Category: NAVB

Navidea Biopharmaceuticals, Inc. (NYSE:NAVB) Q4 2022 Earnings Conference Call March 22, 2023 5:00 PM ET

Company Participants

Michael Rosol – SVP & Chief Medical Officer

Erika Eves – VP, Finance & Administration and Principal Financial & Accounting Officer

Joseph Meyer – Controller

Alexander Cappello – Independent Chairman

Conference Call Participants

Edward English – Private Investor

Operator

Greetings, and welcome to the Navidea Biopharmaceuticals Fourth Quarter Earnings Call and Business Update. [Operator Instructions].

It is now my pleasure to introduce to you, Dr. Michael Rosol, Chief Medical Officer. Thank you, Mike. You may begin.

Michael Rosol

Thank you, and thank you all for joining us here today for the earnings call and business update. This call is being webcast live on our website, ir.navidea.com, and a replay will be made available. Following prepared remarks, we will be conducting a live Q&A session, as you’ve just heard.

Navidea’s Chair of its Board of Directors, Mr. Alex Cappello; the Vice Chair of its Board of Directors, Mr. Kim Scott; its Vice President of Finance and Administration, Ms. Erika Eves; and its controller, Mr. Joe Meyer, are all joining me on the call today.

During the course of this conference call, we will be making forward-looking statements regarding future events and the future performance of the company. These events relate to our business plans to develop Navidea’s molecular diagnostics and immunotherapeutics, which include clinical and regulatory developments and timing of clinical data readouts, along with capital resources and strategic matters. All of these statements are based on the beliefs and expectations of management as of today. These statements involve certain assumptions, risks and uncertainties and could cause actual results to differ materially. We assume no obligation to revise or update forward-looking statements, whether as a result of new information, future events or otherwise. Investors should read carefully the risks and uncertainties described within the safe harbor section of our website as well as the risk factors included in the company’s most recent quarterly and annual filings with the SEC.

As we begin our update and look back at events from Q4 to date, I thought it would be helpful to reiterate a few of our key areas of focus in our 2023 planning. One, we will continue RA, rheumatoid arthritis, Phase III trial success to full enrollment, NDA submission and FDA approval. Two, we’ll fully fund the Phase III trial, and the Board of Directors is actively engaged in discussions with capital providers in support of our mission to identify this full RA trial funding. Our goal is to be fully funded this year. Three, we’ll attract and retain the industry’s top biopharmaceutical talent. As our RA development program success grows, so does the need to grow our team to help support key milestone achievements, identify and support key strategic relationships and initiate new PR IR efforts as a way to share our trial and milestone success.

As I mentioned a moment ago, on the financing front, the Board of Directors is actively engaged in our financing effort, and we hope to have news to announce there shortly. In the last quarter, we have advanced our clinical trials in rheumatoid arthritis as well as our pipeline in other diagnostic indications and in therapeutics. We continue to make solid progress on our Phase IIb trial in rheumatoid arthritis comparing imaging to biopsy. And during Q4, we presented at an international conference our updated promising preliminary results supporting tilmanocept’s ability to distinguish the fibroid pathotype from the nonfibroid in the first 13 participants evaluated by the time of the presentation. These strong early results support our hypotheses and provide excellent data in support of tilmanocept imaging as a biomarker of CD206 expression in joints of patients with RA.

We also continue to enroll into the RA Phase III and are actively enrolling in 12 sites. We continue to advance our therapeutics and imaging applications through key existing collaborations with well-known institutions and investigators across the globe as we work to grow the company’s intellectual property. We are proud of the progress we have made and the planning we are putting in place to benefit our associates and our shareholders here at Navidea. Regarding the CRG and Dr. Goldberg litigation matters, the company has that ruling that essentially bracket its exposure in both. We will continue to minimize exposure.

Now I’d like to provide a brief update specific to our clinical results. So I’ll begin with the progress in our rheumatoid arthritis program. In NAV3-33, the Phase III, we continue to have good enrollment into this Phase III trial in RA. The initial indications we are pursuing for FDA approval are: one, early prediction of treatment response to a new or first-time anti-TNF alpha therapy; and two, identify RA patients with low level of localization of tilmanocept, who are less likely to respond to anti-TNF alpha therapy.

As we have discussed previously, there is a large unmet need for a reliable early predictor of whether a therapy is working in a patient with RA. Because if the drug is not working, the patient’s disease is not being treated, and this can lead to long-term health consequences, along with unnecessary high drug costs for ineffective therapies that also bring with them possible side effects. Our Phase III trial will establish the ability of tilmanocept imaging to serve as an early predictor of treatment response in RA patients switching to an anti-TNF alpha therapy, addressing that unmet medical need.

In NAV3-32, our comparison study of tilmanocept imaging to joint biopsy, we remain in active recruitment. As we’ve announced and discussed previously, the preliminary results of this trial have been promising. Our aim is to recruit patients with each of the 3 pathotypes of RA to obtain comparative imaging and pathology results. And the trial is designed so that we enroll a minimum of 4 subjects in each of the 3 subtypes of RA: fibroid, diffuse myeloid and lympho-myeloid. So overall trial size has been expected to range between 12 and 24. To date, we have achieved our enrollment targets in 2 out of those — 3 of those pathotype buckets, with patients having had both their imaging and joint biopsies completed.

The primary objective of this study is to assess the relationship between joint-specific tilmanocept uptake values and the pathobiology of the RA-involved joints. Knowledge of an individual RA patient’s pathotype may be clinically important because it may predict to which RA therapy a patient is likely to respond. There is a growing body of literature suggesting that those patients with the fibroid type of RA are much less responsive to the anti-TNF alpha drugs, and so a means of determining whether or not a patient has this particular pathotype is seen as extremely important to a number of key opinion leaders in rheumatology. As of this time, there is no reliable way of assessing a patient’s pathotype of RA other than by doing a biopsy, and we have hypothesized that tilmanocept could provide this information.

So we presented updated preliminary results on the first 13 patients back at November’s American College of Rheumatology meeting. That’s the largest rheumatology conference in the world. These results presented there indicated that tilmanocept uptake in the RA-inflamed joints is able to discretely differentiate patients with the fibroid pathotype, that is patients with low macrophage involvement, from those having either the diffuse myeloid or lympho-myeloid types of RA, that is patients with higher macrophage involvement.

So these data also provides support for one of our indications in the Phase III trial. The ability to predict from a baseline scan alone, whether a patient is likely to receive a meaningful clinical benefit from an anti-TNF alpha therapy. Since, as I mentioned, there is increasing evidence that if a patient has the fibroid type of RA, they are less likely to receive significant clinical benefit from anti-TNF alpha therapy.

You might recall that in our previously completed Phase IIb study, NAV3-31, that contained a pilot arm looking at the efficacy of tilmanocept imaging at early prediction of treatment response, those patients who exhibited a low level of tilmanocept uptake in their joints on their baseline scan before they started therapy had an almost 90% nonresponse rate to anti-TNF alpha therapy using a clinical gold standard assessment. Importantly, these promising early results have opened up conversations with pharmaceutical companies who are developing therapeutics for RA, with the possibility of tilmanocept imaging being used as a biomarker in their drug development pipelines. The key differentiator between now and prior discussions we have had with these kind of companies is that we have this additional promising data in hand. And as we move forward and gather more data towards trial completion, if these current results hold, we will be in an even better position for discussions with companies with which to work.

We continue to make very good progress on automating the imaging quantification as well, which will have significant benefit for the commercial product. We are working closely with MIM Software, M-I-M, on a definitive agreement for them to be our commercial partner for image quantification of tilmanocept imaging in RA. So once again, MIM is a leading medical imaging software company based in Cleveland with a large footprint in the nuclear medicine space. We are currently integrating their existing image analysis workflow into our Phase III trial, and their software should be used for the image analysis for this trial as well as our normative database trial data.

The workflow for these trials is extremely well designed. And by integrating them into our trials at this stage, this should be helpful for development and integration of a fully automated workflow that they are developing. Already, they have completed a pilot study using data from our earlier trials, demonstrating that they can develop this fully automated application that should be able to robustly reproduce our quantitative imaging reads using our proprietary algorithm.

This is important for rollout of a commercial product. The ability to perform the quantitative imaging reads rapidly and reproducibly without having to have a bunch of people in the room actually drawing the reference regions of interest will help us go at large scale through this automated method, and that will be critical to large-scale adoption of tilmanocept for RA. Keep in mind that all of this, the image analysis methodology as well as the data upon which it is built, including the normative database you’ve heard us discuss before, is not only critical to driving the most accurate and sensitive objective read of our RA images, but it also serves as a significant barrier to entry to possible competitors in this space.

You might have also seen the conversion of a provisional patent application to an A1 patent application earlier this month. This application involves using clinical and serological markers in combination with our imaging readout to possibly improve our predictive capacity for treatment outcome over using our imaging alone. So we will have IP protection on combinatorial approaches as well if they work and if granted. We have data from the NAV3-31 Phase IIb trial that I just referenced that was completed a while ago that suggests this indeed might work.

In the diagnostics pipeline development, we’ve completed preclinical studies on gallium-68 tilmanocept for PET imaging and related next-generation Manocept imaging agents. We work on this in collaboration with researchers at the University of Alabama at Birmingham or UAB. We’ve also completed work on our NIH-funded preclinical studies for evaluating gallium-68 tilmanocept in various new imaging agents similar to tilmanocept in a mouse model of atherosclerosis.

Work on another important set of preclinical studies was completed with our collaborators at UAB. This work explored varying the molecular weights of tilmanocept-like constructs and evaluating their biodistributions, following intravenous injection with and without competitive blocking. Results showed that by varying the molecular weights of these compounds and introducing competitive blocking agents, it was possible to significantly increase localization of tilmanocept-like imaging and therapeutic constructs to target tissues like tumors while concurrently reducing localization to off-target organs such as the liver.

These results show a path to improving our diagnostic imaging and to greater and more effective targeted delivery of our therapeutic constructs to tumors and other sites of macrophage and valve pathology. We presented these results at the Society of Nuclear Medicine and Molecular Imaging meeting last summer, and these were electronically published on March 7 of this year in the Journal Molecular Imaging and Biology, and you can access that online.

On the therapeutic assets front, we are advancing our candidates in the oncology and anti-inflammatory spaces in preclinical studies with the goal of filing investigational new drug applications to advance to human trials in 2024. These filings will be significant inflection points and opportunities for licensing and partnering deals for the company. Work on new drug delivery constructs and new targeted payloads has also progressed. These new constructs carry new drug payloads that may be more effective than doxorubicin for beneficially altering the immune status of tumor macrophages, for example. Results in mouse models have demonstrated that when administered alone or in combination with another cancer drug, these therapeutic constructs significantly reduce the rate of tumor growth by an average of 76%.

