Navidea Biopharmaceuticals, Inc.
Q1 2019 Earnings Call Transcript

Published: 9 May 2019

[Operator:]

Greetings and welcome to Navidea Biopharmaceuticals' Q1 2019 Earnings Conference Call. At this time, all participants are in listen-only-mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mr. Jed Latkin, CEO. Thank you, Mr. Latkin. You may begin.

[Jed Latkin:]

Good afternoon and welcome, everyone, to Navidea's First Quarter 2019 Earnings Call. My name is Jed Latkin and I am the Chief Executive Officer of Navidea Biopharmaceuticals. This call will cover Navidea's financial and operating results for the first quarter 2019, which ended on March 31, 2019, along with a discussion of goals and milestones for the remainder of 2019. Following our prepared remarks, we will open up the conference call to a question-and-answer session. With me on our call today is our Director of Finance and Administration, Erika Gibson; our Chief Medical and Science Officer, Dr. Mike Rosol; and our Chief Compliance Officer and Regulatory Officer, Bill Regan. But before we begin our formal remarks, I would like to remind everyone that some of the statements on this conference call may be considered forward-looking statements within the meaning of Section 27A of Securities Act of 1933 as amended and Section 21E of the Securities Exchange Act of 1934 as amended. That concern matters that involve risks and uncertainties that could cause actual results to differ materially from those anticipated or projected in the forward-looking statements. Words such as expects, anticipates, intends, plans, aims, targets, believes, seeks, estimates, optimistic, potential, goal, suggests, and similar expressions identify forward-looking statements. These forward-looking statements relate to the effectiveness of the Company's bodily fluid-based diagnostic tests, as well as the Company's ability to develop and successfully commercialize such test platforms for early detection of cancer, and the diagnosis and monitoring of rheumatoid arthritis. The Company's actual results may differ materially from those indicated in these forward-looking statements due to numerous risks and uncertainties. For instance, if we fail to develop and commercialize diagnostic products, we may be unable to execute our plan of operation. Other risks and uncertainties include the Company's failure to obtain necessary regulatory clearances or approvals to distribute and market future products in the clinical IVD market; a failure by the marketplace to accept the products in the Company's development pipeline or any other diagnostic products the Company might develop; the Company will face fierce competition and the Company's intended products may become obsolete due to the highly competitive nature of the diagnostics market and its rapid technological change; and ability to maintain our listing with the New York Stock Exchange, inability to maintain effective internal control over financial reporting, the outcome of any pending litigation, and other risks identified in the Company's most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q, as well as other documents that the Company files with the Securities and Exchange Commission. These statements are based on current expectation, estimates and projections about the Company's business based, in part, on assumptions made by management. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Forward-looking statements are made as of the date of this conference call, and except as required by law, the Company does not undertake an obligation to update its forward-looking statements to reflect future events or circumstances. Now let me start with the business update. Let me begin by emphasizing some of the very significant strides the company has made in recent months. Not only towards bringing our proprietary RA imaging agent closer to realization, but also a progress we've made towards stabilizing the company's financial condition for a path forward. We mentioned on the FDA update call a month ago that following the FDA's comments, enrollment in our Phase 2b trial was in it. Today I'm extremely proud and excited to announce that we have officially begun to enroll in patients in the NAV3-31 Phase 2b trial. Dr. Rosol will elaborate on this news but we must recognize the tremendous undertaking that was required to accomplish this milestone. Congrats to all my team for a job well done. They have been laser-focused on designing the trial protocol that are aligned with the FDA's expectation while simultaneously qualifying clinical sites and obtaining the necessary institutional review board approvals to proceed. This was a small fee and I am so proud of all involved. On the business development front, we have had a very active start to the fiscal year. Our participation in the 2019 JPMorgan BioPartnering Conference and Biotech Showcase held in San Francisco in January has proven to be highly productive in generating substantial interest in our technology. We engage with and continue to our productive discussions under CVA with several major players in the diagnostic imaging space. We also engaged a number of prominent investment firms and hope to announce analyst coverage on the video for the first time in several years. This is a major step in the right direction. We have also advanced collaboration talks with a number of very well-established pharma companies interested in exploring the use Tilmanocept in trial involving inflammatory condition. The team has also been very busy, vetting several imaging groups to partner with for our longer term commercialization plan. We hope to have some announcements in the near future. We are very encouraged by the feedback and the progress being made on the business development part. Securing a partnership with the right partner under the right terms is the primary goal for this company in 2019. And let me stress this, we will not agree to a deal that doesn't reflect the inherent value that our RA diagnostic agent hold. We understand very clearly the potential of what our game-changing product would mean to the healthcare industry and healthcare insurers and most importantly, what it would mean for the nearly 1.5 million Americans suffering from this debilitating disease. That's just 1.5 million Americans, that does not include all the other RA patients all around the world. We will be hopefully announcing partnerships over the next several quarters for both the U.S. and global. I also want to address the reverse split that was effectuated on April 26, 2019. After granting three unprecedented extension, the New York Stock Exchange mandated that we take such action in order to maintain compliance with the exchange rule, and so we complied. It will turn an option of delisting would have severely handicapped the company by reducing our financial flexibility. On this it's important to note that not having a listed security which is something that we can use as a currency to monetize and do future deals with it severely hampered our negotiating flexibility when talking with partners and other financial partners. With that, I'd like to turn the call over to Dr. Rosol for more detail on our development front. Mike?

