Navidea Biopharmaceuticals, Inc.
Q2 2018 Earnings Call Transcript

Published: 17 Aug 2018

[Operator:]

Greetings and welcome to the Navidea Biopharmaceutical Annual Meeting Discussion and Update on Current Corporate Events and Outlook. At this time, all participants are in a 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, Jed Latkin, Chief Financial Officer for Navidea Biopharmaceutical. Thank you. Mr. Latkin, you may begin.

[Jed Latkin:]

Thank you, Doug. I just wanted to welcome everybody to the call today. Also, on today's call is the CEO of Macrophage Therapeutics, Dr. Michael Goldberg. 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 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, optimizing, 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 other diseases. 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 operations. Other risks and uncertainties include the company's failure to obtain necessary regulatory clearances or approvals to distribute and market further products; 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 products -- 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 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 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. As part of our business transformation, Navidea will be transitioning the leadership with the resignation of Michael Goldberg as Navidea's Chief Executive Officer and President. Going forward, Dr. Goldberg will serve as CEO of MT and concentrate all of his attention and efforts on progression and the developments taking place at Navidea subsidiary, Macrophage Therapeutics. In his role, Dr. Goldberg will focus on addressing Macrophage Therapeutic's eventual funding needs as well as progressing its clinical pipeline in the future. Dr. Goldberg, later on this call, will detail a lot of that. For Dr. Goldberg's resignation agreement with Navidea, he will own 5% of the company and maintain his position as the largest shareholder of Navidea for the foreseeable future. Also, Dr. Goldberg's super voting rights will eventually transition upon the investment of $10 million or more from an outside investor. Dr. Goldberg's shares in Navidea will be locked up for a minimum of six months as he maintains a continued interest in the development of Navidea and Macrophage Therapeutics. To address the debt facility that Navidea had in place with Dr. Goldberg, the company has directed 23.5 million shares restricted stock to him. This payback in shares of the company are at a friendlier term than the market would have awarded or any financial capital provider given the financial landscape of Navidea. Furthermore, these shares wiped out close to $3.1 million of cash liabilities on Navidea's balance sheet without having to place shares into the market at a discount or issue warrants that would act as a millstone around the share price for years to come. I would like to note that the Board as well as myself spoke with many capital providers, and this deal represents a significant discount to the term sheets that we received. The term sheets would have required an issuance of a minimum of 26 million shares with warrant coverages as high as 100%. This was also backed up by a third-party investment bank that we brought in to do evaluation. It's important to note that these players who do play in the space typically take these shares and sell them immediately back into the market and then hold on to the warrants, which, as we said, will act as a cap on the share price. What we've done here is we've taken our largest shareholder, given him an additional amount of shares that are all restricted, so we can guarantee that those shares will not be coming to market. He's fully invested in the future of this company as well as guiding Macrophage Therapeutics forward. Also, before I turn the call over to Michael, I just want to briefly discuss the best news of the day and that is our acceptance by the FDA for a meeting to discuss the Phase 2 trial results and present our plan for the approvable Phase 3 trial of our rheumatoid arthritis and activated macrophage detection. I want to sincerely thank the entire team in Dublin, Ohio that spent their entire summer working on the dossier that, with its included appendices, has more than 4,000 pages in it. Not only did we get the dossier done in time, but it was submitted early. This is something that has never happened before in the history of Navidea. Without their hard work, none of this would be possible. I just want to give people a brief set of bullet points and would like to direct people to our website where we have a fully more fleshed out presentation that gives a lot of new slides on it that also talks about the future direction of Navidea and Macrophage. First off, we expect to receive some questions in the upcoming weeks prior to the meeting. We will be meeting in late September with the FDA to go over the Phase 2 results and detail the Phase 3 approvable trial, how many patients we want to treat, the biopsies we want to do and so on and so forth. We will be taking full advantage of key opinion leaders for the meeting with the FDA. It's important to note because it's not just going to be Navidea presenting but people who are very important in this field, including doctors from the U.K., representatives from San Francisco, other statistical people who've evaluated the data, all of which are independent third-parties that have verified the abilities of what our product has done in Phase 2 and will be able to do in Phase 3. Then, up to 45 days post the meeting, we will receive the minute meetings from the FDA, which will then give us a sense of what we need to do going forward with the trial. The plan post those minute meetings are to launch the trial sometime in the beginning of Q1 2019. I welcome any further questions on this during the Q&A portion of this call. I will now turn the call over to Dr. Goldberg. He's going to discuss the transition and the move to the CEO role at MT, and then he'll turn the call back over to me and we'll go over some more of the financial update. Michael?

