Business Innovation Research ("SBIR") Grant for Manocept-based treatment for Kaposi’s Sarcoma ("KS")
Appointed Michael M. Goldberg, M.D., as President and Chief Executive Officer and Eric K. Rowinsky, M.D., as Chairman of the Board of Directors
Business and Product Development Update

This past year and first quarter of 2017 were positively transformative for us. We refocused Navidea from investing in developing the commercial infrastructure to sell its sole commercial imaging product to a late-stage development company focused on several very large imaging market opportunities, and through its Macrophage Therapeutics, Inc. ("MT") subsidiary successfully advanced a number of novel immunotherapy products through proof of concept studies in animals. In the process, we transformed our capital structure by paying down our high interest and very covenant restrictive debt. The Company has gone from losing close to $28 million in 2015 to a net loss of $14 million in 2016 to operating at cash flow positive projected for 2017 not including discretionary research projects. Furthermore the Company, which had no excess cash flow for discretionary, non grant related research, now has sufficient cash to advance all of our existing imaging and MT ongoing initiatives.

While transforming our business model, balance sheet and income statements, we made significant progress with our technology and pipeline. We are fortunate that both our imaging and therapeutic product candidates are based on the same drug delivery system that targets activated macrophages, even when an additional agent is chemically attached. In humans, we advanced two new delivery approaches and confirmed their utility when dosed subcutaneously or intravenously. In animals, we initiated development of an oral delivery formulation for our therapeutic product candidates.

Additionally, we confirmed that in humans we can target the classically-activated or M1 macrophage in patients with RA and atherosclerosis. This is a major advance, as the alternative activation state, or M2 macrophage, is well known to have significantly higher cell surface expression of the mannose receptor (CD206) than the M1 macrophage in the activated state. Clinical results clearly demonstrate sufficient CD206 expression on M1 activated macrophages to target this receptor with our technology. Our animal studies confirmed as well that targeting either M1 or M2 macrophages implicated in disease is feasible with the appropriate therapeutic linked to our delivery system. In animal models we verified the activity of our product candidates in both M1-based diseases as well as M2-based diseases. Finally, working with various academic groups we demonstrated that by targeting the host macrophage that acts as an incubator we can eliminate viral reservoirs containing Zika, dengue, human immunodeficiency virus ("HIV"), human herpesvirus 8 ("HHV8"), and other infectious agents such as leishmaniosis. We are also currently working with National Institutes of Health ("NIH")-funded labs, at no cost to Navidea, to explore our antiviral and anti-infective performance in appropriate animal models.

Financial Results

Revenues for the year ended December 31, 2016 were $22.0 million compared to $13.2 million for 2015. Navidea’s revenues for 2016 consisted of $17.0 million in sales of Lymphoseek, $3.1 million from various federal grants and other revenue, and $1.8 million related to license agreements, compared to $10.3 million, $1.9 million and $1.1 million, respectively, for 2015.

Operating expenses for the year ended December 31, 2016 were approximately $21.9 million compared to $30.0 million for 2015. Research and development expenses were $8.9 million during 2016 compared to $12.8 million during 2015. The net decrease was primarily a result of reductions in NAV4694, Lymphoseek and NAV5001 product development costs coupled with reduced headcount and related support costs, offset by increased Manocept diagnostic and therapeutic product development costs. Selling, general and administrative expenses were approximately $13.0 million for 2016 compared to $17.3 million for 2015. The net decrease was primarily due to reduced headcount and related support costs, contracted medical science liaisons, business development consulting services, market development expenses related to Lymphoseek, and investor relations, offset by increased legal and professional services.

Navidea’s loss from operations for the year ended December 31, 2016 was $2.2 million compared to $18.6 million for 2015. For the year ended December 31, 2016, Navidea reported a loss attributable to common stockholders of $14.3 million, or $0.09 per share, compared to a loss attributable to common stockholders of $27.6 million, or $0.18 per share, for the same period in 2015.

Revenues for the fourth quarter of 2016 were $3.4 million compared to $4.3 million for the same period in 2015. Navidea’s revenues for the fourth quarter of 2016 consisted of $2.3 million in sales of Lymphoseek and $1.0 million from various federal grants and other revenue, compared to $3.5 million and $541,000, respectively, coupled with $250,000 related to license agreements, for the same period in 2015. Additionally, approximately $2 million in sales of Lymphoseek to Cardinal Health 414 recorded in the third quarter of 2016 was accelerated to help facilitate the transaction that was ultimately closed in March 2017. Without acceleration of such, the related sales would have occurred in the fourth quarter of 2016.

Fourth quarter 2016 operating expenses were $5.5 million compared to $6.4 million for the fourth quarter of 2015. Research and development expenses were $2.4 million during the fourth quarter of 2016 compared to $2.6 million during the fourth quarter of 2015. The net decrease from 2015 to 2016 was primarily a result of reduced headcount and related support costs coupled with decreased NAV4694 product development costs, offset by increased Manocept diagnostic and Lymphoseek product development costs. Selling, general and administrative expenses were $3.1 million for the fourth quarter of 2016 compared to $3.8 million for the same period in 2015. The net decrease was primarily due to reduced headcount and related support costs, market development expenses related to Lymphoseek and investor relations, offset by increased legal and professional services.