[Dr. Mike Rosol:]

Thanks, Jed, and hello, everyone. I'm happy to participate in today's call and provide you with updates from the clinical side. I'm going to touch on many subjects here so I hope you'll bear with me. I want to reiterate the good news that following up on our April 8 investor call, we've begun to enroll our first patients in our Phase 2b trial evaluating the stability and reproducibility of our Tilmanocept imaging readout in healthy subjects and patients with active RA. You'll recall that we arrived at this point after successful completion of our Phase 1 and 2 studies in RA. The Phase 1 study demonstrated no adverse safety signals and showed that with subcutaneous injection of Tilmanocept, we were able to see localization of signal to the joints of patients with active RA. This empowered us to move to the Phase 2 study with the results showing localization of intravenously-injected Tilmanocept signal to the joint of patients with active RA compared to healthy control exceeded our prestudy expectations, and have -- as well as our rheumatologist consultants are very excited about the potential of Tilmanocept imaging in RA. In short, the differences between the images from the RA subjects and the healthy subjects were highly conspicuous. And now in this Phase 2b study, we will be doing a test/retest evaluation of Tilmanocept imaging for the first time, so we can really understand the robustness of the signal and defying signal from the joints of healthy subjects versus signal from patients with active RA definitively and quantifiably. I'd like to publicly thank our clinical trial operations team led by Bonnie Abbruzzese for the diligent work getting this trial going. Congratulations to them all. You might also recall that this trial contains a third arm that mirrors the design of our planned Phase 3 study and that this will enable us to power that study with increased confidence. We will be performing interim analysis on this trial along the way and plan to reach back out to FDA as these data come in to make sure we're in alignment with them with our Phase 3 plans. Currently, planned total enrollment in this trial is 105 subjects, with subjects very roughly distributed equally in the three arms. Again, we continue to plan for the second Phase 2b study. That is the correlation of our imaging readout with histopathology and the Phase 3 later this year. We'll keep you apprised of the situation as we move ahead and continue to converse with FDA. While we are focused on our RA indications currently, I want to assure you that research actively continues in other areas of our pipeline. You've seen the announcement of the comparative study to be run in South Africa, looking at a Gallium-68 label Tilmanocept in tuberculosis. This is a study initiated by well-known nuclear medicine researcher Dr. Mike Sathekge in South Africa, and is in-line with our larger strategy to keep looking for appropriate indications where there's an urgent medical need that our agent might address. TB certainly fits this and we are setting up to begin a pilot arm of this study shortly. It also fits in with our strategy to look at radio labeling Tilmanocept with a PET imaging radionuclide. In this case, Gallium-68 rather than Technetium-99m which is a gamma-emitter SPECT agent. This study will provide us useful information about the labeling and use of Tilmanocept as a PET agent. A discussion of the advantages versus the disadvantages of PET versus SPECT is far beyond the scope of this call, but given the currently-installed worldwide imaging instrument base, availability of a PET agent would provide better performance characteristics of our imaging agent and having the capability of being able to use either a PET or SPECT agent could greatly expand the market for us. Kaposi sarcoma work at UCSF continues. You'll recall we have two ongoing NIH grants with them -- one on the clinical diagnostic side and the other on the preclinical therapeutic side. On the clinical side, the site things they can complete enrollment by end of summer. No promise from them on this front of course, but they worked out some scheduling issues and think recruitment is fulling more easily. The plan is for up to six more subjects to be enrolled in that study and following full analysis and wrap up, we would hope we can open up discussions with FDA about the path to an S&DA. On the preclinical front, work continues and we plan to wrap up that later this year including preclinical animal safety and efficacy data with next steps and other discussion with FDA about a possible IND. We also have the ongoing atherosclerotic plaque imaging study at Massachusetts General Hospital. Currently, Dr. Steven Grinspoon there is continuing to run this investigator-initiated study to look at the ability of Tilmanocept to detect atherosclerotic plaques enriched with activated macrophages. This is building upon the work we published within that provided evident support of this in HIV-infected patients and Framingham Risk Score-matched healthy controls. We'll keep discussion progress with him and have begun talks about next studies with his group. Regarding our NASH trial, we recently closed that out as the team and PI felt that the data on the first cohort would be sufficient to evaluate the comparison to sulfur colloid imaging. We will be fully analyzing these data in the coming weeks and let you know the outcome. Regarding the registration of CD206 with the FDA as a biomarker in rheumatoid arthritis, we continue to work with the Critical Path Institute and are actively preparing the required document of intent and context of use for submission to FDA for them to begin their process of consideration. Based on these discussions, we think the first pass qualification should be as a prognostic biomarker used for subject selection and drug development clinical trials in RA. I'd ask you to be aware that the data to support this will come from our trials, so this will be an ongoing process. We are also continuing to expand our IP portfolio. We filed two new provisional patent applications since January. Although I'm not in liberty to get too much into details, I can tell you that the first of these deals with our image quantitation and the second relates more to fundamental biology. We likely will file two more provisionals before year's end. We also continue as Jed mentioned to discuss possible partnerships and collaborations with companies that play in the space. So just to summarize and reiterate, I want to be clear that our main focus remains rheumatoid arthritis and on moving towards approval as a clinical product and along those lines, we've begun enrollments into our first Phase 2b study and continue to plan and prepare for the second Phase 2b as well as the Phase 3. We are also continuing to push ahead in other areas of our clinical pipeline and in preclinical research. Thank you. Now, I would like to turn the call back over to Jed. Jed?