Some of our results covering new bisphosphonate payload constructs were presented at the Tumor Myeloid-Directed Therapy Summit meeting. More recently, on November 10, the full spectrum of results for the paclitaxel and novel bisphosphonate constructs were presented at the Annual Meeting of the Society for Immunotherapy of Cancer held in Boston. In addition, we completed what’s called a maximum tolerated dose study in mice for our bisphosphonate-carrying construct. The results of this study will facilitate design of studies intended to evaluate anticancer efficacy of this construct in the future. All of our preclinical work with potential cancer immunotherapy constructs are intended to enable Navidea to choose a lead candidate for macro-type-, phenotype-altering drugs for oncology indications.

Preclinical studies are also ongoing in leishmaniasis. Leishmaniasis is a vector-borne chronic disease caused by a protozoan parasite that replicates in CD206-positive macrophages. It is transmitted to humans through the bite of infected sandflies found in parts of the tropics, subtropics and Southern Europe. It’s rare in the United States, but in more tropical countries where the sandfly vectors are found, it is a common serious and potentially life-threatening disease. The U.S. FDA has designated leishmaniasis as a neglected tropical disease, making new therapeutics of this disease potentially eligible for what’s called a priority review voucher that Navidea could sell potentially for more than enough to back cover the cost of development as well as accelerate a number of other pipeline candidates.

Previously, Navidea scientists and our collaborators at the NIH published research results demonstrating that high CD206 expressing macrophages play a role in the dominant form of the disease. This project has advanced significantly in the last year with results from 3 separate experiments showing that a novel construct created by Navidea has significant therapeutic potential to control leishmanial infections in mice. Concurrent with reduced numbers of these parasites, alterations in the immune status of the lesions that are caused by leishmaniasis were observed with potential implications for the mechanism of action of our novel therapeutic construct. Additional experiments are ongoing or our plan to follow up on these very promising initial results.

That brings me to our overall intellectual property front. We received notification of issuance of a patent from the United States Patent and Trademark Office for the company’s application titled Compositions And Methods For Altering Macrophage Phenotype. This patent covers the ability of our constructs to stimulate an immune response against tumors through targeted delivery of payloads that change the nature of macrophages to make them more pro-inflammatory. Efficacy of these constructs has been demonstrated in preclinical studies, including the ones I just spoke about. We have also received notifications of issuance of patent application of patents in Israel and in Canada. Please refer to the earnings call press release from earlier today for more detail.

So we continue to submit new provisional applications and work on our pending ones. We have filed a new provisional patent application describing a new chemistry for addition of mannose sugars to our mannosylated dextran-based imaging and therapeutic constructs. This new chemistry results in a different linkage holding the mannose onto our constructs, one that is more stable than the linkage currently used, and is designed to facilitate commercial scale-up and production of our next-generation imaging and therapeutic constructs. In partnership with our excellent patent attorneys, we have an active IP protection strategy for the company that will provide needed protections and rights to both our current diagnostic and therapeutic agents as well as to our next-generation molecules and disease indications.

On the Lymphoseek front, regarding Lymphoseek Europe and the rest of the world, our strategy has been and remains to find the right partners for marketing and distribution for Lymphoseek and other company pipeline candidates in Europe and beyond. The reason for this is we are focusing on the long-term strategy of partnering for marketing and distribution.

On the drug manufacturing and supply front for both Lymphoseek and the RA product, we have been and continue to work with a new active pharmaceutical ingredient or API supplier as well as a final drug product supplier. Progress continues. And as of this time, we are advancing towards completion of these and readiness for clinical and commercial supply. This work has implications for Lymphoseek in China and Lymphoaim in India as we need to be able to supply a steady and reliable stream of product through our partners in these countries.

So these are just some of the highlights of the last quarter that we wanted to touch on for this update. We remain largely focused on the RA pipeline, specifically the Phase IIb imaging, the biopsy trial in the Phase III, while we continue to support and push progress on our other diagnostic and therapeutic indications.

As always, I want to thank the team here for their tireless efforts to keep things moving and our network of clinical trial sites and academic research collaborators for all of their hard work. Our business strategy remains to advance our pipeline products to key inflection points and seek appropriate partnerships for commercialization and marketing.

So with that, I’ll close the update — summary update. I want to thank you, and I’m going to turn it over to Erika now for the financials.

Erika Eves

Thank you, Mike. As announced last week, I will be leaving Navidea at the end of the month. Our current Controller, Joe Meyer, will be taking over many of my responsibilities. So I’d like to introduce all of you to Joe, who will now read the financial results for the fourth quarter and full year of 2022. Joe?

Joseph Meyer

Thanks, Erika. And for the first time, hello, everyone. Total revenues for the 3-month period ended December 31, 2022, were approximately $1,000 compared to $50,000 for the same period in 2021. Total revenues for the year ended December 31, 2022, were $66,000 compared to $532,000 for the same period in 2021. The decrease was primarily due to the 2021 partial recovery of debt previously written off in 2015, the 2021 receipt of reimbursement from Cardinal Health of certain research and development costs, decreased grant revenue relative to small business innovation research from NIH supporting Manocept development and decreased license revenue from transitional sales up to Manocept in Europe.

Research and development expenses for Q4 were $1 million compared to $1.4 million for the same period in 2021. R&D expenses for the full year 2022 were $6.0 million compared to $5.1 million for the full year 2021. That year-over-year increase was primarily due to increased drug project expenses and increased employee compensation, including incentive-based awards, offset by decreased regulatory consulting expenses.

Selling, general and administrative expenses, or SG&A, for Q4 were $1.3 million compared to $2.3 million for the same period in 2021. SG&A expenses for the full year 2022 were $8 million compared to $7.5 million for the full year 2021. Following the ruling by the Texas Court in August 2022, the company recorded $2.6 million of legal fees in SG&A pursuant to the CRG judgment. The year-over-year increase was also due to increases in insurance and depreciation and amortization, partially offset by decreases in employee compensation, including fringe benefits and incentive-based awards, expenses related to European operations, travel, legal and professional services, investor relations and shareholder services, general office expenses, facilities costs, losses on the abandonment of certain intellectual property, and franchise taxes.

Navidea’s net loss attributable to common stockholders for Q4 was $3.5 million or $0.11 per share compared to $3.7 million or $0.12 per share for the same period in 2021. Navidea’s net loss attributable to common stockholders for the full year 2022 was $17.2 million or $0.56 per share compared to $11.7 million or $0.40 per share for the full year 2021. Navidea ended the fourth quarter of 2022 with approximately $2 million in cash and cash equivalents.

And with that, I’ll throw it back to you, Mike.

Michael Rosol

Thank you, Joe and Erika. Thanks for everything, Erika, that you’ve done over the years, not just my years here, but before.

And now I’d like to open up the call to questions. I’ll let the moderator do that more professionally than I just did. Joining me for the Q&A session, of course, will be the folks here in this room, myself, Erika, Joe. And then indeed, we have Alex Cappello, the Chair of our Board; as well as Mr. Kim Scott, the Vice Chair.

Question-and-Answer Session

Operator

[Operator Instructions]. And the first question comes from the line of Edward English, a private investor.

Edward English

Mike, this is Eddie English. Before I ask my first question, though, I would like to extend a shout-out to Erika Eves for the 30-plus years of service and support, not only to Navidea but us, shareholders, and to wish her the very best in her new endeavors.

With that, Mike, the elephant in the room based on the report that came out this afternoon, in my mind, is the current cash position with only $2 million at the end of the fourth quarter and a historical cash burn rate of $800,000 to $1 million a month. Can you shed some light on how far in the future you all can operate with your existing cash reserves?

Michael Rosol

Eddie, thanks for the question, and I appreciate the shout-out. I’m sure Erika does to her.

Erika Eves

Thank you. Appreciate it.

Michael Rosol

Yes. In any event. So Eddie, great question. Really, it’s no secret that the company has been in a resource limited environment, but we are optimistic that we’ll have something to announce around capital infusion soon. As I mentioned, the Board — members of the Board are working diligently on this, and that’s really all that we can say about it at the current time. I appreciate the question, though. So that’s really what we can say right now.

Edward English

Okay. One follow-up, and I’ll abide by the rules and then go back in the queue because I have a few more. But my next question is around your plans to become NYSE-compliant by July 28. Are you all on schedule to meet that deadline? Or what can you tell us about that?

Michael Rosol

I’m going to let Erika use her great financial wisdom to have one — she should have something to say on this last Q&A. Go for it, Erika.

Erika Eves

One final word for me. Yes. So obviously, one of the biggest issues facing us is the NYSE cure that is required, and I think the financing that the Board is currently working on should go a long way towards satisfying the requirements. And so I would say at this time, expectations are that we will indeed become — regain compliance with NYSE by the end of the cure period.

Operator

And our next question comes from the line of with — another private investor.

Unidentified Analyst

Yes. I appreciate you touching on Lymphoseek a few minutes ago. I wanted to — hopefully, you can expand a little bit on that. I know that it’s been 8 years since we’ve retained the international rights to selling Lymphoseek. And in all that time, it appears we’ve not been able to generate any significant revenue. And I wanted — if you could put your honesty on this, is there something more specific that we could do to make this happen? Or is Lymphoseek a lost cause at this point?

Michael Rosol

Yes. Great question. I’m happy to answer and give you as much transparency as possible. So that’s a summerlong story that I’ll try to stick to a shorter version of. So as you and others know on this call, we — Navidea had licensed the European rights to Lymphoseek to a company called Norgine. And they’re a fine company. Their strategy, we might say, was probably not optimal strategy for penetrating the market of sentinel lymph node biopsy assessments or lymphoscintigraphy in Europe.

And it’s not all just on their strategy. See, in Europe, there is a viable competitor for Lymphoseek. It’s a version of — it’s a colloidal compound. There are different names, but one of the common names is Nanocoll. And it’s a pretty good agent, right, for — and it’s relatively inexpensive. In fact, it’s actually very inexpensive, and it’s pretty good.

We and others, and there’s a growing body of research that supports this, suspect or believe that there are advantages to Lymphoseek over this product that has really dominated the market in Europe for years. So Norgine didn’t do maybe the optimal strategy for penetrating a market that already has a viable product. We do think there are advantages to it. And to be fair to Norgine, it’s been years in the making that researchers have produced publications that support what I just said is our belief, that Lymphoseek has advantages.

So one thing we think Norgine did maybe that wasn’t what we would do is they priced Lymphoseek at a premium without having enough of these data in hand to make the case in the very highly regulated European market to adopt Lymphoseek over a good product. That make sense? So what we have done is we brought back the rights, as you probably know, Lymphoseek Europe to Navidea. And we’ve spent a significant amount of time getting our API and drug product development processes in gear so that we could potentially supply the European market as well as the rest of the world with Lymphoseek and/or the RA product.

