Navidea Biopharmaceuticals, Inc.
Q4 2019 Earnings Call Transcript

Published: 12 Mar 2020

[Jed Latkin:]

Thank you. Good afternoon and welcome, everyone, to Navidea's fourth quarter 2019 earnings call. I am Jed Latkin, Chief Executive Officer of Navidea Biopharmaceuticals. This call will cover Navidea's financial and operating results for the fourth quarter of 2019, which ended on December 31, 2019, along with a discussion of goals and milestones for 2020. 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 Chief Medical Officer, Dr. Mike Rosol and our Director of Finance and Administration, Erika Eves. 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 the Securities Act of 1933 as amended and Section 21E of the Securities and Exchange Act of 1934 as amended that concerns 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 goals, 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 commercialized diagnostic products, we may be unable to execute our plan of operations. 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 IBD 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.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 expectations, estimates and projections about the company's business, based in part on assumptions made by managementThese 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.I want to start by saying that our comments this quarter will once again be primarily focused on our ongoing preclinical and clinical research efforts.While we have a lot of things going on at the moment, I want to keep the discussion focused on what we are focused on which is bringing the RA product to market. I am very pleased with the progress that the company has been making on many fronts. Dr. Rosol is going to update you on several key milestones that we have hit over the past several months and I anticipate other major positive announcements over the next month or two.I have always guided the street and our owners, you, the loyal shareholders that we would seek out the right partner at the right time and not let funding be the main deciding point. We have really accomplished a lot on the clinical side and on the funding side as well. We creatively limited the dilution and regained compliance with NYSE by raising approximately $7.6 million about four weeks ago. This deal would have been considered a good deal in any market but given what is going on around us, it was truly a remarkable win for the company and its shareholders. We now have runway and time to complete the 31 trial and complete our partnership discussions.I can honestly say that I am more enthusiastic today than I have ever been in the four years that I have been with Navidea. As we narrow down our list of potential partners, I assure you that we are getting closer and closer to the finish line. We have also been moving on a number of different fronts in various areas of the business to bring more of our products front and center. The best news is that with all the deal making in the radio pharmaceutical sector, it seems that the current market ructions are having virtually no impact on the company's appetite for transactions.I also once again want to commend my finance team, my regulatory team and certainly last but not least the clinical team for all the hard work they have been doing. We closed arms one and two faster than I had ever expected and have seen an incredible pickup in enrollments on three as well. We are now moving forward with the independent reads to confirm everything and we will be speaking with all of you again very, very soon.With that, I would like to turn the call over to Dr. Rosol for more details on our development front. Mike?

[Mike Rosol:]