[Jed Latkin:]

Thanks, Mike, and thanks for that summary. I really appreciate everything that you guys have done and I just want to stress that we need to keep the ball moving forward. Before I turn the call over to Erika just to go through some of the financial updates, I just wanted to direct everyone after this call to our website where our investors can see our brand new presentation deck that we'll be using going forward in the upcoming conferences over the next few months. It's important to note that this deck reestablishes for everyone our focus on getting the RA products through these last phases and into commercialization. You'll see a lot of new information there such as the size of the market that we're looking to go for and other parts of the different phases of trial that we're going to be working on. Now, let's move on to the financial updates. Erika?

[Erika Gibson:]

Our consolidated balance sheets, statements of operations and statements of stockholders equity have been restated as required for all periods presented to reflect the reversestock split as it occurred on January 1, 2018. Our consolidated statements of cashflows were not impacted by the reverse split. Total revenues for the first quarter of 2019 were $136,000 compared to $276,000 in the same period of 2018. The decrease was primarily due to a reduction in GRIT revenue related to FDIR grants from the NIH supporting Manocept development, offset by sublicensed revenue related to the adaption of new lease accounting standards effective January 1, 2019. Research and development expenses for the first quarter of 2019 were $741,000, compared to $999,000 in the same period in 2018. The decrease was primarily due to net decreases in drug project expenses including therapeutics and Tc-99m Tilmanocept development cost, coupled with decreased compensation cost resulting from net decrease salaries and headcount. Selling, general and administrative expenses were approximately $1.8 million in each of the first quarters of 2019 and 2018. Increased legal and professional services and increased lease expenses due to the new lease accounting standards were offset by decreased compensation and decreased investor relations cost. Navidea's net loss attributable to common stockholders for the first quarter of 2019 was $2.4 million or $0.24 per share compared to a net loss attributable to common stockholders of $6.7 million or $0.83 per share for the same period in 2018. Navidea ended the first quarter of 2019 with $2.1 million in cash and investments. And with that, I will turn the call back over to Jed.

[Jed Latkin:]

Okay. Thank you, all, for joining us this afternoon. There is great promise in what we're trying to do here and hopefully, that message has been conveyed today. If it's not, I would now like to open the call up for questions and answers. Operator, can you please?

[Operator:]

Thank you. We'll now be conducting a question-and-answer session. [Operator Instructions] The first question is from Jason McCarthy, Maxim Group. Please go ahead, sir.

[Jason McCarthy:]

Hey, guys. Thanks for taking the question and congratulations on the progress. Regarding the Phase 2b, could you give us a bit more color on what sort of endpoints and metrics you'd be using to assess image stability? And how long would it take to gather data for an individual patient? As in would you take multiple images of the same patient over time? Or would it be kind of a one-and-done?

[Jed Latkin:]

Thank you, Jason. I'll let Mike answer that.

[Michael Rosol:]

No worries. Sorry, Jed. This is Mike Rosol. Yes, good question. Let me see if I can remember what the heck you asked. You're indeed right. We're doing test/retest, reproducibility, repeatability. So the short version of that is we're looking at the variability. What does all that means? It means for example there will be times where the subjects get on the scanner, they are injected with our agent, we scan them, they get off the scanner, they get back on and we'll do that with the gap in between as well. So we're going to look at is this scan robust? Requiring one image and then another after they get back on and lay back down presumably in the same orientation. And then over time between one and three hours, we're going to see if that matters in terms of how the imaging readout looks. So there is robustness of getting back on and off the scanner immediately after a scan as well as a little bit of a time gap in between. Additionally for the patients with active RA, we're going to do that and then we're going to also call them back a week later and see how those scans a week later with presumably the disease being relatively stable, how that looks. We're going to see repeatability and reproducibility over short periods and a little bit longer. So with all of those data, we'll be able to understand how does a healthy control look like, what is the typical readout of a healthy person's joints, how robust is the signal, what's the variability, as well as the same kind of information about patients who have active RA. That should enable us to get confidence to obtain confidence in our goals of what a healthy person is versus a person with active RA, their joints -- and then that can also start to feed us towards what is our minimal detectable change, what kind of change in our signal can we attribute beyond statistical chance. Those are the metrics we're looking for in the arm 1 and 2. And again, we'll be doing interim analysis of these when roughly half of the patients are enrolled in arms 1 and 2. So arm 1 is the healthy controls, arm 2 are the patients with active RA. We'll have an idea halfway through and then of course in parallel, we'll be recruiting for the pilot arm of the Phase 3. Does that make sense?

[Jason McCarthy:]

Yes, thank you. It's very helpful. I'd also like to see if you could tell us how we should look at the market opportunity in RA? Are we looking at more of the broader market 1.3 million patients in the U.S. or there are some specific sub-populations where Tilmanocept could provide a particular benefit?