So with all of that said, we are actively in discussions with possible partners for Lymphoseek in Europe because it is not just us and some KOLs who believe there are advantages of Lymphoseek to Nanocoll or these Nanocoll and related products, but there are other possible partners who believe it as well. Having said that, it’s — there is a viable product out there, and so the case must be made strongly in a very highly regulated environment in Europe. So there are a lot of — it’s not quite as smooth sailing as it is in the United States. That’s maybe too much flavor or detail for you. But it is a product that we think has advantages over the existing product that dominates, and we are in discussions. And if I didn’t say that in this call, I think I did, we’ve said it before. And so we’ll continue to have those and see what the market will bear, but we’re optimistic. That’s about as honest as I can be.

Operator

And the next question comes from the line of , a private investor.

Unidentified Analyst

Yes. Erika, like everyone, we wish you well in the future. Thanks for your 31 years. And Joe, welcome on board. My question — initial question is observation first. I think there’s a great under-appreciation for this patent that you received on the M1/M2 reprogramming in the TAMs that I just felt the market appreciated it yet, and I don’t know if many investors had appreciated it. To me, it seems quite outstanding.

But taking that as an observation, there’s also been a lot of science developed, Dr. Rosol, over the last little while that M1/M2 programming, whether in reverse or inverse, also may be applicable in many other diseases and inflammations. Can you expand on that a little bit? And do you believe that you will be — we’ll be seeing patent applications on that in the future?

Michael Rosol

Yes. Thanks, Mike. Right on all counts and good questions. So some background for the folks who are so in-depth into the field. Very broadly speaking, there are — macrophages can be pro-inflammatory, stimulate an immune response. That’s the so-called M1 macrophages that you just heard Mike refer to. And then there are M2 macrophages that are more — they have the opposite kind of effects. The wound healing, they quiet down the immune response. Some people would say, in tumors, paradoxically, they’re pro-tumor, actually. So there are these kind of extremes of the macrophage in the macrophage world.

And looking at changing the phenotypes of the macrophage, driving them from one of those, the M1, for example, to the M2 or vice versa is a very hot topic across the world because macrophages are very powerful and prevalent cell type in the body, and they’re involved in almost all diseases, really. And so the opportunities there to help people to treat diseases is enormous.

Macrophages play a key role in cancer growth and metastases. And in cancers, the macrophages that dominate in and around the cancers are the kind of wound-healing, so-called pro-tumor types of macrophages that actually act as a kind of force field around the tumors to prevent the body’s natural immune response from attacking the tumors.

And so what we and many other organizations are doing across the globe related to specific cancer is we’re looking at therapies that — or treatments that might change the phenotype or the nature of the macrophage and drive them from the wound-healing M2s to the pro-inflammatory M1s. And if you can do that in people who have cancer and in those tumors themselves, you can then rally the body’s immune response to attack the cancer.

And as of May of 2021, to give you an idea of how large these efforts are globally, to do just what I told, there were 606 clinical trials that we’re running or have been completed just to do what I just said related to cancers. It’s a huge field. And you know what’s cool about it is, really, we’re at the forefront of that, not necessarily in the progression of our therapeutic constructs into humans, but in the technology and what our drugs have been show — what we have been able to show they can do in the in vitro or preclinical phases.

So we’re right there at the leading edge of this incredibly large opportunity field or space to help patients and to treat a large number of diseases from cancers to others. I can get into that in a moment. And that patent that Mike referenced was about — was giving us our intellectual property around using our constructs to change the phenotype of the nature of macrophages, as I just described. And yes, there are going to be a whole series of patents that follow suit or applications around that.

The fact that we can target macrophages of all type, the M1s, the M2s and everything in between, with our construct means that we can deliver all sorts of cool things, payloads, they’re called loosely, to the macrophage. And we can perturb them and drive them in different directions. And we have a very flexible, adaptable molecule that has all sorts of really great advantages over what almost every other group out there is using. So I’m not just saying that because I work here. It’s proved.

And so we have this great opportunity to be able to really shake up the world in these therapeutic domains. And one of the major thing holding us back as a small company, of course, has been resources, financial resources. So we’re very good at making a lot happen with a little. And so our goal, of course, this year, and you’ve heard it before, but I believe significantly that things are different now than they used to be, our goal is to be fully funded so that we can help drive those things towards first-in-human trials, which is where we can — those kinds of inflection points are opportunities for large investments, whether they be partnering or license deals or whatever, or whatever we might decide to do. So we’re trying to drive them towards that.

So I might have gone astray from what you originally asked, but that patent is very important. There will be others coming along the way that are related. There are some already. You just don’t know about it yet because they’re not published. And this is a very hot and exciting area in not just cancer research but in other diseases.

So I’ve mentioned in cancer, you want to drive the M2 or wound-healing pro-tumor type macrophages to M1 pro-inflammatory. In many other diseases, including almost all inflammatory and infectious diseases, you want to do the opposite. You want to take the inflamed pro-inflammatory macrophages that are doing a lot of stuff to try to attack whatever the infectious agent is, but the body has a hard time controlling those things precisely. So what you want to do is you want to drive those towards the more wound healing-type. And we have data suggesting that we can do that with our dexamethasone constructs.

So we can perturb the macrophages and drive them in one direction or the other. And with that, the world is kind of our oyster, and almost every disease is touched by the macrophage, or the macrophage plays a central or critical role. So that’s my spiel. Hopefully, I addressed your question, Mike.

Unidentified Analyst

You did an excellent answer. So my follow-up on that is an observation that I can make, and maybe you can’t opine on it. But I think it’s opening up the IND that will really open this up to the world. And on that, do you have any other guideline you can give us into 2024 on your target range for that IND?

Michael Rosol

Yes, sorry. Thanks. I think that’s still our goal and our objective. Obviously, it will be really helped — will have significant help propelling us forward with full funding, but that is still an achievable goal because we’ve advanced some of these significantly in the preclinical space. And what you want to do to get towards that IND, the other kind of 2 dominoes that need to fall, roughly speaking or at a high level, are you need to establish that in preclinical models that your construct or your therapy is safe and tolerated, and there are some specific studies you have to do for that. But they’re very well known and established and we can box those out, and we’ve already accounted for those in our time line.

And then the other thing you have to do is show that you can actually make the drug in a scalable fashion and it’s reliable and safe to be injected. And so those are the other 2 dominoes that need to fall. It’s fairly reasonable for us, we think, to get to those in the time lines you’ve seen with the caveat always we need to be resourced properly.

Operator

And the next question is a follow-up from Edward English, a private investor.

Edward English

Again, Dr. Rosol, I’m curious, I’ve noticed in what’s available to us in the public and the securities and exchange filings that there haven’t been any stocks granted to the Board of Directors since late November. I haven’t seen any Form 4s. Has something changed with the compensation for the Board? Are they now receiving cash? Or can you elaborate on what’s changed? And if so, why?

Michael Rosol

Go on, Erika, please.

Erika Eves

Yes. So in late 2021, the directors adopted a compensation plan for the next 12 months. Due to our funding situation, many of the directors have chosen to defer compensation until we achieve full funding. And so I can’t really speak for the Board, but I believe that, that may have had something to do with their decision to not award themselves an additional package this year. I think that they are probably waiting until we feel like they don’t have to defer any longer.

Alexander Cappello

Actually, several months ago, all of us were — had cash payments suspended. So we’ve all been working several months without compensation and some for the whole year.

Edward English

Next question, a follow-up, and that will be my question for the day. You still have the third-party assessment for the use of the tilmanocept in the RA program. It’s still out on the site, and it has revenue projections that are quite appealing. And I’m just curious if you all still stand by those projections. I think there’s some $41 million in revenue projected for the year 2024. Have those projections slipped or changed in any way?

Michael Rosol

Yes, this is Mike. So the numbers, I think, are solid numbers in terms of the market potential and the growth curves even. Those are always based on modeling.

In terms of the time lines, I mean the — we’re doing our best to meet the time lines that are on the investor deck that is out there right now. But to be honest, some of these projections were based on opening up a full suite of sites or a larger number of sites at a certain stage and then going forward from that period. And we’ve been, frankly, in a resource limited environment for a while now.

So some of these things are just naturally going to be pushed forward unless — and this is where it gets very complicated. So I’m not giving you double talk, I’m giving you real talk. Unless the — we could open up more sites than we built into the original model. Enrollment is always something that we have some control over but not full. And then there are several other factors that are — including the trial size, which is variable based on the response rate to the anti-TNF alpha therapies.

So you put all of that into the hopper, the resource limited environment where we have not been able to open up all the sites we wanted to yet and some of these other variables, and they can kind of counteract each other. So you end up with the same resolution of everything at the same time or might be driven forward or even happen earlier. So more likely than not, it gets pushed forward a little bit if you have to run a long time without a full complement of clinical trial sites open.

And that’s kind of where we are now. So I hope that doesn’t sound hand-wavy. But like those — the first revenue generated may be pushed off a bit, but the numbers themselves and the trajectory, once it happens, we still stand by and believe because we have a good idea of the competitive landscape. And the data that we’re bringing to the table so far are significantly better than anything I’ve seen out there. That make sense?

Edward English

Yes. If I could summarize, I think you’re telling me the potential is still there and it’s very robust, but the timing could go either way.

Michael Rosol

You got it. Yes.

Edward English

Okay. Well, I’ll end it there and just say certainly looking forward to some news soon on your financing.

Operator

And the next question is a follow-up from , private investor.

Unidentified Analyst

Yes. Dr. Rosol, 2 follow-up questions. You mentioned briefly that as you advance the science engagement, future funding partners improve. Are those still active talks ongoing on the RA partner potential? Is that still in the works and still progressing?

Michael Rosol

Thanks, Mike. Yes, that’s a — and there’s a complicated answer behind that. The answer is yes, we’re still in — and I’ve said this, so I can say it now. We’re in discussions related to the implementation of — or the use of tilmanocept in partnership with other drug development companies. And those are — there’s a lot of interest in the NAV3-32 Phase IIb study for that.

In terms of the overall business partner for RA, I think there are opportunities to discuss as we roll with other possible — with possible business partners as we roll into — through the trials. But really, and again, to be honest, what I think, Mike Rosol, the place where you’re in the best position to get the most bang for your buck is when you’ve completed the trials and have strong data in hand. From that point on to — all the way to and into or through FDA approval, that puts you in the strongest position, I believe, because then you have a proved-out, to one degree or another, diagnostic.

So again, if you want me to be completely honest here, doing deals earlier, you usually — you give up something because there’s more risk, right? It’s all about the rNPV, right? So the longer we can go, if we can be fully funded and drive this towards completion of a trial, good data, FDA NDA submission, believe me, then we’re in the strongest position to do a deal.