Thank you Jed and hello everyone. As always, I am happy to participate in today's call and provide you with updates from the clinical side. So I will begin with the progress on our currently running Phase 2b trial in RA. I am pleased to announce that we have completed enrollment in both arms one and two of this trial and are more than halfway through recruitment in arm three. Current projections are that this trial will complete this year as scheduled.In arms one and two, you might recall, we are evaluating the repeatability, reproducibility and stability of our tilmanocept imaging readout in both healthy subjects and in patients with active RA. And in the third arm, we are mirroring our upcoming Phase 3 study in order to enable us to obtain data to help validate our power calculations for the Phase 3. As announced previously, the interim results on the first two arms were very positive, demonstrating low variability of imaging, both within day and over time.Those data demonstrated that tilmanocept can provide robust, quantitative imaging in healthy controls and in patients with active RA and that this imaging is stable, reproducible and can define joints with and without RA involved inflammation. This is fundamentally important to advancing our technology into a successful product in RA. We have written an abstract on the results of the first interim analysis and submitted it for presentation at an international conference.The next milestone is the interim look at the arm three data. Our plan has been to wait until about half of the arm three subjects had their second imaging event at five weeks post initiation of anti-TNF therapy. We are well on our way to this milestone and expect those next image sets to be acquired in the coming weeks. We will then complete analysis of these data and have an idea of the magnitude of change we might expect to see from baseline scan to five weeks post therapy start in RA subjects.I want to make sure to give credit to our clinical trial team who worked diligently literally day and night in order to keep things moving as efficiently and rapidly as possible while maintaining quality and integrity of data and provide evidence to you to let you know that the team here is performing at a high level. One good example of that is in our recruitment rate. Evidence suggests that typical recruitment rates in North America and Western Europe for Phase 2 and 3 trials in RA are about 0.4 subjects per month per principal investigator. This means it typically takes about two-and-a-half months for a specific site to recruit one subject in these trials.Our recruitment rate in our current trial is 1.2 subjects per site per month. And our arm three rate has increased significantly in the last several months, as Jed alluded to, so much so that we are optimistic that we can complete enrollment into that arm before too long. With that rate of 1.2 per month per site, we are enrolling at about three times the typical rate across RA trials and across pharma companies, both large and small. And all of that with a relatively lean but obviously efficient team and a protocol on arm three that is actually a difficult one to recruit into compared to many other RA trial designs.We will continue to enroll into arm three of this trial and are planning for the start of the Phase 2b comparative study of our imaging readout to histopathology from the joints of patients with RA as well as the Phase 3. We are well positioned for the Phase 3 since most of the sites that are currently recruiting into the ongoing Phase 2b will be rolled right into that trial. And so the logistics and strategies for recruitment will be established.Our current plan is to initiate that comparative imaging to histopath Phase 2b study in the upcoming quarter. This study will primarily enroll subjects in the U.K. where our principal investigator, the world's leading physician in synovial tissue biopsy of patients with RA is located and where there is a network of academic centers that also have specialists in this domain. We will have at least one site in the U.S. as well.We have spent many months preparing to initiate this trial and are well on our way to having all needed approvals and contracts in place to begin. We have pushed out the start of this trial while we made sure that we would have the financial resources to run it adequately, while also finishing up the current Phase 2b and beginning the Phase 3. Recall that this Phase 2b trial isn't required for FDA approval in the initial indications in RA that we are 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 possible pharma partners for its use in trials of their new RA therapeutics. Our plan at this time for the Phase 3 is to be ready to begin following meeting with the FDA with our interim analysis one and two results in hand so we can be sure we are fully aligned on the Phase 3 objectives and targets and that first patient, first visit should happen later this year.We have also been working to further refine our quantitative method for determining the amount of localization of tilmanocept in the joints of both healthy subjects and patients with RA. As you know, this is our key readout and the foundation upon which all of our indications in RA rest. At the time of our first interim analysis, we had evaluated both the method originally proposed following our prior Phase 2 study as well as a modified method we developed as we looked at all the new data rolling in. It was the modified method that provided the best results. We believe we have made significant improvements in the analysis method and will continue to refine it with data from the currently running trial in preparation for the Phase 3.Directly related to this, we recently converted the so-called tilmanocept uptake value provisional patent application to an A1 application. As part of this conversion, we made significant revisions to the original claims with our newly discovered improvements in quantitative methodology. The goal, of course, is to optimize the imaging read method to provide the lowest variability, most robust quantitation possible.In other indications, we have now completed patient enrollment and imaging of all subjects in our NIH funded study in Kaposi's Sarcoma. As outlined in the study's title, in this trial we sought to evaluate the safety of escalating doses of tilmanocept by IV injection and perform a comparison to subcutaneous injection in HIV patients diagnosed with KS. You might recall that KS cells express the CD206 receptor that our technology targets. And so from both a diagnostic imaging perspective as well as a therapeutics perspective, it makes sense to pursue it as an indication as well as the continued impact it has on HIV-infected people, both in the U.S. and in particular, throughout Africa.We have had our site close out and database locked in this trial and are waiting the final biopsy results. No safety signal was detected and we completed a comparison of subcu injection to IV injection in these patients as planned. Final read of clinical assessment to imaging will take place shortly. Qualitatively, what we have seen is excellent localization of KS lesions and visualization of the lymphatics. Following full analysis on wrap up, we hope to open up discussion with FDA about the path to an sNDA in KS before too long.We also have the atherosclerotic plaque imaging study at MGH in Boston. Dr. Grinspoon there is continuing to run this investigator-initiated study that we provided supportive funds for to look at the ability of tilmanocept to detect plaques enriched with activated macrophages. This is building upon the work we published with them already that provided evidence supportive of this in HIV-infected patients and Framingham Risk Scores matched healthy control. We have regular update discussions with him and his team and they have completed an internal milestone in the study looking at imaging results via different routes of administration.The data we have seen are in line with the earlier published work and supportive of the hypothesis that tilmanocept can provide an excellent signal to background read of so-called soft plaque in the aortas of these patients. We are having internal discussions on what specific indications in cardiovascular disease to go for and what the next trial might look like. And we have engaged with external possible partners as well to help support these studies. Once our trial plan outline is finalized, we will request a meeting with the FDA to discuss.This work also aligns, of course, with the Phase 1 grant we have with the NHLBI that we have in support of our collaboration with the University of Alabama at Birmingham, looking at Gallium 68 tilmanocept for PET imaging of plaques. Preclinical studies are ongoing and we recently received the first data set. As we outlined in our press release about this, this project fits in with our existing pipeline of atherosclerosis and will enable us to test tilmanocept as a PET imaging agent and compare it to F18 FDG PET imaging, which is a widely studied method of looking at macrophages and plaque, but one which we believe has significant deficiencies in comparison to tilmanocept.On the therapeutic side, we have preclinical study plans in place and have had our kickoff meeting for the research collaboration with IMV, the clinical-stage immuno-oncology company that we recently announced our research agreement with. Remember, the purpose of this collaboration between our two companies is to conduct preclinical studies to evaluate the combinatory effect of our proprietary activated macrophage targeting compounds along with their T-cell activating platform. Based on our discussions with IMV, I would expect the first study to begin shortly. Along those lines, we are having good discussions with other players in the therapeutics space about possible collaborative efforts.Using funding from our NIH therapeutics grant, we have made significant steps towards synthesizing a robust, reproducible and scalable therapeutic construct that can then be tested in human studies. We have also made significant strides in the making of next generation of our molecule that we think will provide for improvement in certain diagnostic and therapeutic applications. We also have received positive results from our mechanism of action studies of our doxorubicin containing construct in cell culture and in preclinical models and we aim to hold a pre-IND meeting with the FDA this year. We expect to submit manuscripts for publication this year covering these mechanism of action studies as well as the synthesis work.This month, we will be converting another provisional patent application, in this case a therapeutic patent to an A1 application. We expect to file at least one new provisional patent application this year on improvements in chemical synthesis. Finally, we have also initiated work on new therapeutic constructs with payloads other than dexamethasone and doxorubicin.So those are just some of the highlights of the last quarter that we wanted to touch on through this update. We remain largely focused on the RA pipeline and moving that towards submission to the FDA, while we continue to support and push for 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, our CEO, Jed, for allowing us the space and opportunity to achieve these goals and our network of clinical trial sites and academic research collaborators for all of their hard work. Thank you.Now I would like to turn the call back over to Jed.

[Jed Latkin:]

Thanks Mike. Now let's move over to the financial updates with Erika.