[Michael Rosol:]

Jed, I'll let you answer that.

[Jed Latkin:]

Well, I think it's an interesting question because what we're hoping to do is really have it used by virtually every patient out there because our idea is the patient comes in -- especially if it's a newly diagnosed patient and they want to know what the outcome is going to be on the treatment -- they would get the scan, the doctor will decide depending on the severity and the scoring that they get in terms of implementation, they'll decide what is the next course of action. So, 'Do we want to put them on a biologic?' If they put them on a biologic after a certain set period of time, they will then come back, get another scan and that will show whether or not there has been some change in the inflammation. So our hope is that virtually every patient type will be able to use our product. What we have sort of ascertained is that if you have really, really bad RA, have been heavily pre-treated and don't have any Synovial tissue left in any of your joints, the diagnostic is probably not going to work. So we feel that our optimal population are both the newly diagnosed and the sort of recently diagnosed and the ones who are on a stable treatment. That encompasses most of the RA market. We think that and as you'll see in our presentation that we just posted, we do feel that this is somewhere between a $500 million to $1 billion market because there will be multiple scans every year just to monitor the progress and as long as you're on stable therapy, you'll continue to be monitored be it every six months or every year depending on what your score is. So it will be a long-lived product as well. As long as your therapy is stable, you'll continue to get those scans. However, if we start to see an up tip in inflammation, then you sort of start the clock over again. You do that scan, you get the new score and then you put them on a new therapy, you then probably come back fairly quickly to see whether or not the new treatment is working and then continue onward with continued scans every six months to a year depending on how the doctor wants to do it. So as you can see, it's really going to be quite long-tailed product for us and we're going to capture the patient on day one and be able to keep them pretty much long term. It will get rid of the subjectivity of the knuckle squeeze, all that other stuff, and it will allow for doctors to make objective decision onto the severity of the disease. But we do feel that it will capture a vast majority of the market outside of those very heavily pre-treated patients that have had the disease for a very long time.

[Jason McCarthy:]

All right. Thank you very much and again, congratulations.

[Jed Latkin:]

Thank you, Jason.

[Operator:]

We have a question from Rick Drew [ph] who is a private investor. Please go ahead, sir.

[Unidentified Analyst:]

Good afternoon and thank you very much for the update on the clinical perspective. Jed, this goes to you or whoever you wish to pass it along to. Relative to the voucher for Krabbe [ph] disease, where are we in that process?

[Jed Latkin:]

As you know, we are in ongoing litigation with the former CEO of Macrophage, Dr. Michael Goldberg. What I would say is we are continuing to move forward on the development with the university of Connecticut, so that project is moving forward. I would say that we need to continue to spend money there, we need to continue to do the test, but I don't have a time frame for when we get to the next level on that. But we are continuing to spend material to the doctor of University of Connecticut and we'd continue to do those trials. I do expect that we should have data within the next couple of quarters. Unfortunately, the whole issue was sort of delayed a bit due to the legal situation.

[Unidentified Analyst:]

That voucher is then tied directly into what was to be Macrophage Therapeutics then? Is that correct?

[Jed Latkin:]

Well, it's part of the therapeutic business, yes. The voucher comes about -- it's the pediatric voucher program and what happens is when you go for a smaller orphan indication like we're looking at with Krabbe disease, you then get this voucher once you get the approval. So it would be part of the therapeutic business, be it as part of Macrophage, at one part of Navidea, but that is how the voucher would work. But just to remind you, Navidea does own currently 99.9% of Macrophage Therapeutics.

[Unidentified Analyst:]

That's a large number in the scheme of things in terms of ownership. I'm just a little flummox as to why such a small percentage is being held by the previous CEO as that would hold things up like that. But then again, I don't practice law, so okay. Thank you for that update then.

[Jed Latkin:]

Thank you, Rick.

[Operator:]

We have a question from Paul [ph] who is a private investor. Please go ahead, sir.

[Unidentified Analyst:]

Good afternoon, Jed, and the rest of your staff. First of all I want to thank you. I'm a long-time shareholder. I've seen the company go through some great changes. I like what I see here [ph], I like what I see. My question is twofold. Number one, how far out do we go before we can see some sort of revenue or income to the company? And to get to that level, what is the company going to do to raise revenues? But obviously with $2.1 million, that's not going to carry the company even past maybe another quarter or two.

[Jed Latkin:]

That's actually sort of a two-prong question...

[Unidentified Analyst:]

Hello?

[Jed Latkin:]

Hello?

[Unidentified Analyst:]

Yes, I hear you now. Are you there?

[Michael Rosol:]

...Navidea here. But I think Jed who is calling in, we might have lost Jed.

[Unidentified Analyst:]

Oh, no. We lost our leader. Okay, so can somebody pick up the ball?

[Michael Rosol:]

He might be dialing in.

[Unidentified Analyst:]

Yes, let's give him a moment. He'll dial back in. I'm sure.

[Michael Rosol:]

One thing we could do is I know there's a queue here. I want to be fair to Paul, but we could go on the next question and hold that one for when he calls back. Is that all right with you?

[Unidentified Analyst:]

Sure. No problem.