So I think that’s the strategy that you should pursue, at least if you can, and we’re trying to do that strategy. It doesn’t mean if something happens in the intervening months or so, we’re not turning it away, we’re listening. But we want to make the best that we can of what we’ve got here. And really, that’s the story. So…

Unidentified Analyst

Well, I think taking that approach of extracting the best value with the most informed and progressed results is — would be the desired way to go. And I think I’ll finish with the comment that you made in the rheumatoid arthritis treatment patent application that should encourage people on this and in 2 of the embodiments in 106 and 111. It was stated that the exciting perfect prediction and remarkable test responses were generated in that testing for the treatment. Can you expand on any of that? Because that just exemplifies and amplifies the potential of this RA, the results you were seeing in the treatment RA — of the RA patent application. Can you comment?

Michael Rosol

Sure. So thanks for that. That patent is primarily about the — using a combinatorial approach for achieving a better prediction capacity for our imaging agent for predicting treatment response in RA. And so we know that our — that in the data so far, tilmanocept imaging is a very good predictor in the data so far of clinical outcome at 3 and 6 months.

And what we started to look at after the Phase IIb study was, could — is it an independent and additive predictor to other clinical serological biomarkers, which for the most part or entire part have really kind of failed to be adequate on their own or even in combination? Although there’s a lot of people looking at different combinations.

So we looked at our imaging prediction in combination with all sorts of different clinical and blood-based, that’s what I mean by serological, biomarkers that are normally obtained in RA patients. And we looked at these in all sorts of different cool ways, and what we found was that it looks like — and we only have limited data to date. But it might be that our — if we take our very powerful imaging readout and combine it with some readily available and already validated clinical biomarkers, we might be able to improve our prediction capacity, in some circumstances, the upwards towards a sensitivity of 100, right, or perfect.

Never going to be perfect across the world, across everybody, across all time. But it’s really about taking a combinatorial approach of our imaging readout with other biomarkers that are available. And it looks like there might be value there. And by filing that patent, then of course, we have the intellectual property protection.

And insofar as it relates to therapeutics, that should be therapeutic-agnostic. Although to date, we’ve only looked at the anti-TNF alphas. So the exciting thing there is, what we’ve learned to date is our imaging readout is an objective, independent predictor of whether or not a patient is getting better or not from treatment of an anti-TNF alpha or with an anti-TNF alpha. It’s independent of all the other clinical and serological or blood-based biomarkers. That’s one, and it’s really strong.

If you add some of those, and we’re looking to see which is the best combination, then you might improve your prediction, or not much closer because there’s not even a lot of ceiling left, but even closer to the ceiling of getting it right all the time or most of the time or the vast majority of the time.

So that’s really cool and promising. So we’re really trying to get to what is the optimal predictive capacity for any patient. Is their drug going to work or not? Or is it working or not early? Now related to the therapeutics, it’s less specific in that it’s not really specifically outlined in that patent. However, the fact that we can deliver and we’ve demonstrated that we can deliver an imaging probe to RA-inflamed joints, and we can do this reliably, repeatedly and stably, it should not escape your attention that then we could easily swap that out for a therapeutic.

So we believe that we also have a potential powerful therapeutic in our hands, pardon the pun of hands. But — and that remains to be explored more fully when the company is funding. But indeed, we have the potential for a powerful therapeutic. And what we’re doing in that patent application is showing that on the diagnostics side, we really have all the bases covered. That make sense?

Unidentified Analyst

Yes. So on a therapeutic, did you guys do — have you done any preclinical, just small test to see if that therapeutic validated that concept you just talked about that’s not in the patent? Have you tried anything? Or I imagine you have.

Michael Rosol

Yes. There were preclinical studies that have been done in the past, and there was some promise to those. So let me leave it at that. But really — and we have a plan for how we can go forward and really flesh that out. But in the limited data that I’ve seen to date, and much of this predates my time here, there was already promise shown. And we know a lot more than we knew then, so I think it’s only — we’re only in a better position.

Operator

There are no further questions at this time. And I would like to turn the floor back over to Dr. Mike Rosol for any closing comments.

Michael Rosol

All right. I think you’ve heard enough from me today. I want to thank you for joining us today for your engagement and all of your questions. Once again, I want to thank Erika for all her hard work here over the years. And welcome, Joe, here to the fray, at least the public-facing fray. I’m sure he’s going to be great and have a fun time. And hopefully, we’ll be talking to you, folks, before too long. So thank you, and have a great evening.

Operator

This concludes today’s conference. You may disconnect your lines at this time. Thank you for your participation, and have a great day.

Is Navidea Biopharmaceuticals Inc (NYSE:NAVB) a good place to invest some of your money right now? We can gain invaluable insight to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given immense resources and industry contacts to put their financial expertise to work. The top picks of these firms have historically outperformed the market when we account for known risk factors, making them very valuable investment ideas.

Navidea Biopharmaceuticals Inc (NYSE:NAVB) was in 3 hedge funds’ portfolios at the end of September. The all time high for this statistics is 7. NAVB has seen an increase in hedge fund sentiment in recent months. There were 2 hedge funds in our database with NAVB positions at the end of the second quarter. Our calculations also showed that NAVB isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks).


Video: Watch our video about the top 5 most popular hedge fund stocks.

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 113% since March 2017 and outperformed the S&P 500 ETFs by more than 66 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website.With all of this in mind we’re going to take a gander at the key hedge fund action regarding Navidea Biopharmaceuticals Inc (NYSE:NAVB).

How are hedge funds trading Navidea Biopharmaceuticals Inc (NYSE:NAVB)?

At the end of September, a total of 3 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 50% from one quarter earlier. On the other hand, there were a total of 1 hedge funds with a bullish position in NAVB a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, Renaissance Technologies was the largest shareholder of Navidea Biopharmaceuticals Inc (NYSE:NAVB), with a stake worth $0.3 million reported as of the end of September. Trailing Renaissance Technologies was Two Sigma Advisors, which amassed a stake valued at $0.1 million. Citadel Investment Group was also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Two Sigma Advisors allocated the biggest weight to Navidea Biopharmaceuticals Inc (NYSE:NAVB), around 0.0003% of its 13F portfolio. Renaissance Technologies is also relatively very bullish on the stock, setting aside 0.0003 percent of its 13F equity portfolio to NAVB.

Consequently, key money managers were leading the bulls’ herd. Two Sigma Advisors, managed by John Overdeck and David Siegel, established the most valuable position in Navidea Biopharmaceuticals Inc (NYSE:NAVB). Two Sigma Advisors had $0.1 million invested in the company at the end of the quarter.

Let’s also examine hedge fund activity in other stocks similar to Navidea Biopharmaceuticals Inc (NYSE:NAVB). These stocks are Rhinebeck Bancorp, Inc. (NASDAQ:RBKB), Oncolytics Biotech, Inc. (NASDAQ:ONCY), United Bancshares Inc. (NASDAQ:UBOH), Marker Therapeutics, Inc. (NASDAQ:MRKR), United-Guardian, Inc. (NASDAQ:UG), Manning and Napier Inc (NYSE:MN), and Synlogic, Inc. (NASDAQ:SYBX). This group of stocks’ market caps match NAVB’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 3.7 hedge funds with bullish positions and the average amount invested in these stocks was $5 million. That figure was $0 million in NAVB’s case. Manning and Napier Inc (NYSE:MN) is the most popular stock in this table. On the other hand United Bancshares Inc. (NASDAQ:UBOH) is the least popular one with only 1 bullish hedge fund positions. Navidea Biopharmaceuticals Inc (NYSE:NAVB) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for NAVB is 30. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 28.1% in 2020 through November 23rd and surpassed the market again by 15.4 percentage points. Unfortunately NAVB wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); NAVB investors were disappointed as the stock returned -12.6% since the end of September (through 11/23) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.

Disclosure: None. This article was originally published at Insider Monkey.

Navidea Biopharmaceuticals, Inc. (NYSEMKT:NAVB) Q3 2020 Earnings Conference Call November 12, 2020 5:00 PM ET

Company Participants

Jed Latkin – CEO, CFO, and COO

Mike Rosol – CMO

Joel Kaufman – CBO

Conference Call Participants

Michael Okunewitch – Maxim Group

Operator

Greeting and thank you for standing by, welcome to Navidea Biopharmaceuticals’ Q3 2020 Earnings and Business Call. During the presentation, all participants will be in a listen-only mode. Afterwards we’ll conduct a question-and-answer session. [Operator Instructions] This conference is being recorded, Thursday, November 12th, 2020.

And now I’d like to turn the conference over to Jed Latkin, CEO, COO, and CFO. Please go ahead.

Jed Latkin

Thank you, Scott. This call — first off, I just want to say that this call is being webcast live on our website ir.navidea.com and a replay will be made available. Following prepared remarks, we’re just going to do a Q&A as well as always.

During the course of the conference call, we will be making forward-looking statements regarding future events and the future performance of the company. These events relate to our business plans to develop Navidea’s molecular diagnostics and immunotherapeutics, which include clinical and regulatory developments and timing of clinical data readouts along with capital resources and strategic matters, as well as the impact of the COVID -19 pandemic on Navidea’s business operations.

All of these statements are based on the beliefs and expectations of management as of today. These statements involve certain assumptions of risks and uncertainties and could cause actual results to differ materially. We assume no obligation to revise or update forward-looking statements, whether as a result of new information, future events or otherwise.

Investors should read carefully the risks and uncertainties described within the Safe Harbor section of our website as well as the risk factors included in the company’s most recently quarterly and annual filing with the SEC.

I want to thank everyone for calling in today for today’s third quarter conference call. The last several months for this company have been quite busy and I’ll provide a brief recap, before I turn the call over to Dr. Rosol to go through the exciting news of our deeper dive into the arm three data now that we have more than half the patient at completion of week 24.

As all of you on the will call know, we engaged in several transformational transactions this past quarter. We signed a binding MoU with Jubilant that when completed will provide up to $20 million upfront capital as well as several hundred million in sales milestones along with significant double-digit royalties in the future.

The MoU contain an exclusive negotiation period and we are currently in the middle of that period now. We have ongoing due diligence in commercial, clinical, legal, and financial all of which are moving along very nicely. Jubilant has been quite thorough and as a result of that, we are generating some excellent data that has validated our commercial assumptions and has given us a much deeper look into the data that we are generating. Dr. Rosol will spend quite a bit of time this evening presenting the data which we are very, very excited about.

Another area of great change in the company is some degree of financial flexibility after years of penury. You will notice when you see our Q that financial language has changed significantly. Despite all the turbulence in the markets and the uncertainty surrounding COVID, even if we don’t complete the Jubilant transaction, we are fully funded to complete our Phase 3 trials and bring our product to market without further dilution.