[Erika Eves:]

Thank you Jed. As a reminder, our consolidated balance sheets, statements of operations and statements of stockholders equity have been restated, as required, for all periods presented to reflect the April 2019 reverse stock split, as if it had occurred on January 1, 2018. Our consolidated statements of cash flows were not impacted by the reverse stock split.Total revenues for the fourth quarters of both 2018 and 2019 were $119,000. Total revenues in 2019 were $658,000 compared to $1.2 million in 2018. The year-to-year decrease was primarily due to a decrease in license revenue related to the sublicense of the company's NAV4694 technology, which included a nonrefundable upfront payment in 2018, coupled with a reduction in grant revenue related to Small Business Innovation Research grants from the National Institutes of Health supporting Manocept development.Research and development expenses for the fourth quarter of 2019 were $1.7 million compared to $854,000 in the same period of 2018. R&D expenses in 2019 were $5.3 million compared to $4.2 million 2018. The increase was primarily due to net increases in drug project development expenses, which includes Manocept diagnostic and tilmanocept development costs, offset by decreased Manocept therapeutic and NAV4694 development costs.SG&A expenses for the fourth quarter of 2019 were $1.2 million compared to $1.4 million in the same period of 2018. SG&A expenses for 2019 were $6.3 million compared to $7.7 million in 2008. The decrease was primarily related to the resignation of the company's former CEO in 2018, coupled with net decreases in salaries and bonuses, investor relations, general office expenses and taxes and offset by increased legal and professional services, primarily related to the litigation with the company's former CEO.Navidea's net loss attributable to common stockholders for the fourth quarter of 2019 was $2.8 million or $0.15 per share, compared to $3.2 million or $0.33 per share for the same period in 2018. Our net loss attributable to common stockholders for the full year 2019 was $10.9 million or $0.76 per share, compared to $16.1 million or $1.89 per share for 2018.Finally, Navidea ended the fourth quarter of 2019 with $1 million in cash and investments. As disclosed in Navidea's recent filings with the SEC, the company executed funding transactions totaling $7.6 million in proceeds during the first quarter of 2020.And with that, I will turn the call back over to Jed.

[Jed Latkin:]

Thank you Erika. Once again, I just wanted to thank everybody for calling in. I want to thank the team for the all the hard work and more importantly, I just want people to know how hard everybody is working here, how diligent our clinicians have been working on enrolling more and more patients into study and really just how excited everybody is here to get the other trials up and running and really move this product forward into the approval stage.With that, I would like to turn over to the operator to open up the Q&A.

[Operator:]

Our first question comes from the line of Jason McCarthy with Maxim Group. Please proceed with your question.

[Mike Okunewitch:]

Hi Jed. This is Mike Okunewitch, on for Jason. Thanks for taking the questions. So the first question, I have a couple here. I would like to see if you could kind of help breakdown the Tc-Till pathway forward, particularly surrounding the 32 Phase 2b study. So that one looks pretty interesting. I would like to see what the market for Tc-Till looks like in the minimum case? So like just the 31 and 33 studies versus if you can actually demonstrate that correlation to immuno histochemistry with the 32 study?

[Jed Latkin:]

Well, I am going to take a part of it and then I will ask Dr. Rosol to the other part. In our estimates, so we have been going over market sizes and that's something that's in our presentation. We have those two bubbles. We do think that conservatively in North America alone, 31/33 gets us in the $0.5 billion range and then opening up the phenotyping and everything else probably gets us somewhere into the $1 billion to $1.5 billion range in North America alone.Just remember, you are looking at a base of $50 billion in revenues for the RA therapeutics, a market that really doesn't have any diagnostic that is really objective. And more importantly, the way that we have already been working in terms of the pricing, in how aggressive we are going to really market it, we do think that we are going to be able to capture that share. So we think that 31 really opens it up, especially since to the anti-TNFs are the de facto, the main go-to. But 32,e specially with some of the stuff that Dr. Rosol is going to talk about in a minute, really, really widens it because there are so many different options out there.I think what our investors really need to understand, I think it's still lost on the stock, I guess because of the history and all the other stuff, is the fact that this is an area that has lots and lots of treatment options, probably the most treatment options of anything out there and yet there is no real diagnostic. All the treatment options are expensive. All of them have side effects. And more importantly, all of them have different mechanisms of action. And without a proper diagnostic and monitoring tool, you are flying blind. And so let's give everybody an anti-TNF to start or let's start with something else. Let's do something else. But the way the insurance companies push the anti-TNFs because of their tiering, know our diagnostic is going to change all that and it will change it for the better.So a lot of the pushback is, well, won't the Humira people possibly be angry? That's actually the exact opposite of what our diagnostic is going to do because our diagnostic is going to say simply those who are getting better stay on their current treatments. Those who aren't get them off of it as soon as possible so they are not exposed.Remember, the fears going on right now with Coronavirus is, mainly for individuals like myself and other people on biologics, because you have a compromised immune system. And so if your immune system is compromised and your medicine is not working, why are you on the drug in the first place? Our diagnostic is going to be able to eliminate that and that's why we are so excited and that's why the addressable market is so large.Now Dr. Rosol could share a little bit more light on the sort of the differences in how the market changes with those two sets of trials.

