On November 3, 2016 Navidea Biopharmaceuticals (NYSE MKT:NAVB) reported financial results for the quarter ending September 30, 2016 (Press release, Navidea Biopharmaceuticals, NOV 3, 2016, View Source;p=RssLanding&cat=news&id=2219021 [SID1234516230]). Navidea reported total revenue for the third quarter of 2016 of $8.5 million, including Lymphoseek (technetium Tc 99m tilmanocept) injection sales revenue of $6.7 million. The income from operations was $3.4 million and the net loss attributable to common stockholders was $59,000.
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"We ended the third quarter with a clear plan for Navidea’s future. With our previously announced Letter of Intent with Cardinal Health, Inc., we believe that we have successfully identified an arrangement to extinguish the CRG (Capital Royalty Partners II L.P) debt and to focus Navidea on several attractive development efforts outside of lymphatic mapping, lymph node biopsy and the diagnosis of metastatic spread to lymph nodes for the staging of cancer in North America. The contemplated transaction with Cardinal Health, as well as the impending launch of Lymphoseek in Europe by our partner SpePharm AG (Norgine BV), should provide additional income for many years to come," said Dr. Michael Goldberg, Navidea President and CEO. "Our focus moving forward will be on expansion and development of Manocept-based diagnostic markets initially in rheumatoid arthritis and cardiovascular disease, as well as developing our immunotherapeutic platform with a strong preclinical pipeline for cancer, autoimmune, inflammatory and infectious diseases."
Specific events and milestones achieved since the beginning of the third quarter include the following:
Operational & Financial
Entered into Letter of Intent with Cardinal Health, Inc. for the sale of Lymphoseek in North America;
Operating activities provided cash of $1.3 million during the first nine months of 2016, compared to $14.9 million cash used in operations during the same period in 2015;
Reduced cash used in operations by over 100% for the first nine months of 2016 compared to the same period of 2015; and
Appointed Michael M. Goldberg, M.D. President and Chief Executive Officer, and Eric K. Rowinsky, M.D. Chairman of the Board.
Commercial
Achieved sequential quarter-on-quarter Lymphoseek sales revenue growth;
Earned a $500,000 milestone payment from Cardinal Health with the sale of the 100,000th Lymphoseek dose;
Received positive opinion in Europe for new Lymphoseek reduced-mass vial enabling a single injection per vial and triggering a $500,000 milestone payment by our partner, Norgine BV; and
Continued to support the projected Q4 launch of Lymphoseek in Europe by Norgine BV.
Immunodiagnostic & Immunotherapeutic Development Pipeline
Received both Institutional Review Board at University of California, San Francisco and Western Institutional Review Board approvals for a tilmanocept subcutaneous administration clinical trial protocol in rheumatoid arthritis, allowing subject enrollment to begin. To date, 17 of 18 patients have been dosed and imaged;
Received Institutional Review Board approval for a tilmanocept clinical trial protocol in Kaposi Sarcoma which is supported by an NIH grant;
Clinical trial results of tilmanocept in cardiovascular disease from Massachusetts General Hospital have been submitted for publication; and
Completed a number of additional preclinical animal studies and initiated additional studies with the MT 1000 and MT 2000 class of compounds.
Financials
"We are pleased with our financial performance despite the significant disruption in our organization caused by the ongoing litigation with CRG. Our results demonstrate our commitment to our commercial efforts and controlling our operating expenses," said Jed Latkin, interim Chief Operating Officer and Chief Financial Officer at Navidea.
Total revenues for the quarter ended September 30, 2016 were $8.5 million compared to $4.0 million in the third quarter of last year. Third quarter 2016 product revenues recognized from the sale of Lymphoseek were $6.7 million, compared to $4.2 million in the second quarter of 2016 and $3.0 million in the third quarter of 2015. During the third quarter of 2016, the Company also reported $1.8 million in licensing, grant and other revenue. For the nine months ended September 30, 2016, Navidea’s total revenue was $18.6 million compared to $9.0 million for the same period in 2015, an increase of 108%. The primary driver of this increase was revenues recognized by Navidea from the sale of Lymphoseek which exceeded $14.7 million for the nine months ended September 30, 2016 compared to $6.8 million for the same period last year. Third quarter 2016 revenue from the sale of Lymphoseek included $2.0 million of inventory purchases by Cardinal Health and $500,000 of additional revenue from a milestone related to the sale of the 100,000th Lymphoseek dose by Cardinal Health.
Third quarter 2016 margins also remained above 80%, contributing to a total gross profit of $7.6 million for the quarter, compared to $3.5 million for the same period last year. For the nine months ended September 30, 2016, total gross profit rose to $16.6 million versus $7.7 million for the same period last year, an increase of 115%. The increases in total gross profit in the third quarter and first nine months of 2016 was primarily due to $2.0 million of inventory purchases by Cardinal Health, a $500,000 milestone related to the sale of the 100,000th Lymphoseek dose by Cardinal Health, and receipt of a $500,000 milestone payment, and recognition of the remaining $500,000 of the upfront license fee received from SpePharm related to the positive regulatory opinion on a reduced-mass vial in Europe.
Research and development (R&D) expenses for the third quarter of 2016 were $1.3 million, compared to $3.9 million in the third quarter of last year. R&D expenses were $6.5 million for the nine months ended September 30, 2016 compared to $10.2 million in the same period of 2015. The net decreases in year-to-date R&D expenses were primarily a result of decreased headcount costs coupled with decreased project costs related to the Company’s neuro assets and Lymphoseek, offset by increased project costs related to the Company’s therapeutic programs. Selling, general and administrative (SG&A) expenses for the third quarter of 2016 were $2.9 million, compared to $3.9 million in the third quarter of last year. SG&A expenses were $9.9 million for the nine months ended September 30, 2016, compared to $13.5 million for the same period in 2015. The net decrease in year-to-date SG&A expenses was due primarily to decreased headcount coupled with decreased costs related to business development consulting services, contracted medical science liaisons, commercialization costs for Lymphoseek, license fees and investor relations, offset by increases in commercial and medical headcount costs related to the addition of our internal sales force and medical science liaisons coupled with increased legal and professional services. Total operating expenses were $4.2 million for the third quarter of 2016, compared to $7.8 million in the third quarter of last year. Operating expenses were $16.4 million for the nine months ended September 30, 2016, compared to $23.7 million for the same period in 2015.
Navidea’s income from operations for the quarter ended September 30, 2016 was $3.4 million compared to a loss from operations of $4.3 million for the same period in 2015. For the nine months ended September 30, 2016, Navidea’s income from operations was $210,000 compared to a loss from operations of $15.9 million for the same period in 2015. Navidea’s net loss attributable to common stockholders for the quarter ended September 30, 2016 was $59,000, or $0.00 per share, compared to net loss attributable to common stockholders of $8.1 million, or $0.05 per share, for the same period in 2015. For the nine months ended September 30, 2016, Navidea’s net loss attributable to common stockholders was $10.4 million, or $0.07 per share, compared to a net loss attributable to common stockholders of $25.1 million, or $0.17 per share, for the same period in 2015. Net losses attributable to common stockholders include fees paid to CRG (which the Company is disputing in court), the interest expense on our outstanding debt, as well as significant non-cash charges. For the nine-month periods ended September 30, 2016 and September 30, 2015, net loss attributable to common stockholders included $10.6 million and $9.1 million, respectively, in interest, debt-related fees, losses on extinguishment of debt, and changes in the fair value of financial instruments.
Navidea ended the quarter with $4.3 million in cash, $3.5 million of which was restricted related to the CRG debt.