[Michael Goldberg:]

Thank you, Jed. And as Jed said, the Board of Navidea and Jed have asked me to say a few words regarding my stepping down from the Navidea Board and as CEO as well as my thinking behind converting my debt that was past due into straight common shares. Also, they asked me to provide an update on my assessment for Macrophage Therapeutics and why I believe it will represent an important value driver for Navidea. First, I would like to thank Professor Mark Greene, who is also stepping down from the Navidea Board, will remain with MT as Chair of its Scientific Advisory Board. Professor Greene is a world-renowned scientist who discovered the first anticancer antibody ever commercialized. He was instrumental in creating the world's leading immuno-oncology program at the University of Pennsylvania, and his lab, at no cost to Navidea or MT, has done some of the foundational work on our immuno-oncology therapeutics. He did that from his grants because he was so impressed with the potential for our agents to be game-changers in advancing the understanding of immunotherapy in cancer. Professor Greene stepped down -- stepped into this mess that existed when the prior Board of Navidea refused to recognize the impending failure of the commercial strategy built around Lymphoseek, especially with the massive debt and massive burden that existed at that time. While a world-class scientist, he also proved himself to be an insightful business leader as he worked hard to navigate the very difficult CRG debt fiasco. Unfortunately, Navidea has attracted some very difficult investors, as can be expected, shorts but also certain former managers and Board members and even a few long-term investors. The shorts, again, as expected, do what they can to actively drive down the share price. Navidea currently has at least 5 million share shorted, and they appear desperate to force the company to undertake a financing so they can cover without driving up the share price. We also have a mixture of long-term investors, some who invested for RIGS, Cardiosonix or even Neoprobe devices, who have seen their investment drop in value and feel it is appropriate to publicly and personally attack the motives and integrity of the current Board management of the company. This makes it difficult and very expensive to attract and retain high-quality managers and Board members. With that said, I want to thank Dr. Bruck for not only stepping in when she did, but for her willingness to work through some very difficult and time-consuming problems and put efforts in that are above and beyond what she signed up for. I'd also like to acknowledge the same with Michael Rice and comment how critical his advice has been, and I hope will continue to be, for Navidea and MT as they reposition the company and build a Board suited for the current business model. Dr. Bruck will be the sole remaining scientific and pharmaceutical expert on the Board, and Mr. Rice will continue to provide Navidea with unparalleled access to what I personally consider the most relevant expertise in the field of small public life science company investment. I look forward to working even more closely with Professor Greene as we now are better [technical difficulty]. The reason I'm comfortable converting my entire debt position into Navidea common is I am confident in the strategy we have implemented for Navidea and the potential for MT now that it is better situated to raise capital, which is necessary to ensure it's -- that we advance in technology. In addition, I am confident that Jed can and will be able to execute on that strategy and manage Navidea through its difficult time and raise capital prudently to enable the existing shareholders, including me, now by far the largest, to realize a healthy return. Navidea has tremendous potential and under Jed's leadership, I am confident Navidea can introduce numerous blockbuster imaging products. In parallel, I will be focused full time on advancing MT. We have focused our efforts of late to identifying a single application technology that should showcase the breadth and depth of the potential of the technology. Due to limited resources, we have not been able to pursue all the promising leads and ideas as we had hoped, but fortunately, one of the seeds we planted over two years ago has sprouted a green shoot that opens some exciting potential opportunities that we will endeavor to fully explore. Based on many discussions with pharmaceutical companies and venture capital investors, we are convinced that generating human data will be a major valuation driver for investors and potential partners. Advancing therapeutics to human clinical trials is very expensive, very technically challenging, and requires a number of time-based studies that cannot be shortened. To that end, we have identified a pediatric ortho disease opportunity that may allow us to significantly shorten the preclinical development timeline, mainly enable testing and even approval with an unformulated product and, if successful, provide MT with a rare pediatric voucher, which can be sold. The last five such rare pediatric vouchers have sold for between $110 million and $250 million. The reason we attracted to this opportunity are many. It is a fatal orphan disease in children with no approved or even encouraging products and testing. Infants, in the most common form, are diagnosed at about six months and die before the ages of two to three. So, FDA should be very amenable to allowing testing of a promising therapeutic since these families have no other options. The disease is a recessive genetic defect that results in the buildup of a neurotoxic metabolite that cause the central and peripheral nerve damage due to direct toxic effects as well as significant damage from the profound and chronic neuro-inflammation. We have evidence from studies that our anti-inflammatory product crosses the blood-brain barrier and it can achieve therapeutic activity in the central nervous system at doses that do not cause toxicity systemically. We have in-vitro proof from the -- for the period of mechanism of action that our agents convert the M1 disease-causing hyperactive inflammatory macrophage to a normal-appearing healing form or M2 phenotype in macrophages exposed to the toxin in this rare pediatric disease. A naturally occurring mouse model exists that is an exact replica of the human genetic disease. In other words, their existing model of the disease was the exact same defects as exists in humans that enables highly predictive testing of novel therapeutics like MTs in mice. Potential investors and regulatory agencies will review results in these