[Mike Rosol:]

Yes. So Jed did a very good job there. So 31, the currently running Phase 2b as well as the Phase 3, we are looking at a change from baseline to five week scan and whether or not that is predictive on outcome. What the comparative study to the pathobiology will give us is the pathotyping or subtyping, the mapping to those different subtypes based on just one scan, potentially the baseline scan. And so that looks like it's gaining an importance. And why is that?It turns out that from this plethora of different biologics and different therapies that are out there, there are a growing number of publications out there suggesting that different pathotypes or subtypes respond differently to different biologics. And if we can tell a physician, a rheumatologist, at the time that the patient comes and gets the first scan, what subtype of disease this particular patient might have, then they might be able to rule out, for example, an entire class of drugs. The insurers would love that. The patients would love that because they wouldn't have been put on one of these biologics that potentially has very severe side effects. And of course, the physician would like it as well because you get the person on the right drug sooner rather than later.And this is all throughout those different how pathotypes. So it turns out that the more we can give the physician information about the subtype of disease, the better that physician can then prescribe a medication for that person along with the fact that we can then monitor if the patient is receiving a benefit from the particular drug that is then prescribed So as Jed said, that really opens up and expands the market quite a bit.

[Mike Okunewitch:]

Yes. Thank you. And then actually I would like to tie that in to the enrollment speed that you guys are seeing because it is pretty impressive. I like to see if you could comment maybe on some of the reasons why it could be going so much faster than the average? Especially considering that there are typical difficulties with cross disciplinary therapies and diagnostics, could this be indicative the unmet need in the market out there for a reliable imaging agent that can help inform treatment decisions in RA?

[Jed Latkin:]

So I am going to let Mike handle that. But before I start, I thank you for that question and I am glad that you, as an outside person, has recognized the enrollment speed. Because I myself don't. Because I am always getting on the clinical team constantly and having been shown the numbers and looked at the averages, I am very impressed with the job they have done, but that doesn't mean I am happy with them. I still continue to yell at them every single day and make sure that if we don't have patients enrolled every day, it's not a fun day the office.But I will let Dr. Rosol handle the rest of that.

[Mike Rosol:]

Yes. This is Mike. We don't rest on our laurels here because they are gone the next day. No, I appreciate it, so yes. So that's a great question. So I think you have hit upon something there. So there are two sides to this answer. One is, we have an experienced clinical trial team who not only have done work with Navidea and in our first RA trials but in the field in general. And so there is a lot of experience here and expertise in how to engage with sites, how to choose the right sites to engage with and how to continue the engagement process because you really need to, there's kind of a fine line of being talking to the sites, communicating with them from the PIs down the coordinators down to the staff who may be do the actual exams themselves, the imaging exams, for example and bothering them too much.So I think this group is really good. It has been really good at figuring out that happy middle, that place where we keep the PIs engaged. We let them know that we are thinking of them. It's important to us as well as the staff kind of downstream from them. And the second half of this is exactly as you said, what we are seeing is a recognition, both from a nuc med side, the imaging side as well as from the rheumatologists that there is a need and an opportunity here.The rheumatologists see the great need for their patients and in their practices and every time we speak to them and we speak to them all at least monthly, the PIs themselves, that is. We hear this from them and how they are excited about this. And they ask us how we is the recruitment going? what can they do to help increase it? We learn from them and they learned from us and from other sites that we bring that information from other sites to them.And then on the nuc med side, they are interested in having another tool in their toolkit, right, to apply and to use as nuclear med physicians. And so they want to play a role in this as well and so there are excited about that. So indeed, we have got a really good team here who know what they are doing and who engage the right sites and engage them appropriately. And then we got an excited group of PIs, both on the rheumatology side as well as the nuc med side.And yes, I have some bias here, of course, but this team is really, I have been around the field for a while and I have seen teams in large and small companies and this is kind of an A-Team here, I think, that's doing a really bang up job. And so we want to make sure we give them appropriate credit.

[Mike Okunewitch:]

All right. Yes. Thank you for that. I just got one more, kind of more of a housekeeping question. I would just like to confirm some of the timelines. So for arm three, you guys said that you met that 50% enrollment mark and you should have the raw data coming in the next few weeks. So should we expect to see that actual data around mid-2020 or so? And then when are you anticipating the full data from 331?

[Mike Rosol:]

Yes. So indeed, we are just over half of the subjects enrolled in arm three and we are waiting on just a handful, a small handful of those to have their five week scan. Several of them have had their 12 and 24 week scans which will only be helpful for us in terms of looking at these data. So the plan is, once those roll in, in the coming weeks and we are actually going to be working on it before then, but of course once all the data are in, then we will crunch those numbers, give them to our statisticians and that will take, all of that, the final number crunching, the statistician analysis will take some weeks. I don't want to promise on timelines there, but we will do our best. We are setting up things so that we can achieve our goals as rapidly as possible. We try to do things smartly and efficiently here. So the statisticians are ready and waiting. They know what they are going to receive. They have already got the programs written. So we have got all these pieces in place already. So they will be ready once they receive the data to do things rapidly. So yes, it will take some weeks or a matter of a couple of months or so but, give or take plus or minus there some number of weeks. So that will be in. It looks like, if we get the -- at the rate we are going in terms of recruitment and enrollment into the arm three, we optimistically think maybe we can get all of the subjects enrolled maybe by the end of April, right. Again, don't hold me to it but that's the way things are looking as of this moment on this phone call that that is achievable. So then, if you remember the protocol design, we have got some maximally a six-month follow-up scan in those patients, if they don't drop out of the study earlier because they have gone off their anti-TNF alpha and they might. About half the subjects we expect will go off earlier. So if they follow-up that way, then we would have six months plus April, right. So we imagine all those data are going to be in by the end of this year. And then we will do our analysis of the full data set of arms one, two and three and then we will write up our clinical study report and you will be one of the first to know about it. You, the royal you.

[Mike Okunewitch:]

Well, thank you very much. I am looking forward to any future progress. Thanks for taking the questions again.

[Mike Rosol:]

Thank you.

[Jed Latkin:]

Thank you.