[Michael Rosol:]

We'll get to it.

[Unidentified Analyst:]

Okay.

[Operator:]

I am sorry about that gentlemen. We'll wait for Jed to dial back in. We have a question from Mr. Mike Russell [ph], private investor. Please go ahead.

[Unidentified Analyst:]

Thanks. I have a couple. Maybe Michael, you could answer until Jed gets back on. Can you give any more color on that NASH trials? The way it was awarded in the SEC filings? It could have been read that the NASH trials were a failure. That's why he would stop them early, but according to what you're saying today, I believe that the NASH trial actually wasn't a failure. You're just taking a different approach, too. Is that correct?

[Michael Rosol:]

Yes. I want to be careful here in what I say, but the next cohort was actually a lower dose cohort. So we decided that the image data were strong enough to qualitatively enable us to come to a decision where we decided it would be to our benefit to quantitatively address those images comparatively, the sulfur colloid rather than going further and having more patients recruited and waiting at just the lower dose of the compound. What I said there probably isn't quite clear, but the idea is that we're comparing the sulfur colloid to see if Tilmanocept gave us an advantage over imaging and healthy control people versus those with later staged liver disease, later stage NASH where their livers were fairly down the road towards fibrosis. Again without revealing too much, there were similarities and maybe some differences with the sulfur colloid and the Tilmanocept imaging. And we really can't say what those are if any, until we digest them and look at them robustly with quantitative analysis. But since the second cohort was at a lower dose, we thought we've got really good data here in terms of what we can quantify. So let's just stop here, think about it and quantify these data and then decide if we want to enroll that second cohort or maybe redesign the trial to look at earlier patients who have earlier inflammation, or earlier in the disease or what. So we'll make that determination, what next to do after we quantitatively analyze these data. Is that helpful?

[Unidentified Analyst:]

Yes, that is clarified. So it wasn't a failure, it's just a continuing evaluation?

[Michael Rosol:]

Exactly, yes.

[Unidentified Analyst:]

All right. My next question has to do with one of the Massachusetts General Hospital, Grinspoon. Grinspoon, his new trials. It was the one that I brought up last time and it's titled -- you didn't cover it -- 'The application of IV-99m for Manocept for imaging Macrophage-specific inflammation' that was supposed to be completed April 2019 and it had some interesting outcomes to it particularly identifying soluble on 163 et cetera biomarkers. This was in the HIV patients. Do you have an update on that one, Mike?

[Michael Rosol:]

Yes. What happened was -- let me fill in the gaps for the folks who may not have heard the first call and aren't as informed as you. The first trial that we did with Grinspoon was kind of a proof of concept where we did the subcutaneous root of administration because that's what lympocy Tilmanocept is approved for in HIV folks who are at higher risk in general for cardiovascular events versus Framingham Risk Score-matched [indiscernible]. Hello? I'll just keep answer. I'm sorry we're interrupted, I think by the moderator. So that was the Phase 1 proof of concept study and that we then carried on to what we're doing now of what Grinspoon is leading now and that's the IV route of administration. It's just on a small number of patients at this point and where it's going now is we're looking at those, the IV data, as well as the subcutaneous data as a whole and he's going forward with recruiting more folks. The central idea here though is that patients who are people who have so-called vulnerable plaques, those are the plaques, the atherosclerotic plaques in your body that are in your vessels that are thought to be more prone to rupture. Those plaques tend to be or are more enriched with activated macrophages. And there's a long body of literature building up to that point separate from the video and everything else we've done. Currently, there's a lot of research going on and the world of imaging trying to look at those activated macrophages using FDG PET. That's a PET scan where you look for glucose utilization. Main activated macrophages are glucose-hungry machines. However, so is much of the rest of the body. The heart itself is chewing up glucose all the time so you have this very high background signal -- latent background signal in those kinds of images. So the signal to background. The true signal that you're interested in versus background is low. We think Tilmanocept, because it specifically targets the activated macrophages will provide an advantage over FDG. So we have some early data. The short version of all this is Grinspoon is still collecting those data on the IV route of administration and we just spoke to them recently. He's very enthused, he's going forward and as soon as he got a good cohort of patient to flush out those data, we'll update you. Good?

[Unidentified Analyst:]

Okay. The second question, that was his second study that was ongoing, he's got a second study ongoing where he's imaging a macrophage specific inflammation looking at 163 and those with HIV-infected versus non. So it's just basically looking [indiscernible].

[Michael Rosol:]

That's the same thing. I'd have to look exactly at what you're looking at, but we have the NIH graph with him and that was the Phase 1 study with the sub-cu. The one you're speaking about is the IIS investigator initiate study that's going on now. That's the ID. So when he writes -- maybe he just wrote the title broadly. The macrophages he's looking at are those specific to atherosclerotic plaque and he's using the HIV-infected cohort because those are folks who are at high risk of plaque rupture versus the normal population. What he's doing is he's matching people with the similar Frammingham Risk Score who don't have HIV and saying, 'Can you detect the difference early on?' So the long term play here is to be able to detect these vulnerable plaques before rupture. Jed ordered to advance this ball towards further as Jed likes us to do in general. You're going to need to do some form of outcome study where you say, 'Hey, we saw some high signal intensity in these folks and indeed they were significantly more likely to have a coronary vascular vent than patients where we didn't see it.' But that is the same study and I think when you're mentioning 163 for example, that's a cell surface marker of macrophages. I think that's what you're referencing there. He's just using -- all of that language means what I've said. That he's seeing if Tilmanocept can help us identify vulnerable plaques before they rupture. And that would be a big thing for the world. That's what he is excited about and we are as well. Good?