We are working hard on all the little things that investors don’t talk about supply chain, product sourcing, delivery efficiency, and everything that will make this company quite successful for the long haul. These upcoming months will not be easy, as we will be quite busy finalizing the licensing and distribution agreement with Jubilant which you blend moving forward with the FDA meetings and getting everything else aligned as we prepare to launch the Phase 3.

There are so many other things going on at the company, but I assure you that RA remains the primary focus and we will not slow down until we are up and enrolling patients in 333.

I am proud of my team and I would be remiss if I didn’t recognize and congratulate Joel Kaufman on his promotion to Chief Business Officer. You’ll be hearing from him later on in the call and I know many of you have spoken to him in the past as he discusses this quarter’s financial results. I also want to congratulate both Eric [Indiscernible] and Jeff Smith on their respective promotions in finance and operations.

Now, I would like to turn the call over to Dr. Rosol, who will go over the exciting news as it pertains to the week 24 data in arm three of 331. Mike?

Mike Rosol

Thank you, Jed and hello everyone. As always, I’m happy to participate in today’s call and provide you with updates from the clinical side. So, I’ll begin with the progress on our currently running Phase 2b trial in RA. As you know from earlier updates, the trial is completely enrolled, with only the latter half of subjects in arm three continuing to have their longitudinal imaging and clinical assessments as outlined in the study protocol.

As a reminder, this Phase 2b is a three arm trial. In arms one and two, we are evaluating the repeatability, reproducibility, and stability of our tilmanocept imaging readout in healthy subjects and patients with active RA.

And in the third arm, we are mirroring the upcoming Phase 3 study in order to enable us to obtain data to help with sample sizing for the Phase 3 as well as to have a look ability of tilmanocept imaging to serve as an earlier predictor — an early predictor of treatment efficacy and the monitoring tool.

As we have discussed and presented in the past, the interim results to-date on all three arms have been very positive. We have data demonstrating that technetium 99m tilmanocept, can provide robust quantitative imaging and healthy controls and in patients with active RA that this imaging is reproducible and can define joints with and without RA involved inflammation, and that tilmanocept imaging can provide an early prediction of treatment efficacy of anti-TNF alpha therapy.

This month, we presented the positive interim analysis results of arm three at the American College of Rheumatology’s annual meeting. The last couple of months, we have focused quite a bit on the due diligence process with Jubilant. This has been a large effort and taken a great deal of time, but this has also allowed us to continue to analyze the full six month longitudinal data on the first half of subjects in arm three. We believe these data will make an even stronger data set to bring to the FDA in order to support our design and objectives for the upcoming Phase 3.

As we announced previously and as presented at the ACR Meeting, the results of the second interim analysis looking at the first half of patients enrolled in arm three, with imaging and clinical assessments out to 12 weeks, were positive and supportive of our hypotheses.

They provided evidence that tilmanocept imaging can deliver an objective quantifiable assessment of RA involved joints, that does enable early prediction of clinical response as well as the monitoring of clinical status. Those results gave us the confidence to proceed forward with the study and to continue to prepare for the Phase 3.

Since that time, those and additional patients have continued on the trial and a little more than half of the total number now have their complete six-month follow-up done.

So, recall that the design of the third arm is that patients are enrolled prior to beginning an anti-TNF alpha treatment. And we acquire images as well as clinical assessments at the baseline time point.

Once they begin their therapy, we bring them back five, 12, and 24 weeks later, in order to do repeat imaging as well as obtain clinical assessments. The current standard-of-care practice is for their rheumatologists to put them on their new therapy, and then see them only at 12 or 24 weeks following, at which point the doctors obtain their semi-objective to subjective clinical assessments in order to determine if the therapy is working or not.

In the meanwhile, if the drug is not working and this will be the case about half of the time or more, the patient might be getting worse or at best staying the same, and comorbidities can stack up and adversely impact the patient’s life.

All of this in addition to the risk of side effects from the serious drugs. By the way, I should have correct — I correct myself I need to say at least staying the same, not at best.

In any event, our hypothesis is that tilmanocept imaging at week five can provide an early objective readout of whether or not the treatment is working. And the doctor can then make an informed decision earlier about what to do to most benefit the patient.

Additionally, we also believe that the baseline scan itself can provide information that is predictive of whether or not the anti-TNF alphas are likely to work in at least a significant subset of RA patients. And that this would potentially make a tremendous impact on patient management.

So, with that in mind, we now have data on subjects we have followed out to 24 weeks and I’m going to go through that. So, we have a total of 16 patients with active moderate to severe RA that have been included in this analysis. Each of these patients was set to begin a new or first time treatment regimen with an anti-TNF alpha therapy, whole body and hand risk planar gamma camera images were taken at baseline prior to the start of their treatment. Again, its five weeks post therapy initiation, and then again at 12 and 24 weeks.

A panel of established clinical assessments was performed at each time point as well. Again, the reason weeks 12 and 24 are chosen is because those are the standard-of-care time points were rheumatologists bring back their patients who have been put on anti-TNF alpha therapy in order to determine if the drugs are working or not. So, the results of our preliminary analysis demonstrate; one, tilmanocept imaging from baseline to week five was predictive in this data set of clinical outcome at 24 weeks in 13 out of 16 patients for an accuracy of just over 81%.

In this data set, change from baseline to week five in tilmanocept imaging had high positive and negative predictive values for clinical outcome at both 12 and 24 weeks. So, at 12 weeks, the positive predictive value was 100%. The negative predictive value was 83%. At week 24, the positive predictive value was also 100%; the negative predictive value was 77%.

These preliminary results indicate that marked changes in tilmanocept global uptake values by week five are in very good agreement with clinical efficacy evaluations made later at weeks 12 and 24.

Third, the early results support the hypothesis that in a subset of RA patients, the baseline scan alone can be a reliable predictor of non-responsiveness to anti-TNF alpha therapy. These data continue to support our hypothesis that tilmanocept imaging can provide quantifiable imaging assessment of RA involve joints that enables early prediction of clinical response. And if you have any questions about those data, feel free to ask me during the Q&A, and I’ll go into it a little more deeply.

We’re going to continue of course, to follow the remaining arm three subjects in the current trial. And we are presently in the midst of finishing up a fleshed out package of all of our interim analyses data from all three arms of the trial to bring to the FDA to affirm our plans for the Phase 3. Following this, we anticipate to begin to officially open up sites for the Phase 3.

As I’ve said numerous times in the past, we’re in an excellent position for the Phase 3, since most of the sites that recruited into the ongoing trial will be rolled right into that trial and so the logistics and strategies for recruitment are already established.

You should also know that we are working on an aggressive and compressed timeline, but we are doing this smartly. Usually, an FDA meeting would occur at the completion of a Phase 2, following full analysis of the data with the Phase 3 discussed and beginning thereafter.

In conjunction with the positive interim data from the current trial, we’ve thought and been in continual alignment with the FDA all along the development of this RA program and we are integrating the earlier suggestions into the proposed design of the Phase 3.

Because of this, we believe we’ll have a strong data package to present in support of the design, the specific indications we will be going for, and the milestones we will propose in order to achieve success. This will enable us to begin the Phase 4 with confidence earlier than might otherwise be the case.

Our goal in meeting with the FDA at this time is to ensure we maintain alignment and that they agree that at this time our proposed plan, if successful, could be used to make the case for approval of tilmanocept and RA.

We’ve also been preparing for the start of the separate Phase 2b comparative study of our imaging readout to histopathology from the joints of patients with RA. This will be an adaptive study, where we aim to recruit patients with each of the three known subtypes of RA and obtain comparative imaging and pathology results from joint biopsies of their RA inflamed joints.

We now have all of the necessary approvals with various regulatory bodies in place as well as signed contracts with vendors and our key trial site in the U.K., also contractually now signed off to begin this study soon.

We will begin scheduling — we will schedule a site initiation visit soon for our U.K. site. The reason we are running much of this in the U.K. is that our principal investigator for this trial is located there. He is both the world’s leading physician in joint biopsy of patients with RA and he also maintains a lab specializing in the examination of the past results of these biopsies.

We are in the process of opening a U.S. site as well. Both the U.K. site as well as the U.S. site are hopeful that they can begin recruiting in January, contingent upon any new COVID-related restrictions and we’re pushing for that to happen sooner than January even. But remember, this trial is not required for FDA approval in the initial indications in RA that we’re going for, but we believe it is critical in order to achieve qualification of CD206 as a biomarker for RA as well as to engage with pharma for its use in trials of new RA therapeutics.

It will also provide rheumatologists with gold standard information related to our imaging readout and the fundamental biology of a patient’s RA as well as the subtype of Ra they might have. For example, how might this be used? Well, if imaging at baseline can be used to classify a patient subtype of RA, this has implications for what class of therapies might or might not work on that patient and would therefore have immediate impact.

In other indications, I updated you previously that we’ve completed all imaging and biopsy of all subjects in our NIH-funded study of Kaposi’s Sarcoma and we have all of the data in hand. We’re making progress on the analysis and we’ll update you when it is complete.

On the cardiovascular disease front, work continues on the clinical investigator initiated atherosclerotic plaque imaging study at MGH in Boston, and we anticipate an update discussion with them in the coming weeks. I just heard from them that they’re nearing full enrollment in that study, which is very encouraging.

After a slowdown due to COVID restrictions, they’ve been on track again to meet their targets to have all the subjects enrolled before the end of this year. Preclinical studies of Gallium 68 tilmanocept imaging for NIH-funded project with the University of Alabama, Birmingham are also ongoing. We’ve been granted an extension on the funding for that project by the NIH due to the earlier closed downs due to COVID. The cardiovascular potential is large; we’ve been having internal and KOL discussions about possible trial designs and specific indications to bring to the FDA to advance this part of our pipeline.

We also continue to make significant strides towards producing the next generation of our molecule that we think will improve performance in both diagnostic as well as therapeutic applications. During this past quarter, we converted a provisional patent focused on blocking off-target organ uptake of tilmanocept to improve on-target localization. We have had ongoing preclinical studies related to this with promising results.

We believe we have also improved the methods of synthesis for both diagnostic and therapeutic constructs. Back in Q2, we filed a provisional patent application on an improved synthesis method. And we are currently working on and intend to file another provisional patent covering another synthesis protocol. The resulting new imaging and drug delivery constructs are currently being evaluated in cell cultures and in animal models and position as well, we think for the future.

These are just some of the highlights of the last quarter that we wanted to touch on for this update. As Jen said, we remain largely focused on the RA pipeline, specifically preparation for the meeting with the FDA, planning for the Phase 3 and preparation to open enrollment into the other Phase 2b on imaging to histopathology. We continue to support and push for progress on our other diagnostic and therapeutic indications, as I’ve told you today briefly.

And as always, I want to thank the team here for their tireless efforts to keep things moving, as well as our network of clinical trial sites and academic research collaborators for all of their hard work. I wanted to keep these remarks relatively brief today. I don’t think I was successful there. But please feel free to ask questions during the Q&A. Thank you.