[Operator:]

Our next question comes from the line of Vernon Bernardino with H.C. Wainwright. Please proceed with your question.

[Vernon Bernardino:]

Hi guys. Thanks for the question and congrats on the progress. It looks like you have got a lot of things coming up as far as the Phase 2b in RA and definitely looking forward to the mid-2020 readout. So my questions were also related to enrollment rate and the three times typical rate. So congrats on that to the team. It sounds like the experience pays as usual. And I guess, related to the question that the prior analyst asked. If you can expand a little further on the unmet medical need there. It seems like it could translate to market opportunity. Have you had additional thoughts as to what that may translate into? Or is that already built into your expectations as far as the market opportunity is concerned?

[Mike Rosol:]

I think it's built in. And Jed can comment on this further. We have known for quite some time that there is a great medical need and our KOLs that we have contacted over the last several years in the rheumatology space have told us about that. And so I think in our models, we have built in a fairly rapid growth rate that actually is conservative based on our discussions with these rheumatologists and our experience in this kind of trial. So indeed there is a great medical need.I mean, just to revisit this and maybe you already understand this well. Right now, in the treatment of RA, it's a trial and error approach, right. Some of it is dictated by cost. So very often, for example, in the U.K., you must put a patient on methotrexate even though there is a decent chance that that won't do a bit of good. But because it's super cheap to put a patient on methotrexate, you have got start them on that. And then you have to wait a few months to determine if that is even working. And then you can seek approval to go to a biologic.That is basically been the model in the U.S., although some health insurance companies are starting to recognize that may be going through these cheaper non-biologics isn't always the best case scenario, even for them in their own cost burden. So we are hearing more from rheumatologists that there is some flexibility there. But really, they are kind of blind here. They are going on kind of sense of smell.So it's trial and error of different drugs. And you have to wait to see if it's working. About half the time, these drugs, any particular drug won't work on any particular patient. And then you won't know that for maybe three to six months and bad things are happening in that time period potentially to the patient and so things might be getting worse.And then you have to repeat this again with another trial and error. You have learned something from the first time. So maybe you go to something else. But they are really shooting in the dark. And so rheumatologists are very excited about this and I think we are seeing this played out in our clinical trial enrollment rate.

[Jed Latkin:]

Yes. And it's a good point because I think that as a lot of our shareholders and I can see the list on the call, everybody who has dialed in and has been involved in the company for a long time, this is something that has really progressed over time to just looking at diagnosis, just looking at that to realizing working with the KOLs, the thing that we are stressed when we talked with everybody is that when we got Lymphoseek approved, I wasn't here, but it was sort of a different pathway.It's a great drug. It remains a great drug. It's growing nicely in the U.S. We are looking forward to having some growth in Europe in the very near future as well. But more importantly, it was not necessarily done the right way, as in we didn't get the right KOLs when we were doing the trial. As we have grown with these trials, it's all because of what we got as a feedback from our KOLs, what would they prescribe, what do they want and that's how we have taken this drug down the path that is going down.It's very different than what we were talking about just a few years ago, which is why the Phase 2 was structured differently than it probably should have been. But the way we are looking at it now, it's something that is creating a lifetime value of a customer that's what the KOL wants. And also, we are taking the next step by making it all digital, as you know. And so this allows for patient portability but it also allows for really to be able to build on using all the great digital stuff that's out there, using all the innovation and being able to then have this databank that will serve the patients well and serve the product well as it grows and more and more data comes in.So this is seriously something that is going to grow over time. We do not actually factor in the value of the data into our estimates. That's one thing that we are keeping a very conservative look at by not actually considering the value of it at this juncture. But we understand that the monitoring aspect of things is really what all the KOLs want and that's why the trials are structured the way they are.

[Mike Rosol:]

Yes. This is Mike. That's exactly the right point that Jed made. The trial design itself as well as the Phase 3, we incorporated the feedback from the KOLs and this is the kind of trial that they all have focused on and said this is what we need, down to the imaging assessment time points. Their is a virtual unanimous agreement on the design of this trial. In fact, I think it is unanimous which is amazing and they are all very excited to see the results. So there you go.

[Vernon Bernardino:]

So I guess the three times typical rate is driven by tilmanocept and this can likely be translated into real life upon approval?

[Mike Rosol:]

Yes. My expectation would be, the fact that they are so excited and enthused about this and working so hard to recruit should translate into what they want to implement in their clinical practice, absolutely.

[Vernon Bernardino:]

Terrific. That's very exciting. And then my other question is, you had mentioned conversion of the tilmanocept uptake by quantitative image analysis provisional patent to an A1 patent application. Is there perhaps an idea how that could translate into like a market opportunity, if anything?

[Mike Rosol:]

Yes. So that quantitative method is actually the nuts and bolts of what we will be offering. So that is the means. That forms the foundation of the algorithm that we will be employing through our central reading laboratory to read these images. So it plays an integral role in the product itself in RA. And as a little bit of a tease, it's written broadly and often the fundamentals of it are broad enough that it actually might have significant value in other domains related to imaging quantitation. And I will just leave that at that.

[Vernon Bernardino:]

Terrific. Very exciting. I am looking forward to the data in the next several weeks and yes, the exciting progress of the tilmanocept Phase 2b into Phase 3. Congratulations.

[Mike Rosol:]

Thank you.

[Jed Latkin:]

Thank you Vernon. Next question.

[Operator:]

Our next question comes from the line of Michael Liu, Private Investor. Please proceed with your question.

[Michael Liu:]

Thank you for taking my call. Good afternoon gentlemen. So I have two different questions. I guess the first question is pretty short. I would like to know whether Mr. Scott or any entity or person affiliated with him was the purchaser of the Ohio judgment that the company disclosed last month?