[Unidentified Analyst:]

Okay, great. One more follow-up question on the science part. The Ga-68, it's been identified through Google Search and there's also a couple of other possible studies along the line or at papers written on that. One is usually in Ga-68 Tilmanocept in liver imaging and another in cardiovascular imaging. These are renditions to TB. Is there anything ongoing with Ga-68 in the liver, in the CV that you can disclose?

[Michael Rosol:]

Yes. Those specific ones you mentioned are not collaborations with us. That much I can say. In case it's not clear Gallium-68, it's a positron emitter and it's widely used in PET imaging. Again, we think there would be advantages as well as our collaborators do it like Mike S. in South Africa, to using a PET reporter versus a SPECT reporter or being able to swap it out and do either one. But yes, those specific ones are not ones that we are involved in.

[Unidentified Analyst:]

Okay. That's all I have on the scientific part for now. Thanks.

[Michael Rosol:]

Great. And I think Jed is back by the way.

[Jed Latkin:]

Yes, sorry about that. It seems that I got disconnected. I just wanted to follow up. I think, Mike, also the individual who we're working with on TB is also working potentially on the cardiovascular as was indicated in the paper that he was on. That is something that we'll certainly be looking towards as we continue to move forward with him in South Africa. And I think on the TB front, if we show what we hope to show on this, there really is potentially a lot of funding there due to the commitments by the Gates Foundation and others to eradicating TB, Malaria, other types of disease in Africa that we hope to really get involved with. I just wanted to revisit the question from before. On the revenue question, I think just to be brief on that answer, we can expect over time the European lymphocy revenues to grow. Obvoiusly that's out of our hands, that's more genus [ph] selling the product there. We are looking also at potential partnerships for lymphocy in Japan and in a couple of other areas. As you know, we're moving the ball forward in China, we're working towards the regulatory approval there. It's a little bit slower than we would like, but that's just the Chinese situation, that we hope they [ph] are a moving target. In India, we have gotten then the product that they need. They're moving forward with the approvals there. We are expecting that they will not need a trial there, so we can hope that they'll be selling that product some time within the next year or so. But more importantly, what we're really hoping to do on the revenue side or just generating money side is to bring in partnerships either on something like the Gallium program, a potential imaging partner on the rheumatoid arthritis because the way we've set up the trial, there will be one major imaging partner. That partner stands to benefit greatly because once the product gets approved, this is a partner that we'll then work with us on a global basis to receive every image, to process it within 24-48 hours. We're hoping for the shortest type, for the 24, we'll be able to maintain all the data and then this is somebody who's going to share in the revenues and stands to do very, very well over the long tail of the RA product. We're also looking and in discussions with several different individuals on distribution agreements within the U.S., we're looking at research partnerships within the U.S. on the rheumatoid arthritis. We're not necessarily looking to do a commercial deal right now. I think I have to really move back to what I said earlier today. While the negotiations continue -- and I understand this is something that I've spoken to many of you about and we continue to have a dialog on this, I'm not just looking to make a deal just to make an announcement. We're looking to make a deal that optimizes our revenue share, optimizes the right commercial partner, somebody who's going to distribute this and gain very good market share very quickly, but more importantly, it's going to benefit the shareholders. I'm not going to do a deal just to do a deal. If it means that we exercise the equity line that we have with Mr. Scott or down the road, look at other potential options, we'll do that in order to protect the value of this company and the value of the RA product and the future products. It's important to note that while we have these discussions, we continue to move the ball forward. The trial has started, we've enrolled the first several patients and we will seek to maximize the value of this RA product which we feel as the new presentation that's on our website right now shows somewhere between $0.5 billion to $1 billion product. We hope that eventually all newly diagnosed patients will use our imaging agent, all currently-treated patients who will be using our imaging agent -- that is our ultimate goal. And we want to make sure that it gets into the right partner's hand so they can really efficiently distribute it to as many people as possible. So I hope that answers the question. Operator, if there are any other questions, we can take those now.

[Operator:]

There are no further questions at this time. I'd like to turn the conference back over to the management for closing comments.

[Jed Latkin:]

First off, I want to thank everybody for the call today. Actually, it looks like another question just popped up into the queue. Jerry, can you get that?

[Operator:]

The next question is from Mike [ph] who is a private investor.

[Unidentified Analyst:]

Yes. Sorry. Somehow we got cut off. You were mentioning about the revenue. Last year, there was a lot of discussion on using non-registered biomarkers to generate any revenue. Do you see any cases where you're progressing with the 2b phases that there would be any potential to generate biomarker revenue from a non-registered use?