Navidea’s loss from operations for the fourth quarter of 2016 was $2.4 million compared to $2.6 million for the fourth quarter of 2015. For the fourth quarter of 2016, Navidea reported a loss attributable to common stockholders of $3.9 million, or $0.02 per share, compared to a loss attributable to common stockholders of $2.5 million, or $0.02 per share, for the fourth quarter of 2015.

Detailed Highlights

Navidea and Cardinal Health 414
Completed sale of Lymphoseek to Cardinal Health 414 for lymphatic mapping, lymph node biopsy and the diagnosis of metastatic spread to lymph nodes for the staging of cancer in North America
Received approximately $83 million in upfront payments including an advance of $3 million of future earnout payments, with up to $227 million in potential additional earnout payments through 2026, $17.1 million of which is guaranteed over the next three years
CRG et al
Entered into a Global Settlement Agreement between the Company, MT, Capital Royalty Partners II L.P. and its affiliates ("CRG"), and Cardinal Health 414 in which Navidea repaid $59 million (the "Deposit Amount") of its indebtedness and other obligations outstanding under the CRG Term Loan.
Platinum et al
Concurrently with payment of the Deposit Amount to CRG, the Company also paid to Platinum Partners Credit Opportunities Master Fund, LP ("PPCO") an aggregate of $7.7 million in partial satisfaction of the Company’s liabilities, obligations and indebtedness under that certain Loan Agreement, dated July 25, 2012 (as amended) by and between the Company and Platinum-Montaur Life Sciences, LLC, which, to the extent of such payment, were transferred by Platinum-Montaur to PPCO. Approximately $1.9 million remains outstanding under the Platinum Loan Agreement.
U.S. Food and Drug Administration ("FDA")
Held several discussions/meetings with the FDA significantly expediting development and approval timelines for Manocept-RA disease-finding approaches to rheumatoid arthritis
Cardiovascular ("CV") Initiative
Completed nine-subject cardiovascular imaging disease-finding study in HIV/CV patients
Presented clinical results at CROI-2017 and published in the Journal of Infectious Disease
Additional planned studies include a large potential partner evaluating product in their proprietary animal models
Rheumatoid Arthritis
Completed 18-subject subcutaneous ("SC") Manocept RA study
Initiated RA intravenous ("IV") dose escalation Phase 1 imaging/disease-finding study of 10 cohorts with three dose cohorts completed with major escalations and imaging of active RA
Appointed strategic clinical and regulatory consulting firm to optimize clinical development plan for RA imaging candidate
Non-Alcoholic Steatohepatitis (NASH) Therapy
Completed three in vivo studies employing two Manocept conjugate agents and three different dosing regimens demonstrating effectiveness at preventing non-alcoholic fatty liver disease ("NAFLD") progression to NASH and NASH’s progression to liver cirrhosis
A poster presentation on certain of our NASH results will be presented at a meeting next week and will be posted on the MT website
Cancer Therapy
Completed three preclinical studies, two single agent and one in combination with a well-established therapeutic antibody (two confirmatory in vivo studies – murine human tumor model). All three studies confirmed a positive impact on the tumor progression and inhibition/tumor kill.
Cancer Imaging to Treatment
Colorectal Cancer and Liver Cancer – completed preclinical testing for the requirements to administer the Manocept imaging agent for colorectal cancer and colorectal cancer with synchronous liver metastases.
Cervical Cancer – completed a significant portion of the clinical testing for a new indication for imaging of metastatic disease (lymph node metastasis) in cervical cancer. Navidea’s portion of the study will be completed in Q1 2017.
Lipid Storage Disease (Neuro)
Initiated in vitro cell culture study in which Manocept conjugates demonstrated substantial protective effect of glial cells exposed to toxic metabolite
Anti-Infectives
Zika Virus – Initiated and completed four in vitro studies in human tissue demonstrating a highly effective reduction in Zika infectivity and antiviral activity by multiple Manocept conjugates
Dengue Virus – Initiated and completed four in vitro studies in human tissue demonstrating a highly effective reduction in dengue infectivity and antiviral activity by multiple Manocept conjugates
Leishmaniosis – Initiated and completed two in vivo studies demonstrating a highly effective targeting in Leishmaniosis infectivity and parasite activity by multiple Manocept conjugates
Cytomegalovirus ("CMV") – Held discussions with NIH/NIAID on testing of key Manocept conjugates in CMV infection and disease progression with preclinical studies to be initiated in H2 2017
Kaposi’s Sarcoma
Received NIH/NCI funding to support the therapeutic development of anticancer (Anti-KS) Manocept conjugates
Phase 1 of the grant completed and Phase 2 clinical protocols are IRB-approved with study initiation anticipated shortly
Human Herpes Virus 8 – The testing of Manocept agents against HHV8 are an integral part of the Kaposi’s Sarcoma therapy initiatives
Human Immunodeficiency Virus – The testing of Manocept agents against HIV is an integral part of the KS therapy initiatives
Completed Preclinical FDA requirements for IV administration of tilmanocept for all radio-diagnostic applications
Inflammatory Bowel Disease and Crohn’s Disease ("BD/C")
Initiated partnership with major pharma group to assess the efficacy of Manocept conjugates in appropriate in vivo models with results anticipated in the coming months.