types of models very favorably. We have some very early, very limited evidence that our agents can demonstrate activity in these mice. We are working with the leading research in the field who has a colony of heterozygotes that is using to breathe these naturally occurring mice with -- to create a targeted disease. While one would expect one of every four births to be a disease homozygote, it appears that most affected mice do not survive the pregnancy, and the yield is actually only about one in every 32 live births. On the other hand, according to experts in the field, a N or a number of mice to generate sufficient data to drive powerful significance for treatment affecting this model is estimated about 13. This is because the effects of disease are so profound and so widespread. We have a program in place to look at a number of in-life parameters like weight gain, a variety of activity measures, lifespan, along with histopathology, and CNS, and organ toxin levels. In order to generate the best quality data, one needs to dose as early in life as possible. Since one's damage exists, it is difficult, if not impossible, to reverse. To do that, one must dose before the mice exhibit any symptoms and even before they can be genotyped. The doses required for such an indication must be high enough to get sufficient delivery across the blood-brain barrier. The time to dose each new litter, a few days after birth and then continue on with just a deceased mice once they are genotyped. This requires a lot of material as mostly is spent on normal animals. We have invested in ramping up our organic chemistry efforts and engage the process chemistry scale-up group to increase our available material to hundreds of grams to even low kilogram quantities of our agents. To put that into perspective, this is actually a lot more material than is produced by Navidea's commercial contract manufacturer of the commercial Lymphoseek product. This should be sufficient though for all expected preclinical studies, including two species toxicology studies. We have engaged a rare disease CRO or clinical research organization to assist us in planning and interacting with the FDA on this, and they are confident that with a little more data, assuming its positive, we should be positioned to apply for orphan disease designation and for a rare disease voucher designation. Further, they indicated that the size of the approval study in humans could be fewer than 10 patients in a single open-label one-arm study. This is due to the fact that this is a very rare and fatal disease and there are no other viable options. Finally, success in this program can be achieved in many ways. Clearly getting a voucher upon FDA approval could be a financial windfall. Orphan disease companies are highly valued either by investors or acquiring companies. The mechanism of action of our technology is not disease-specific. So, as we generate animal data, and hopefully quickly human data, the attributes of our approach will be demonstrated and its applicability to other diseases will be readily apparent. The bottom-line is we are waiting additional data over the next few weeks to months that will enable us to file with the FDA from an orphan disease designation and pediatric voucher designation. Once submitted, the FDA turns around these applications within 60 days. We should also have completed the first round of scale-up manufacturing and assay development and develop plans for IND-enabling top studies to commence. Then we can begin to prepare for a pre-IND meeting and then submit all the data for an IND to enable human testing as early as the second half of next year, depending on funding and, of course, continued success in our efforts. Based on animal results, we should have a very high degree of confidence though in our human results as a target is exactly the same in humans as it is in mice. But even if we do not achieve all three of our goals, which are necessary for treating this particular disease, we will get the opportunity to determine in humans the safety and efficacy of our agent. For example, if we do not cross the blood-brain barrier in humans with the safe efficiency as we see -- as we do see in mice where we have the same anti-inflammatory activity in the periphery, we can either raise the dose based on limitations, if any, regarding safety or restrict the use of this formulation into scenes [ph] that do not require crossing the blood-brain barrier. For example, the market targeted by anti-TNF-alpha agent represents four out of the five largest selling drugs in the world. Humira, the largest of all, is projected to generate $20 billion in sales in 2018. Humira does not cross the blood-brain barrier nor do any of the other anti-TNF agents. Finally, every project that MT pursues will benefit from having imaging that only Navidea products can provide. As fully expected, MT will be one of the largest users of Navidea agents as biomarkers, and ultimately, its products approvals will generate significant commercial sales of Navidea's agents as companion imaging agents. So, as MT raises money in advance of this pipeline, Navidea investors participate in numerous ways. One, as owners of MT, it's either holdings value rise as MT's value rises; two, MT will develop new markets for Navidea's imaging needs; three, MT will buy Navidea imaging agents and use them as biomarkers for their clinical studies; and four, as MT partners their programs, Navidea products get exposure with MT partners that should lead to use of Navidea products and studies with their non-MT products. I want to thank the vast majority of shareholders who have been supportive and appreciative of the efforts that have been made under my direction to turn Navidea around. So that it, as investors, can realize a return and, hopefully, an outsized return for the time and pain they have endured with this investment. Lymphoseek, unfortunately, did not achieve the commercial value that was anticipated and the capital structure and business strategy needed to be significantly revamped in order to position Navidea to succeed. I believe under Jed's management and Michael and Claudine's supervision and input, based on their vast and relevant experiences in areas that are crucial to Navidea's success, Navidea has an excellent chance for success, even massive success. The technology is that good and the market need is that great. As you all now know, I have massive skin in the game and I will continue to support Navidea, although now from the [Indiscernible] seat, in every way that I can through Macrophage Therapeutics and otherwise. I wish all of us the best of luck. Thank you. Jed?