[Jed Latkin:]

That's an excellent question. I think the Phase 2b that we're doing, 32 is really where we feel we're going to get the most bang for our buck. One, because it's not really necessarily part of the approval process with RA, the FDA did not indicate that it was important for the main indication, but that it could have other usefulness for other indications and other approvals like the phenotyping and things like that. But for the purpose of the biomarker, the 32 is very important because it's going to get us pathological confirmatory data that we will then be able to use as we're moving the ball forward with the FDA biomarker group. The further down the tap we get with CD206 confirming that as a biomarker and get the images that are confirmatory on the pathology that will allow us to hopefully get a biomarker partner. I don't anticipate anything this quarter, but I think that as soon as we get 32 started and we start having that data coming in and as images start coming in, I am very hopeful that we'll be able to use those images to leverage into some sort of partnership where we're able to sell them clinical doses to use as part of whatever trial they're looking at. And these are some of the ongoing discussions we have, but we first need to get that data. I think one of the things that we did that was a little bit ahead of ourselves is we started talking about the biomarker before we had the pathology data. But we're going to have that with 32 and that should make us ready to start partnering people on the biomarker side.

[Unidentified Analyst:]

Last question, I hope it does not cause any conflict and if it does, I'm sure you'll tell us. The intellectual property rights to the therapeutics that we say the Navidea owns 99.9% of Macrophage Therapeutics, the intellectual property rights, are those under the control of the Navidea board of directors? Or are they under the control of who?

[Jed Latkin:]

I appreciate the question, Mike. Our obvious belief is one thing -- other people's assertions are other, but at this juncture, I'm going to defer that question or post some of the legal outcome. I'm not saying one way or the other. I'm just saying that I would leave that. I would leave that for the legal discussions but we obviously have assertions and there are other individuals out there that make their assertions as well.

[Unidentified Analyst:]

Okay. Well, congratulations on the 2b and moving forward.

[Jed Latkin:]

Thanks. Thank you, Mike. I appreciate it.

[Operator:]

We have another question from Scott [ph] who is a private investor.

[Unidentified Analyst:]

Hi, Jed. How are you doing?

[Jed Latkin:]

Well, thank you, Scott. How are you doing?

[Unidentified Analyst:]

Oh, I'm fine. Thanks. I got a quick question. It's in regards to the biomarker and what is the process of getting I guess the biomarker validated? Do you have to go through specific trials like a Phase 1 or Phase 2 or 3? I guess I'm a little confused. What is it that, 'Okay, hey, we got the approval on this biomarker. Now we can take it to market and sell it to so and so and start receiving revenues from it.'

[Jed Latkin:]

I will turn the over to both my regulatory and my clinical guys to handle that because they can say a little bit more because we have been actively working with this group that the FDA set us up with to get that CD206 validated. Mike or Bill?

[Michael Rosol:]

Yes. Can you hear me? It's Mike Rosol. I'll take a whack and then Bill can wrap it up. In any event, great question. We have to be careful about the terminology. I'm going to make certain that that I've specialized at validation and this case means what I think you think it means or you're referring to and that's validation, meaning registration by FDA as a biomarker for something. Because validation that's pharma thing says validation is sufficient for using in a trial might mean something different and that's the weight of evidence in the literature, the used cases and recognition along the road if you're thinking about a Phase 3 of what the FDA might consider registrable. And you don't necessarily have to have a registered biomarker. There's only a relative handful of those for registration. In any event, this registration process of the biomarker we think will give us validation that would then enable us to go to a pharma for example as Jed said and talk to them about implementing in parts of their clinical trials to give them informative data. It kind of adds to the gravitas of what we'd be bringing forward. But of course, they would do their own due diligence to look at the data and support of that as well as the FDA will. Maybe I'm not satisfying you yet and it might get worse. Here is the deal. The good news is the FDA, there's not a specific set of things you have to check off in order to get FDA registration. It's really considered on a case-by-case basis with the body of evidence that you bring to bear. Having said that, what is often needed are things like these trials that we're running the Phase 2b studies where we can bring a bunch of data together that says, 'Hey, this is what our imaging read out in our case looks like. Here is what the histal pap says. We align very well with the histal pap [ph] but we're doing it non-invasively. Now, you FDA, do you agree that with all of these evidence we've accumulated in our Phase 2b in this case, do you then say this is registered for this specific used case? Is it a biomarker in this case?' The short version again to overuse that phrase is as we accumulate data in our two Phase 2b, this will help us and some of it is necessary for us to go then to FDA to the final process of getting them to consider it as something they would register. Going now, what we're doing now is we're putting all our ducks in a row, we're defining exactly what the biomarker we're looking for for registration is and as I mentioned, it's as you said, the idea is that it would be used to help enrich trial enrollment by enabling pharma to do an imaging study and decide if this patient might benefit from this class of compounds versus not benefit. It would enable them to bucket their studies, enrich their trial enrollment and maybe reduce their sample size. We think it brings a lot of value and in our discussions with pharma up to date, they've felt the same way in general. In any of that, the process is we're preparing a used case document with them and we're getting help from this Critical Path Institute. We are also doing what amounts to basically a small grant application in a sense. We're preparing all the supporting data that we have gathered that is in the literature, about CD206 writing up our narrative and saying, 'This is what we think' and we're going to have to give them some of the data. In my opinion from these Phase 2b study to wrap the ball on it and get them to say, 'Okay, we agree with you. This is the thing.' So it's a process. It's not necessary -- in my understanding and Bill might see it differently -- is that there's not a specified, 'This is what you must do in terms of data to support this.' We know in general what kind of data they want and we're discussing with the clinical path institute what kind of data we think they'll want and we'll move forward with that. But as most of these things go, the beauty of it is there's a little bit of wiggle room and the bad news is there's a little bit of wiggle room. We'll keep you guys posted and as we go forward, accumulating data from the Phase 2b studies, we should be able to make the case more strongly. Bill, do you have anything to add to that?