Now I would like to turn the call back over to Jed. Jed?

Jed Latkin

You know, it’s more important that my remarks be brief, since I don’t have much to say. Dr. Rosol, thankfully has a lot to say because of the tireless efforts of his team, which we’ll get to at the end of Joel’s part. So, Joel, why don’t you give us the financial rundown, please?

Joel Kaufman

Thank you, Jed. Total revenues for the third quarter of 2020 were $268,000 compared to $237,000 for the same period in 2019. Total revenues for the first nine months of 2020 are $696,000 compared to $539,000 for the same period in 2019. The increases in revenue were primarily due to increased grant revenue related to SBIR grants from the National Institute of Health supporting the Manocept development.

Research and development expenses for the third quarter of 2020 were $1.4 million compared to $1.8 million in the same period in 2019. As third quarter decrease was primarily due to net decreases in drug product expenses, including decreased Manocept diagnostic and technetium 99 tilmanocept development costs coupled with decreased employee compensation.

R&D expense for the first nine months of 2020 were $3.7 million compared to $3.6 million in the same period in 2019. The year-to-date increase was primarily due to net increases in drug product expenses, including increased Manocept diagnostic development costs, offset by decreased Manocept therapeutic and technetium 99 tilmanocept development costs, coupled with increased employee compensation.

SG&A expense for the third quarter of 2020 was $1.8 million, compared to $1.5 million in the same period in 2019. The third quarter increase was primarily due to increased legal and professional services and employee compensation, offset site decreased travel, insurance and depreciation costs. SG&A expense for the first nine months of 2020 were $4.9 million compared to $5.1 million in the same period in 2019. The year-to-date decrease was primarily due to decreased travel, legal and professional services, insurance, depreciation and Investor Relations related costs offset by increased employee compensation and franchise taxes.

Navidea’s net loss attributable to common stockholders for the third quarter of 2020 was $3.3 million, or $0.13 per share compared to $3.1 million or $0.17 per share for the same period in 2019. Navidea’s net loss attributable to common stockholders for the first nine months of 2020 was $8.4 million, or $0.37 per share, compared to $8.2 million or $0.62 per share in the same period in 2019. Navidea ended the third quarter of 2020 with $3.7 million in cash and cash equivalents. Since September 30, 2020 the company has received $700,000 of cash related to the August 2020 funding transactions.

And I will now turn it back to Jed for closing remarks.

Jed Latkin

Thank you, Joel. Before we turn to Q&A, I just want to once again thank the clinical team for the tireless work in these very trying times. They are in the office every day wearing their masks, and driving the trials forward. They also take the time to hit the road constantly to do their site visits regardless of the risk to their health. And words can express my continued appreciation of all of them from Bonnie, Dave and Rachel all the way down to our interns.

With that, I would like to turn it over to Scott to open up the Q&A.

Question-and-Answer Session

Thank you. [Operator Instructions]

And we have a question from Jason McCarthy with Maxim Group. Please go ahead. Your line is open.

Michael Okunewitch

Hey, guys. Thanks for taking the question. This is Michael Okunewitch on the call for Jason.

Jed Latkin

Hey, Michael, how you doing?

Michael Okunewitch

Good. How are you doing, Jed?

Jed Latkin

Good. So we’re thankfully we’re chugging along here. It’s good.

Michael Okunewitch

Yeah, no, as I said, it’s a good result. Congratulation. I like to see in the quarter, a bit more about the subset of patients where the baseline result can be predictive of the non-responsiveness. What are the characteristics of these patients? And how does the tilmanocept signaling vary between patients who respond versus those who want a baseline?

Mike Rosol

Sure. Great question. So, this is Mike Rosol for the record. Hey, nice to speak to you. So there are thought to be three general subtypes of rheumatoid arthritis, right, at least according to one classification scheme. Those subtypes are the myeloid, the lympho-myeloid and the fibroid pauci-immune. One of the main distinguishing characteristics between those different subtypes is the amount of macrophage involvement in the rheumatoid arthritis pathophysiology for each of them.

With the lympho-myeloid, and the myeloid being macrophage rich rheumatoid arthritis and the fibroid pauci-immune having a much lower level of macrophage involvement. So, our molecule or radiopharmaceutical, tilmanocept, of course, targets with very high affinity, the activated macrophage. So you might say to yourself, oh, my golly, those fibroid pauci-immune maybe you’re not going to build image to them. And that’d be bad for you, right? Because you’re looking at the macrophage, and you just told me there aren’t that many?

Well, it actually turns out that this could be tremendously important for rheumatologists and their patients in a good way. And so, the thing is, right now, there’s no way to distinguish those different subtypes what type you as an RA person might have, no way at all, unless you do a synovial tissue biopsy. This is something that it’s not done everywhere. It’s only done at research institutions. There’s no way it’s going to be standard-of-care. And it has its own deficiencies in terms of accuracy and sensitivity.

So what we think is our hypothesis is this. Since we are measuring our radiopharmaceutical is imaging the macrophage, we would expect that RA subjects who have RA as diagnosed by all the other hallmarks of RA, those who have the fibroid or the pauci-immune subtypes, those scans with tilmanocept will likely look more like a healthy subject or a normal person than the other two that have a lot of macrophage involvement and likely would have a lot of localization of tilmanocept, right.

So, it turns out that the fibroid subtype, there’s a growing body of literature suggesting that that subtype in particular does not respond well to anti-TNF alpha therapies at all. And that makes sense, because really in the main pathway of the anti-TNF alpha therapies is the macrophage. So it makes sense that those fibroid subtypes are likely going to be enriched or full of the non-responders.

And so our hypothesis, as I mentioned has been that our first scan, the baseline scan, before there’s any changes of a patient with the fibroid pauci-immune subtype will look much more like a healthy person. And we would then predict based on that scan alone, that they are much less likely to receive a benefit of an anti-TNF alpha therapy.

Now, in the small numbers that we’ve looked at so far, 16, and we actually have others kind of accumulating along the way, I can tell you that we do see a different — at least a couple of maybe three different populations of localization accumulation in these patients that we’re imaging.

And for sure, we think we can divide them at least into the very little macrophage activity and those who have much more macrophage activity, right, because we see roughly a third or so a little bit more of the patients look more like normal, and then maybe two thirds or a half look like they have significant localization in certain joints, right.

And I should mention that the distribution of those different subtypes across the populations is roughly across the population of RA subjects is roughly thought to be about a third, a third, a third, maybe more, maybe 40% of the fibroids, it depends on what paper you read and who you ask.

So we’re seeing about that number of patients in our scans who look more like the normal. And guess what we followed them to 12 and 24 weeks after they were put on their anti-TNF alphas, and most of them don’t respond. And so that is accumulating evidence that our hypothesis is going to hold to be true. That just at that baseline scan, if you look more like a normal, you’re likely to be a fibroid pauci-immune, and you’re less likely to respond to the anti-TNF alphas. So our data are accumulating that support that.

Now the NAV3-32 Phase 2b study where we’re doing synovial tissue biopsy, as well as imaging will help establish that with ground truth, where we will not only be looking at the number and the density of the macrophages in the joints by sampling those joints with a needle, but we’ll also have the rheumatologists then classify those cases as one of those three subtypes. To me, it’s much more important to look at the correlation with the actual number and density macrophages than it is to worry about the subtype naming.

What I think we’re going to be able to do is say, look, your scans show you look — you’ve got all the signs and symptoms of RA, you’ve been diagnosed, the scan at baseline looks pretty normal, you’re probably a fibroid type, or at least you’re a subtype, whatever we call it, we could call it out. You’re a subtype that doesn’t have a lot of macrophages. You’re less likely to respond to an entire class of drugs.

And so we don’t have to go through all of those where you might be, you’re going to be wasting money; the insurer is going to be paying for drugs that aren’t likely to be benefit to you — of benefit to you. You might have side effects because these are serious potent drugs. We’re going to forget all those. And we’re going to put you on something else which has a higher likelihood of success. I talked a lot. Did I answer your question? Maybe I missed some things.

Michael Okunewitch

Yeah, no, thanks. It’s kind of my hunch is that it was going to be really what we find out in that 3-32 study, but you’re seeing some initial signals from this.

Mike Rosol

Yeah. You got it.

Michael Okunewitch

So I’m just like to see if you could give it a highlight what you’re seeing in the patients who don’t get a predictive result at week five. Are these patients not demonstrating a reduction in tilmanocept update value at week five, but then they are responding in week 12 or 24? Is really that a question of the test not detecting patients who are responding or is it that the patients taking longer to display a response?

Mike Rosol

Yeah, that’s a good question. So here’s my view, which is somewhat biased, but I tried to base it in fundamental facts. So the way it is determined that somebody is responding to or not to any therapeutic an RA, these are done with composite assessments and these consist of a variety of semi objective to subjective things.

For example, the rheumatologist will look at a patient’s hand joints, the wrists, their elbows, their shoulders, and say, are they swollen or not and they will do a count of those, the ones that are swollen. There are 28 joints in particular that they look at. They will also then squeeze those joints and say, Does that hurt? Does that hurt? Does that hurt? So there you can see immediately that there are going to be subject, there’s a subject of nature to those.

The other kind of two main components that are used in these assessments are a global assessment of the patient him or herself of how they’re doing, which obviously has value. And then the physician also contributes in overall global assessment. You put all of those into the meat grinder, and you come up with a number that says the patient, is this, this is the status of the patient. But because each one of those is subjective in its nature, there’s a lot of variability in those composite scores. So they’re pretty noisy.

One of the reasons that trials, one of the main reasons, it’s not the main reason that trials and rheumatoid arthritis require lots of patients, typically for new therapies, and they need to be followed over usually significant chunks of time are because of that fact that these are subjective measurements that are very noisy, so to see a true signal across the noise takes big numbers or time.

So if you ask me, I think what we’re doing is measuring a fundamental unit of biology, the macrophage. I think in the end, biology wins. Eventually, we’re going to know if the patient is getting better or not, because we’re measuring that biology. But on any given day, there’s going to be influence in those composite scores from how the patient or even the doctor is doing. Maybe they’re really happy. Maybe they feel like they switched to a new drug by golly, it has to be working. Maybe it’s in their nature to be happy or pessimistic with times of year. There are all sorts of variables.

I think as we accumulate more subjects, our accuracy is potentially going to go up and as you look over time, I’m pretty sure it will, meaning that we’ll be able to make the right call. And it just might take a while for those clinical assessments to catch up. Doesn’t mean that’s always going to be the case though. There are some that — so specific to your question, the ones that we’ve seen that our prediction has been not correct, at least not yet. I really do think a lot of it has to do with the target itself. So we’re hitting an amorphous, target the clinical assessments.