[Jed Latkin:]

He was not nor was it any entity affiliated with him.

[Michael Liu:]

Okay. Thank you very much for that. The second question is a question management is probably tired of getting and I understand that management has said on several times that they will not make a deal with respect to RA with any partner that doesn't recognize the full value of the potential product. But I guess from sitting here as a shareholder who has been in this stock for a significant period of time. I guess what I am trying to understand is why it seems like deadlines keep getting pushed out. In the Q2 call back in August of last year, I think management said that securing a partnership with the right partner under the right terms is a primary goal for the company still in 2019. Then in October when the company announced the interim results, I think things were said such as we received quite a lot of inquiries. It's assisted in moving the ball forward. This should lead to other positive things in a very quick manner. On the Q3 call then in November a couple weeks later, I want to assure all our investors the best is yet to come. We have made major milestones on the horizon. We will do everything in our power to make sure we achieve our goals in a timely manner. We are not going to let anything slow us down. I mean I could go on and on. But I am just trying to understand, why it seems like these deadlines keep getting pushed out? And I guess one other related question possibly for Mike is, also on the Q3 call, I believe he said that the start of the Phase 3 does not have to be when the Phase 2b is over and the company was expecting to stagger those two results. And if I understood comments earlier today, that has now possibly changed, that the company would like to finalize the Phase 2b trials before initiating Phase 3 or really finalizing any partnership discussions. So I am just trying to understand why these deadlines seem to keep getting pushed out.

[Jed Latkin:]

Michael, thank you for the question. And so I will take the first part and I will let Dr. Rosol handle the second part. I would say that you are correct. This is something that we have been talking about. We have had discussions, I did, for full disclosure, I thought about a year-and-a-half ago we were going to have a deal. In the end, the terms I thought were not appropriate for what we wanted. We had another offer which was pretty good with a very large company.But once again I think the issues with what we have gotten offered so far and this was a year ago not now with what's on the table today, were more of the, you are running out of money. You can't finish this trial and there is no way you are going to be able to issue any equity. There is no way you are going to be able to raise any money. You are screwed. You know, let's make a deal.And that's just not the case. I mean we have been able to find investors, get more investors, bring more money to the company by thinking creatively. And now I can tell you that the term sheets that are on the right now are for bigger numbers. We have multiple companies doing third-party paid research now on the company. So third-party valuations of the product to confirm that and one of those company has actually confirmed what our numbers are. Unfortunately, they pay for it. So we don't get access to that report but they have confirmed it and we are further along than we have ever been.And the numbers have all been discussed and we said, this is what we want. This is the terms of the milestones that we want and this is what's going to take to do that. And we are not going to waiver off of that. I am not, I really, really, you know strenuously want to say that we are not going to make a deal just to make a deal. We have had that opportunity. We have said, no, thank you, to a few parties already.And we are in discussions right now with the ones who are the most interested. And those terms, I think are quite favorable for us and for the partner as well because we do believe there is a lot of value in this product and the partners that we are talking to understand that and we are really getting very close to that announcement. I mean I think that unfortunately the one thing as being a little company versus a big company, we are somewhat at the whim of Board votes, internal meetings and these independent third-party valuations. But with all of those coming to an end, I do expect that we are going to have something to discuss with the market in a short order.Now I don't want to be like the experts with Alan Greenspan's financial statements and everybody analyzing every single word and saying, well, if you say that it means you know two weeks or whatever. I do expect to have something within the near-term. And that's why I said in my opening remarks, within the next two or so months.

[Michael Liu:]

Okay. Thank you for that.

[Jed Latkin:]

And I will let Dr. Rosol handle the other side of the question, unless you had a response.

[Michael Liu:]

No. I appreciate the candor and the response.

[Mike Rosol:]

Yes. So thanks Michael, this is Michael. Nice to speak with you. So good question. The Phase 2b, we are still planning to stagger these, right. So it is not the case that we are -- and I apologize if I was not clear. We are not waiting until the Phase 2b that's currently running is completely finished or all the data are in before we start the Phase 3. Rather, what we are doing is, we are waiting for both of the interim looks to be fully in. So the first one that we announced in October as well as in the one that relates to the arm three that we should be having coming up fairly soon.Then, once we have looked at those data, what you have to do, you request a meeting with the FDA. The kind of meeting this is, there is a minimum of 60 days between the time you requested and the time they give it to you. It doesn't have to be at 60 days. But that's the minimum. And so we don't want to ask for that meeting until we have the data in hand and know what the heck we are going to be talking about really and finally fully want to do this smartly.So what I am doing is projecting out. So the idea is, we will start the Phase 3, we will still be recruiting into the currently running Phase 2b or not recruiting into, but by that point we will just be following up those subjects who are already enrolled in arm three of the trial but there will be a stagger there. And so in terms of the timeline of that, I think we have evolved a little bit the plan here in terms of what we would want to bring data wise to the FDA.And so maybe that has pushed things out a little bit as well as even though our overall recruitment rate is super stellar, to be frank with you, there was a period of a couple of months late maybe in Q3, Q4 last year where the arm three enrollment had lag, right. And so the sites were recruiting greatly into the arm two. And the reason for that is most likely, it's an easier arm to recruit into. And so I think folks, may be even the coordinators on the ground were pushing more for recruitment in that arm than the others.We said, hey folks, you know, we met with the PIs and continue to speak with them and said, make sure you don't neglect that other arm. And then everybody kind of reawakened and that enrollment now is going great guns. So there was that as well. But we are not waiting until the end of the Phase 2b before we start the Phase 3. Does that answer your question?