[Bill Regan:]

Yes. Let me just add a couple of points here. Qualification of a biomarker by FDA basically is a good housekeeping seal of approval and as Mike said, what you provide in terms of data has a lot to do with the context of use that you're going for and want to have list it with the FDA as the use for the particular biomarker. That said, a lot of the data that we're collecting now to make our case, we are not obligated to have an FDA confirm qualification on the biomarker for it to be used. It's actually based upon the data that we have and other pharma companies looking at that, they could actually incorporate our biomarker into their clinical studies with any formal qualification designation by FDA. But obviously, they're not going to incorporate it unless we have data that's compelling about the use of our product in clinical study. It's a good thing that we're working with the institute -- the biomarker institute -- on this because they're giving us a lot of good advice. They gave us the advice that I just mentioned and actually before we have ultimate qualification could likely see some pharma companies who's in our biomarker in their clinical studies.

[Unidentified Analyst:]

So he only thing that you're lacking right now is there's not enough data to submit it to big pharma for biomarker use?

[Bill Regan:]

Yes. We need to have the context of use data to share with big pharmas to get them to accept the use of a biomarker in their clinical studies. That would be a one step. The second step would get a qualification designation by FDA which again is like the ultimate that you want to get and you can get it based upon the context of use and you can get qualification on more than one context of use, but it will go for one at a time.

[Unidentified Analyst:]

What is the time frame of getting that qualification? What is the time frame on something like that?

[Bill Regan:]

There are specified times for the submission and acceptance and then specified time for after acceptance. I believe it's six months after acceptance that they have to make a decision. It probably is a nine-month to one-year process from the time of the start of the [indiscernible] with the submission of the intent to seek qualification.

[Unidentified Analyst:]

And besides RA, what other diseases are you guys looking for to go to big pharma with the biomarker?

[Bill Regan:]

RA is one thing but it really is about the inflammatory process. It would be an inflammatory biomarker that we would be seeking. That is necessarily a disease-specific. Our data would be in RA, but if we could make the case that regardless of disease state, if we're tracking CD206 inflammatory process, then we'll be able to potentially use that in other types of diseases.

[Jed Latkin:]

And more importantly also as the discussions that we've had as I alluded to over the last several months since the beginning of the year, we've had discussions on RA, inflammatory conditions and cardiovascular, but also defers to prove using the product in the cancer setting. So the tumor microenvironment is something that is a very, very hot area as the immunotherapies continue to be used and our marker as evidenced by denomination last year [indiscernible] year with our liver-met tumor, we have a unique ability to be able to image the cam [ph]. And part of our pitch and part of the discussions that we've had with both pharmaceutical companies, universities and other research organizations was if you really want to get the best sense of the tumor microenvironment, use our product because you can get a very good image of what the microenvironment of the tumor. And being able to figure out the 'force field' that protects the tumor is going to be very, very instrumental on how effective a treatment is going to be. If the body's immune system can't get through the force field that the medicine can't get through and the body still doesn't know that the tumor is there because it's protected by an N2 force field, it's going to be very difficult to have an efficacious treatment. Our imaging agent which we're hoping to get to push to some of these trials will help show exactly what's going on in the tumor and the microenvironment and exactly what treatments potentially could or could not work. So that's a very big area and that's an area that we really hope to get involved with as soon as we get some more of the data and have some more of these meetings to show the compelling data that we're generating.

[Unidentified Analyst:]

That's my question. I guess it's a little frustrating because the technology that you guys have, these people should be beating down your doors for using it as a biomarker, I guess.

[Jed Latkin:]

It is, but remember, there are lots of different things within a trial. One, the trials are blinded so this could be used for patient-screening tool and I think it's not as effective as during the trial because you're never going to be actually getting a drug and who's not. But I agree with you, Scott and I think that is something that as we continue to show more data, most importantly the pathology data, that backs up the images that we have. So once we get the pathology data and we showed then what we're showing is in fact what we've seen in the images, do you think will be able to make a more compelling case and be able to bring in some partnerships and some revenues on that space.

[Unidentified Analyst:]

Okay, great. Thanks for taking my call. Congratulations on your progress, guys.

[Jed Latkin:]

Thank you.

[Operator:]

At this time there are no further questions. Would you like to have a closing remark?

[Jed Latkin:]

Excellent. Thank you, Jerry. I just want to thank everybody for calling in today. I look forward to speaking with you guys in the future. I encourage you to go to the website and look at the new presentation. We will be at some upcoming conferences, be presenting and I look forward to speaking with many of you over the upcoming weeks. Thanks again and have a great night.

[Operator:]

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation and have a good evening.

[Jed Latkin:]

Thank you.