[Jed Latkin:]

Thank you, Michael. Just wanted to quickly review some of the financial results from the last quarter. Our consolidated balance sheet and statements of operations have been reclassified as required by current accounting standards for all periods presented to reflect the line of business sold to Cardinal Health 414 as a discontinued operation. Accordingly, this discussion focuses on describing results of our operations as if we had not operated the discontinued operation during the periods being disclosed. Total revenues for the second quarter of 2018 were $542,000 compared to $612,000 in the second quarter of 2017. Total revenues for the first six months of 2018 were $819,000 compared to $1.2 million for the same period of 2017. License revenue in 2018 was primarily related to the sublicense of NAV4694 to Meilleur. License revenue during 2017 was primarily related to the license of technetium 99 tilmanocept to Sayre Therapeutics in India. Grant revenue in both 2018 and 2017 was primarily related to Small Business Innovation Research grants from the National Institute of Health supporting Manocept development. R&D expenses for the second quarter of 2018 were $1.1 million compared to $1.2 million in the second quarter of 2017. The net decrease was primarily due to reduction in drug projects expenses related to NAV4694 and Manocept development costs, offset by increased therapeutics and Tc99m tilmanocept development costs. R&D expenses for the first 6 months were $2.1 million compared to $1.9 million during the same period in 2017. The net increase was primarily due to the increase in drug project expenses and therapeutics development costs, offset by decreased Manocept, the technetium 99 tilmanocept development costs. The change in R&D expenses for both periods also include net decreased compensation related to decreased headcount. SG&A expenses for the second quarter of 2018 were $1.8 million compared to $4.2 million in the second quarter of 2017. SG&A expenses for the first six months of 2018 were $3.6 million compared to $7.3 million for the same period in 2017. The net decrease for both period was primarily due to decreased legal and professional services, a loss on disposal of assets related to our previous office space, termination costs related to the arbitration award for former CEO, a loss on termination of our previous office lease, and decreased general office expenses such as depreciation, insurance, and rent. Navidea's net loss attributable to common stockholders for the quarter ended June 30th, 2018, were $2.4 million or $0.02 per share compared to a net loss attributable to common stockholders of $5.2 million or $0.03 per share for the same period in 2017. Navidea's net loss attributable to common stockholders for the six-month period ended June 30th, 2018, was $9.1 million or $0.06 per share compared to a net income attributable to common stockholders of $80.4 million or $0.50 per share for the same period in 2017. Navidea ended the second quarter of 2018 with $5.5 million in cash and investments, including the accelerated earnout payment of $6 million from Cardinal Health 414, which was received during the quarter. Now that we have paid off the company's debt, and this is really important, I want to get back to what I talked about earlier. Now that we have paid off the debt, which represented a real cash liability, we will have incremental increase in the working capital sustained by the company and this will help our situation and our liquidity moving forward as we'll be able to focus those funds on other areas of development. Before we turn over the call to Q&A, I really just want to stress one more time how we've managed to streamline the balance sheet in just two short years. We removed close to $90 million of debt and we now have no debt on the balance sheet and only the liquidity to look forward to. It's really quite -- I'm quite excited, especially as we prepare for this FDA meeting and we're ready to turn to a new chapter for Navidea. I would like now to turn the call over to question-and-answer period. Doug?