[Michael Liu:]

It does. Thank you very much. I appreciate that.

[Mike Rosol:]

You are welcome, yes.

[Jed Latkin:]

Next question.

[Operator:]

[Operator Instructions]. Our next question comes from line of Mike Riccelli, private investor. Please proceed with your question.

[Mike Riccelli:]

Yes. This is Mike again. Thank you for taking my question and thanks for the conference call. The questions so far have been excellent and I appreciate those people that have asked them. First, I would like to say, Jed congratulations on that very low discount rate you got on that accounts receivable. So that was very impressive.

[Jed Latkin:]

Thank you Mike.

[Mike Riccelli:]

Now we talked in generalities and Mike Rosol, in the press release, you said we have eye on the next interim result on the timing outlook. Are you speaking that the next interim results will be in the next couple months or is it longer than that?

[Mike Rosol:]

Yes. That's what we are shooting for. So we have got the number of subjects that we would like enrolled and we need to follow-up the -- we need five weeks scans in from the last few who haven't. And then like I said, we will be beginning to analyze those data on a rolling fashion and we need the analysis done and then the statisticians. So we are trying to position it so that we can do this most expeditiously, right, because we are excited to see these results and of course you folks are as well. We are excited to get them in so we can then prepare our questions and discussions with the FDA. But I would say that you are correct on the timeline. So we would like those within the next couple of months.

[Mike Riccelli:]

Okay. Now earlier, in the prepared remarks, you said going to the FDA on the P3 for RA later in the year. Are you implying late in the year or maybe after the mid-year?

[Mike Rosol:]

No. So the idea is, it will probably be around the mid-year, right. So if we get those data in, within a couple of months. Like I said, we have got the 60 day period from the time you request a meeting with the FDA till they give it to you. So that might put us into the summer. Then once we have got all the go-ahead, the blessing that we believe we are going to get from the FDA, because remember we have met with them all along the way. They been in line with our thinking. We want to show them the data from the pilot arm of the currently running trial that mirrors the Phase 3 as well as the repeatability, reproducibility and stability data because we are using those to set our benchmarks for what the objectives and endpoints will be in the Phase 3 in exact line with what they have recommended we do. But we need some numbers for that, right. So we are going to bring those to the table to the FDA. We are preparing, even as we speak we are setting up sites for the Phase 3. So once we get that response from the FDA and all systems are go, then we will start to engage the machinery at full operation to get that Phase 3 going.

[Mike Riccelli:]

Now, in the press release, it said that the funds that you received from the recent financings and the accounts receivable would launch into the next critical trial. How far those funds launch you into the start of the RA P3? Do they get you into the start of the RA P3?

[Jed Latkin:]

Yes, for sure. I mean I think that these funds and remember things are going to change when the interim result come as well. So we will adjust for that. But these funds, if everything else remains equal and the same, definitely get us into the Phase 3 and also probably get us the launch of the 32 as well. We are just working on the logistics on the 32. So 's is something that we are going to push forward as well. I think that it gives us a very nice runway to get those things going without having to rely on anything else in the near-term.

[Mike Rosol:]

Yes. This is Mike Rosol. These trials, by the way, that's how you say my last name, Rosol. I would like to ask how to say your last name. You call in all the time and I appreciate it and I don't know how to say your last name. But one second, these trials maybe less expensive than you think they are. We have mapped these out and with everything else aside, I am not going to give you the exact numbers but they are significantly less than your typical clinical trial. And that's one of the beauties of an imaging base trial rather than a large-scale therapeutic trial.Anyway, how do you say your last name exactly, please?

[Mike Riccelli:]

Riccelli. Mike Riccelli.

[Mike Rosol:]

Wow, that was not what I was doing. So thank you for that. Mike, you have another?

[Mike Riccelli:]

I try to fool people, so I can't ever be tracked down. Yes, I have just a couple more. I appreciate what you are sharing. You shared a little bit on the KS imaging trial being complete and your next steps. But one of interest also is the KS therapeutic trial and the IND timing. That's been in the reports for quite a while. Are you still planning this year to go to the FDA for an IND on KS therapeutics or not? Or can you share that?

[Mike Rosol:]

Yes, a pre-IND meeting anyway. So those data are actually very strong data. So we have continued those studies from the funding of that grant with UCSF. And as I mentioned in my notes here, my scripted comments, we plan to be writing those up. We may actually be presenting those at an international meeting before too long. They are actually very exciting and so we think we are going to be in a good position to meet with the FDA. And yes, there's a lot going on with a small team. But I would like to go to the FDA before the end of the year with that, yes.

[Mike Riccelli:]

Okay. I have three more questions, if you don't mind.

[Jed Latkin:]

You keep adding questions.

[Mike Riccelli:]

Okay. But they kind of get into today's world a little bit. Has there been any further subjects injected in the Pretoria Ga68 trial, TB trial?

[Mike Rosol:]

Yes. So the update there is, Mike Sathekge and I am really butchering his name. But anyway, that's how I am going to say it. I am sticking to it. He is a nuc med physician there who's running that investigator-initiated trial. He's done a handful of subjects. I think at last count, he had injected seven subjects. And what his ruling conclusion was based on those pilot data is that, he wanted to increase the max dose and potentially the radio label amount of Gallium-68 on these. And then go forward and do more subjects so that it could increase the signal. He had also been working towards optimizing and we kibitzed with them.We didn't direct it because it's an IIS, but we gave him our thoughts as well and he can do with them as he thinks. We gave him some ideas about maybe an optimal imaging window as well based on what he had shared with us. And so as far as I know what he's been doing currently is, he's writing up a revised protocol to change the max dose, the radio label dose and maybe the imaging time to get an optimal imaging window and imaging material. And then, he will go forward more with the pilot study. But that study is indeed progressing.