And I actually would be a little bit scared if we hit 16 out of 16 of an amorphous target, because that might mean we’re equally amorphous. So again, I think the biology will win out. In some of these, though and all of these three that we haven’t met, there’s borderline things going on with the macrophages that I would expect would eventually be borne out in the clinical assessments.

We’re not going to keep following them beyond six months. So we may not learn that, maybe we can follow up with some of these. But I wouldn’t — I’m not surprised we’re not hitting 100% in terms of these clinical assessments as the outcome. That makes sense.

Michael Okunewitch

Yeah. It does make sense. So then one thing I guess I have one more follow-up on that same point. In the Phase 3, is there any plan to include a tilmanocept assessment as well the clinical assessment at weeks12 and 24?

Jed Latkin

Yeah. So we are doing that in the current trial. And we will do that in the Phase 3 as well. So we’re going for three main indications, right or the plan is. One is the week zero to week five change just any in the tilmanocept scan. Is that predictive of clinical outcome of either 12 or 24 weeks? That’s our main indication. Another indication is can the baseline scan itself be predictive of clinical outcome based on this kind of pathotype or subtype bucketing?

And the third indication is the longitudinal monitoring, and that is imaging a multiple time points over — or imaging over time, and seeing how the patient’s disease status, at least as assessed by macrophage activity is over time. And so the way to — one way to get that is to look at correlations with the clinical assessments.

And like I said, and it may stand out to you, I wouldn’t expect us to match up at every time point with the clinical, but I think what we’re going to be seeing is in some patients, it’ll be more anticipatory, right, so the macrophages might be going down, so our signal will go down. And then long-term, the clinical assessments will catch up to that. So there is a plan though to and we are currently acquiring images at every single time point.

So we do have those data, and we’re looking into the week 12 and week 24 imaging data as well and aligning those with the clinical assessment. I can tell you something that I haven’t said before, it’s not — it’s encouraging. And that is when we have looked at the week 12 images and quantified those, the trends are holding. So it’s pretty cool, right?

So if we see a subject, for example, who has achieved a response, as assessed clinically at week 12 or 24 by the clinical assessments, a positive response to anti-TNF alpha. Our imaging, for example, the localization has been going down, at least in some of these subjects from week zero to week five.

And then the ones who are still getting better along the way or continue to get better as measured at every time point by those clinical assessments, we actually see the signal go down at week 12 even further, of tilmanocept. So it looks like that that’s something that reassures us that we’re measuring something that’s showing a real effect, and that the effect is lasting, right. So it’s not a transient thing for the drug at least in those subjects. The signal is going down, and it continues going down. So we’ll keep looking at those data and quantifying those along the way.

Michael Okunewitch

All right. Thank you, Jed and congratulations on the data.

Jed Latkin

Excellent, guys. Excellent, Michael. Thank you. Next question?

Operator

We have a question from Jacob [Indiscernible] with — a Private Investor. Please go ahead.

Unidentified Analyst

Hi, Jed. So I know that you touched on it on the conference call just now, regarding the Jubilant transaction? Can you tell us with more clarity as far as how long the exclusivity period is with them?

Jed Latkin

That’s a good question. I mean, we have not disclosed that. But all I can say is that we’re within the period. We have constant discussions with them. And I trust that based on our discussions, we will be able to complete it within the time that they’ve allocated. So we have specific. We’ve been in discussions with them consistently over how long each subject would take. We gave ourselves enough time to get it done to work in for the COVID delays.

Unfortunately, on the clinical side, we’ve had numerous issues with COVID, and people not being able to do calls and whatever. But we’re well within the timeline. So I do anticipate that we will get it completed within the set timeframe. But it’s not something that we’ve disclosed publicly what that timeframe is.

I do know that once we do continue to move forward to the FDA, that’ll sort of push things forward a little bit faster, and sort of push them to a decision faster. But we are well within the timeline. And we do expect that as more data comes through on the remaining due diligence items and clinical legal and financial, we’re going to get this thing completed within the timeframe of the contract. So I’m not worried about it.

Nothing has really popped up that would worry me, other than the fact that things have gone a little bit slower based — just because of COVID. And the fact that we can’t get into a room, everything’s obviously done remote by zoom.

But the one good thing that this has done is one, it has allowed us to have this addendum to the second interim look. It is also the company Jubilant has spent just countless amount of money on the commercialization feasibility, all this other stuff, money that we haven’t sent that they did, which further validates everything that we’re working on. And so that’s something that’s been a positive that we had not anticipated, and it’s something that we’re excited about. But we are very, very confident that we will get this thing done within the timeframe allocated under the MOU.

Unidentified Analyst

Okay. And on that same front, on the August 10 call, you mentioned about the investor group, that would be paying $5 per share for up to 1 million shares of Navidea. And then they also talked about if the stock were to rise to that $5 range, they’d be making at least or they’d be making another 3 million share investment, which is $15 million. What’s the exact latest date of the first investment, of the first $5 million on the 1 million shares? And then what exactly is the last date on the remaining $15 million worth?

Jed Latkin

So the first is approximately the 23rd or 24th because it was it’s a 45 business days contingent on the acceptance and of the application. So then there’s 45 business days thereafter. And what I want to stress is that the agreement we have is the first $5 million is guaranty that’s definitely coming in at $5 a share for the $1 million shares.

The remaining and it’s actually $20 million is at the company’s option, if the stock trades between five and 575 for five consecutive days. Given the financials we have in place, as I’ve said numerous times, I’m not the — one of the CEOs of these biotechs that get some good news and look to raise $100 million just to have it on the balance sheet. I know how much it’s going to cost to get us to our product, I don’t want to needlessly dilute.

So we have the option to do that if the stock goes above five. But given the 15 million Series D that we have in place, we have more than enough money. But for those dates we have, it’s approximately November 23, and then 45 days thereafter for the expiry of the remaining 20.

But that’s going to be sort of a wait and see, because I just don’t think at this juncture, it’s money that we need, given that we have the funding in place. We’re moving at a good pace with Jubilant. We have our plans in place for moving forward on cardiovascular and some of the other projects we’re working on.

So I’m not going to needlessly look to fund. I mean, I’m very happy, we’ve been working with the auditors on how the Q was going to look in terms of financial disclosure. And given what my budget is over the next two years, we have enough money in the bank allocated to get us from here until approval.

So I’m not going to — I wouldn’t 100% rule out using it, because it really depends on what happens. But I would say that it would be highly unlikely that we would use that second tranche, but the $5 million is coming in, and it should be in within the next week or two.

Unidentified Analyst

Right. That’s it for me. I’m good. Thanks.

Jed Latkin

Excellent. Thank you, Jacob. Next question?

Operator

We have a question from Mike Rically [ph] with Navidea [ph]. Please go ahead. Your lines open.

Unidentified Analyst

Yes. This is Mike Rically, independent investor. Question. A couple questions here. Two financial and I appreciate you taking the call. Jed and Mike and Joel. First question is what you were just talking to the prior caller Jacob about? So when you were on the KOL and you said there was a $20 million coming in, is that the $5 million plus the $15 million, Jed?

Jed Latkin

Yeah. Yes, it is. And I think on one hand, that’s also as an aside, helps move Jubilant forward faster, because they understand that it would be — it’s great, I do firmly believe we’re going to get the deal done. I think that’s going to happen. But remember, we now have a lot of financial freedom. This is something that we have not had, in many, many years.

And I know a lot of the people on the phone call have been with us for many years and they understand that. I was looking back a lot of the decisions we always made were, well do we want to have milk or bread or something like that. Now we finally have an opportunity to complete the trial, to work on a bunch of other projects in a very focused and directed manner. So we get things to completion and not just scattershot investments here, there and everywhere. But we also have the benefit of moving forward with a great partner.

So I’m talking about the five that is guaranteed and the 15 that is guaranteed under the Series D preferred. And then we have the other option, which is for an additional 20. But as I said, with the five and the 15, we’re more than covered to take care of all of our financial needs for the next couple years.

Unidentified Analyst

So as the 700 that came in after the third quarter was that from Jubilant, was that from somebody else?

Jed Latkin

No, no, the 700 was from the Series D.

Unidentified Analyst

So, they’ve already started funding?

Jed Latkin

Yes, they have. Yeah, so they’ve funded. Well, you know, you’ll see the Q tomorrow, but they’ve already started funding. Yes. We’ll see that if you look at the Q tomorrow, the important thing to look down is on the balance sheet, look under the equity section, you’ll see the equity receivable as well as the Series D outstanding. So if you put those two together, you’ll see what the financing — what we have planned over the next nine months coming in on a guaranteed basis. So it’s nice to have a nice positive receivable on the balance sheet for once.

Unidentified Analyst

Well, that’s great to hear. I’m glad to see it started funding. The rest — several more questions, but there are on the scientific side. The first one is on the FDA window. You’ve said that before there’s a 60 day window from the time you request the meeting with the FDA till you have that meeting at a minimum. Have you made that request yet with the FDA for the P3 review?

Mike Rosol

Hey, Mike. It’s Mike. How are you?

Unidentified Analyst

Fine, Mike, appreciate it. Mr. Rosol.

Mike Rosol

Yeah. Thanks for the question. We have not made that request yet. So what we’ve been doing, like I said is, while we’ve been doing the due diligence with Jubilant we’ve — it allowed us to accumulate more of this data that I just went over and to have the first half of the subjects actually a little bit more, and on three, completed through their six month follow up.

And so if you ask me, and you’re asking me, I think that actually puts us in a better position than if we had asked for the FDA meeting before, because this gives us the data that would actually be how we would design and are seeking the thinking of designing the Phase 3, following up the subjects all the way to six months, because that’s what is done.

Clinically, you look at the patients and see if the drug is working after three and six months. This is — this has given us the time to get data, where we have imaging, and all of these time points. But most importantly, as I just went over the baseline in the five week, and then we can compare those to the 12 and the 24 week clinical outcome.

So it gives us a stronger story to tell. I mean, there was some risk there, maybe things got worse as we followed them for 24 weeks, versus 12. You remember the 12 week data were very powerful.

But it turns out the 24 week data are equally powerful. And I think that’s very important. But what this does is reinforce our hypotheses and what we’re thinking in terms of what to tilmanocept can bring to the table. So I think it’s put us in a better position, frankly. But we haven’t asked it yet the plan is to, to ask for that meeting in the next, before the end of the year, for sure is the plan.

And we’re putting all these data together in what is known as a briefing book that also has all sorts of other explanations and descriptors of the prior trials. So that the FDA can have everything in front of their fingertips as they make their — give us their feedback on our trial design, as well as our proposed end points and objectives and milestones.

So, again, a long answer to your short question, we haven’t asked for it yet. But we’re going to ask for it before too long.

Q –

So, Michael, does that point to sometime late in the first quarter of 2021? Before starting the P3?

Mike Rosol

Yeah. Most likely, I mean, things could happen sooner, right? So that’s the typical response time like that I’ve said, it’s unlikely, it’ll be sooner given things that are going on in the world. I mean, the response time, given the COVID scenario. So once we asked for it, we’ll have feedback from them in 60 days. And then we’re in a good position to go.

Now, again, we should, you should know that we’re not going to the FDA for our formal approval process to start the Phase 3. But we just want to make sure that they’re that they agree with what we’re proposing. So that will increase our likelihood of success. If we meet these milestones that, they’ve agreed upon, and then we deliver those data at the end of the Phase 3, since they’ve been involved in the decision making, it’s much more likely that we’re going to be in agreement that the data support the indications are going for.

So it’s not a requirement to do at this stage, we think it’s a smart way of doing it, to make sure that the Phase 3 has the most likelihood of being accepted as a registerable study, assuming it meets our targets.

Q –

So you just made a very important clarification there that may not have been understood, you do not need for the FDA to start the P3. But all of this effort you’re going to in this continual refinement of — understanding of data will make the P3 more effective. So are you saying you could start the P3 any times, but you’re choosing to better refine the data before you start and go to them?

Mike Rosol

Yes, yeah, we could start it at risk sooner than that. But as Jed is — outlined and due to his efforts, we’re in a position where we don’t we can make it to the end of the road and do it in the best fashion possible right in the smartest way. Where we have the resources now to do it and set us up set ourselves up for the best chance of success.

Jed Latkin

I think I really want to build on what Dr. Rosol just said, because I think it’s important that you know, that refund books are being worked on now. And that’s something that is going to be submitted the preponderance of evidence that we’re now bringing, having these 16 patients that we 24 really is what I would say like the crucial linchpin for getting the FDA’s buy in, and yes, we don’t need to go to them again.

We could launch at any point in time, but we have the flexibility. We have the runway to do it. And now that we can provide to them a package that includes this really key week 24 data, we made a decision internally it was obviously a risk, because maybe we didn’t have such a positive week 24.

But thankfully, we have the data is very, very good, I’m really, really happy with it, I think it couldn’t have been better. And now, we can use that as part of our package to the FDA, if you remember the last time we submitted to the FDA, we’re actually caught off guard because they responded so quickly.

We submitted it was the middle of the summer, and I was like, okay, we’re going to submit, we can take off a few weeks, relax, and then have the meeting. And then we heard back within two weeks. And next thing, everybody had to cancel their summer vacations, and we’re working on it. So I’m really happy with the fact that, we’re going to be presenting such a robust data package to them. And I think that, it’ll really lead us to have a nice springboard into the launch of the Phase 3.

Q –

You know this is excellent information that both of you just passed on. I don’t think the general population understood that. I think the general understanding was that you still had to get approval for the Phase 3, but you’re actually trying to make the Phase 3, a better — a better more well understood and accepted trial. And you’re not waiting because you can’t get approval. So that’s a really important piece of information that I —

Mike Rosol

Yeah. Thanks Mike. I am glad you highlighted that. I’m sorry to over talk you, but I think we’ve noticed that in our conversations and readings. And so I wanted to make that clear. And I know Jed did as well. So thanks for also emphasizing that point.

Q –

That’s excellent. On your remaining participants in the arm three, based on what it’s taken to get these done. Are you seeing those being done by the first quarter of next year also?

Mike Rosol

Oh, yeah. So we’ve got, they will have their imaging events and the last clinical assessments, I think there’s only one subject who’s lagging, because they it took them a while and maybe, maybe a couple that are lagging, because it took them a while to get their anti-TNF. But in terms of the analysis, we’re doing it in a rolling fashion.

So with those, lagging one or two aside, we’ll have all the data analyzed at some level in the first quarter. How this is or maybe you don’t, and maybe I should tell the folks out there, it formally done and analyzed with statistical input and analysis and tables, figures and legends that that need to be done.

And a final clinical study report done that takes some months after. But the way we’re looking analyzing the data internally in a rolling fashion, so we’re going to know a lot about those in the first quarter. So even before the Phase 3 starts, we’re going to have more information, even that I’ve discussed today, and more detailed analysis will have been done on those cases as well.

So that will help us. I don’t foresee it changing the design, as Jed mentioned, and as I’ve tried to relate today, things are going along according to hypotheses exceedingly well. And so I think this is all supportive for our, even our current design of the Phase 3 and now we’re also using these data to help us in the sample size estimation, we already have estimations of that. But we’re able to use these data to help us refine that even more. So we can really hit the ground running with a very targeted phase three, not, not larger than it needs to be and not too small so that we can’t achieve success.

Jed Latkin

And the other thing to build on that, this arm three, has really shown to me, I don’t know about, our clinical guys are obviously very experienced in all of this. But you know, I’m more of the outsider, I would say, but the arm three has really shown to me why there’s such a need for this product. The fact that, it takes some of these patients forever, who aren’t on great health care plans to get the anti-TNF is because you know what? They know that once they get it, it’s a six month authorization. And there’s you know, they don’t — they get there — they get their medicine and maybe it works, maybe it doesn’t.

The fact that we’re going to have something that can tell you at week five, whether or not it works, is going to invite the insurance companies to be more apt to say what, we’ll take the chance because instead of authorizing for six months, and paying for six months of a drug, we’re going to pay for five weeks of a drug, and which is essentially, two or three injections. And we’ll know whether or not it’s going to work.

So it’s sort of money well spent, how the insurance company, they view all of us as positives and negatives, where we’re just dollars and cents to them. I think the patient care doesn’t really care. But thank god, they’re companies like us, who do care about the patients and are putting forward a product that will allow these insurance companies to make the decisions in a timely manner, because they know that their commitments not going to go beyond that five week, because we’re going to be accurately able to predict it. And at five weeks, we predicted working, the insurance companies more than willing to pay for it, we’ve had issues with patients who just can’t get the drug, insurance companies more and more are tightening their belts, and they don’t want to have to pay.

And this is why our diagnostic is so greatly needed. Because this is something that’s going to open up patients who need the drug and be able to get access to it faster. And that’s why we have several patients that will go past this quarter, because they just couldn’t get the truck. I mean, that’s the it’s the lunacy of this whole thing, that sometimes you really need it, if you’re going to get it, because there’s, well we know, it’s working, we now know it’s working.

Do I want to have to pay for six months of a drug? The insurance companies don’t, for them, it’s all about the dollars and cents, and we’re going to make that decision so much easier for them. And that’s something that has really given us a moment of pause and really encouraged us to how good of a product this will be and how successful it will be long-term.

Q –

Well, you and Mike just lead into something and this was from your KOL with Graf, he did a really good job in explaining from his viewpoint, what was going on it within the in the medical community. But one thing he brought up that was really important was the acceptance of this after it gets approved, which we’re all hoping for positive outcome. And will the people who make the TNF — anti-TNF, excuse me, try to do anything negative to it.

And what he said was, basically there’s 30 other types of drugs out there just chomping at the bit to get out into the market. So the big companies that are making the anti-TNFs may not be receptive to this. But there’s plenty of others that also. So I took away from that that — that have mitigated the risk, a lot of non-acceptance. Is that a fair assessment from the KOL?

Mike Rosol

Yeah. And there’s another point, great point. This is my Mike Rosol. I agree, did a great job, Jonathan Graf. He is now — we’ve had a number of discussions with a minute, they’ve all been really informative. And in fact, he was one of the KOLs, who helped us design the currently running trial, as well as the Phase 3. And so he’s been instrumental. His insight has been instrumental all along the way. And he’s a — he’s an influencer in the field of Rheumatology.

And in addition to what you said, there, Mike, I want to emphasize that something Jed has said multiple times. We think is holding true at least in our limited data so far. So when I mentioned to you the positive predictive value is 100% for imaging readout for predicting clinical outcome at 12 weeks and 24 weeks, I don’t know that that number is going to hold. But what that means is in subjects where we see an beneficial effect in our tilmanocept imaging readout. All of those subjects, where we said, you’re getting better by tilmanocept, every one of them got better clinically.

So that’s something where a payer or a company that’s making an anti-TNF alpha, I think we’ll see that information is valuable, because that would then be usable to reinforce that their anti-TNF alpha treatment is working. So they can keep, the patient will then need to stay on it, the doctor will advocate that the patient stay on it, because they have something in hand that says objectively it is working.

And as Jed is, using it as an example of himself over time, the payers are going to want some concrete information to say this drug we’re paying, $5,000 a month for is working, right. So this will be something, we can give that says indeed it is working.

Jed Latkin

And we’ve seen it firsthand with patients who look like they’re great for the trial. And I’m always getting on in Bonnie about that. She’s been working her butt-off on this thing for years. And I always yell at her what happened to that patient, why they couldn’t get drug?

We have patients that screen and look great, and they can’t get the drug because the insurance company just doesn’t want to pay. And this is I mean, and yes, Mike made the point is maybe I’m a bit selfish, because this will help me long-term with my Crohn’s disease. And in my in my situation, getting my anti-TNF, but it’s going to help so many people and it’s something that we’re really, really excited about.

Q –

Well, you guys have done a great job here. I got one more an easier your question for the end. You said several times that you’ve been doing some preclinical studies on therapeutics. Can we — can you leave us with a teaser of some of those been looking at cancers or CV therapeutics? What? Can you tease us a little bit what some of those preclinical that you got out there? You’re working on now?

Mike Rosol

Sure. So the main one is the main is — the main domain is oncology. So cancer, yes, we’ve looked at a number of tumor models. And I think this part has been publicly discussed in general, the theory is that and the evidence is supportive in general, that our therapeutic in concert with existing immunotherapies can have then added synergistic effect.

And we’re seeing that in our preclinical models, and we have some compelling data demonstrating that that we’ve been talking about and are likely to write up for abstract and a publication before too long. These are — these are, we think, very strong data that showed that we can impact the macrophages associated with tumors in such a way that not only have a clinical benefit themselves, but also can kind of release the body’s immune system as encouraged by other immunotherapies and increase the effect of those immunotherapies. So we think this is a very powerful story, potentially, in the cancer space. I’ll leave it at that.

Q –

Okay. Well, I appreciate you sharing that little bit. I’m very — I’m a long-term shareholder. I’m very encouraged by what you guys are doing and what you’ve done. And I appreciate it, and applaud you and say thank you.

Jed Latkin

Excellent. Thank you, Mike. And I think I think that was it for the questions.

Jed Latkin

And so I know it’s already late. So I just want to thank everybody once again for calling in. And I look forward to speaking with you guys all again in the near term, we’re going to be trying to set up some more of these virtual fireside chats as well as appearances at some of these other virtual investor conferences so that way we can get out in front of investors as much as possible. So everybody, have a great day and thank you so much for tuning in.

Operator

That concludes the call for today. We thank you for your participation. And I say please disconnect your line.