[Mike Riccelli:]

Okay. Next and the last question evolves around viruses. And you have done a lot of work on the preclinical trials on Zika and Dengue and you had some really good results on MT-1002 and MT-2002 in preclinical trials which you were getting data together. Do you think with all the concern with the Coronavirus that there will be any grant funding available to help you push these forward? Or is that not in the offering?

[Jed Latkin:]

No. Absolutely, there could be grant funding to push these forward. And those preliminary data are very compelling in the Leishmaniasis domain as well as in Dengue. But to be frank, we are prioritizing what we are putting our efforts forward on. And we don't want to, I think maybe I wasn't here, but I think maybe there was a little bit of shiny object syndrome in the past and we don't want to replicate that kind of history of the company. Since we are a small, lean and mean machine, we want to focus on the biggest targets where we think we can bring the biggest impact most rapidly, right. And then as we grow, we can expand out into these other areas. But indeed, there are compelling data in those domains. And it is something that we are monitoring not to use, there's a pun there somewhere with people being monitored for Coronavirus. But we are, of course, aware of these things and the possible grant funding in these domains, so disease areas.

[Mike Riccelli:]

Do you expect peeking in? I mean, I know you are trying to be focused and I understand all that, but with grant funding, obviously, you have to be able to obtain some third-party services to help. Do you anticipate any funding coming through on that? Or have you even applied for any?

[Jed Latkin:]

We have to talk about that in terms of applications because you are right. Once you get the money, you can involve third parties who might do a great majority of the actual physical work. But of course, it takes some intellectual input to get the grant to get them funded. So we are trying to focus on the things we are focusing on for the reasons that I said. But again, it's not that it's thrown aside because there is some promise there. So we are going to keep looking at that.

[Mike Riccelli:]

Okay. And the last question is a big tent, the umbrella type question. And I think you get it all the times, Jed, when you go to these various conferences. Is there any pending competition to the Manocept platform that you know that is out there or that is pending?

[Jed Latkin:]

Not that we have seen. And believe me, we have some very diligent shareholders and individuals on our team, I am talking about you, who have been very aware of looking at that. I mean, we look at everything out there. We are constantly really going through to find out if there's anything out there. And there really isn't anything out there. And so we are going to continue to push this product forward obviously, so we are in the market. But as of now, there's really nothing else out there that can do what we do or is in testing.I think what's always been interesting to me is, obviously, you see the different multiples. Although now, the way the market has been going, all the multiples are compressing. But you see the different multiples between diagnostic and therapeutic, but you also see another thing. You see a very, very large focus in the news today about diagnostic testing and how important it is and how important is to stay ahead of that. I think that this really brings a focus back to companies like ours. And I am not saying we have a Coronavirus test because we don't.We are really focused on RA, not that we couldn't pick up the virus if we wanted to with our technology, but that's neither here nor there. But there is a focus on diagnostic testing, especially in an area where things like pandemic outbreak cause massive stress to the healthcare system and anything that can possibly lower the cost burden to the system will be something that more and more will be not only embraced, but insisted upon. And that's why we are really excited about the technology. That's why we are really pushing it.Would that invite other competitors into the market? Potentially, but there's nobody thankfully right now who has what we have and that's why we are moving forward to, to really getting this to market. We keep on pushing the IP. Our team here, Dr. Ralph is constantly filing new IP to make sure that we protect all of our patents and enhance all of our patents. And that's something that we are going to continue to do. And so we are very excited about it.I mean, unfortunately, with what's been going on in the market and in the world, we hope and pray for everybody's safety. But it has once again brought a focus back on to the diagnostic space, which serves a very, very critical role in our healthcare system.

[Mike Rosol:]

Yes. And Mike, this is Mike Rosol. Go on, Mike. You go.

[Mike Riccelli:]

No, I was just going to say, this big umbrella, this big tent focus on no pending competition mitigates, in my view, the fact that it may take a little longer to get all of your RA subjects tested. It may take longer to get a partner with a win-win. That is a real mitigating factor. So yes, everybody would like to partner faster. Everybody would like a win-win. Everybody likes the trial faster. We are all human and that's what we would like. But this is a real mitigating factor and I think it's something that adds great value that's not recognized.

[Mike Rosol:]

No. This is Mike Rosol. You are absolutely right, Mike. And what I was going to say is, not only do Dave Ralph and I and Jed and others like yourself spend our nights scanning the literature in the world, looking for what else is going on in this domain. I can say, maybe you will be interested in this, as part of these partnership discussions, particularly in the RA domain, we have had very high level people at very high level places and very smart people do a lot of their own due diligence. And they have asked us our thoughts on the competitive landscape and we have told them what we think. And none of them have come, they have all said, again, unanimously, you are right. There's nothing on the horizon that does what your stuff does and not going to happen in any near term, if ever.So that's really encouraging. And we have heard that from these independent folks who have a reason to be critical, right. And they come back and say, there's nothing out there. So it inspires some confidence in us. But we still won't sleep well anyway.

[Mike Riccelli:]

Anyway, congratulations. Thanks for the very informative call so far and thanks for all your hard work, gentlemen and ladies.

[Jed Latkin:]

Thank you. Dave, are there any other questions?

[Operator:]

There are no further questions at this time. And I would like to turn the floor back over to management for any closing remarks.

[Jed Latkin:]

Okay. Well, we just want to thank everybody for calling in. As always, if anybody has any other questions, they can always e-mail me or call at any time. And just want to, I look forward to speaking to you guys again in the very near future. Okay. Have a great day.