[Operator:]

Thank you. We will now be conducting a question-and-answer session. [Operator Instructions] Our first question comes from the line of Mike [Raschelle] [ph] with -- a Private Investor. Please proceed with your question.

[Unidentified Analyst:]

Yes, good day. I have several questions I hope you can indulge me, please. The first ones involve the timing of the MT spin-off. When will it actually occur?

[Jed Latkin:]

Michael, I'll let you handle that -- actually, I'll start. So, it's not a spin-off per se. We've separated the company, but there's not going to be a publicly traded entity. Right now, Michael is going to be focusing on going out and getting in investors, which will allow us to sort of crystallize the value and attach value to the MT shares. Michael, do you want to comment a little bit more?

[Michael Goldberg:]

Right. So, decision for now is going to be based on doing what's best for Navidea and what's best for MT. And I think it's -- the structure allows both to do that without making any significant compromises. In the future, depending on how MT finances and depending what Navidea's capital needs are, there may be an opportunity either to spin out the Navidea ownership to -- in MT to Navidea shareholders or Navidea could just use its ownership in MT to raise capital if that is a more efficient form of raising capital for Navidea, then -- for Navidea to issue its own shares into the market. So, that decision, none of that has to be made right now. The strategy behind this is so that we can negotiate with investors and may know that if they put money into Macrophage, it won't be forced to do what Navidea needs. In case Navidea gets acquired or in case Navidea definitely needs cash, and that could force a transaction that would make it difficult for the [indiscernible] investor to realize the type of return they're looking to make. So, by doing the transaction that we did, we don't forestall an opportunity in the future to either do a spinout or any other kind of liquidation event for Navidea. But we provide the certainty to investors who are not going to do the work, which is what we've heard from some investors that we've talked to, until they knew that they're not going to be subjected to the problems, for example, the CRG subsidiary guarantee that Macrophage had to give and other issues that held us up for a very long period of time in terms of our discussions with potential partners or investors.

[Unidentified Analyst:]

Okay. A follow-up on that. So, in essence, all of the parameters filed in the SEC documents such as the conversion rights of the preferreds for yourself, Dr. Goldberg and PM, the $500 million valuation target and the $50 million conversion -- the $50 million investment, those all stay the same for now?

[Michael Goldberg:]

Well, actually, no. What happened was I gave up all of that as part of this. So, as part of my deal to make it very clean and neat, I gave up my preferred stock position in Macrophage and my options in Macrophage, all of that has been given up. Platinum still has theirs. I couldn't do anything on their behalf. They're a separate entity. But I gave up all of that. So, none of that – it’s going to be very, very clean. And the reason I have the vote is so that I can tell investors that they have to deal with me and the Macrophage team and when I recruit employees to Macrophage, we can commit to them, provide them with equity, et cetera, so that we can get, hopefully, the best and the brightest and continue to move the company forward by bringing in value-added partners. And I think it's pretty clear for all of us, Navidea shareholders, that if Macrophage brought in a high-quality investor that put in $10 million, $15 million, with the expectation that, that investor is going to look for return and that return is going to be many years out because that's how long therapeutics take, but that value, all of a sudden, immediately accrues to the benefit of Navidea shareholders because we still -- we, Navidea shareholders, still own the vast majority, hopefully, of the entity, even after that investment. And then what will happen is, as we make progress and announce progress with the science and, hopefully then, other financings at higher prices and other partnerships and things like that, now that we have the resources to really more aggressively develop the products, I think that goes to the benefit significantly of Navidea. And that is, again, one of the key reasons why I gave up my debt position for a pari passu common equity position with every other investor in the company. So, -- and I did it at basically the market rates without any of the bells and whistles that any new investor would have come in and expected. But I do believe very, very strongly that the Navidea programs have tremendous, tremendous potential. I think the company, for the first time since I've been actively involved with the company, has actual ability to hit regulatory milestones, which it hasn't had since Lymphoseek. And I think that's what sophisticated health care investors look for. We've been able to make some nice announcements about some imaging with NASH and cardiovascular, et cetera. But in reality, the key thing is, where does that move you in the regulatory framework? And I think now with the work that Jed and the team have done on getting this in the Phase 2 package together and getting the agreement to meet with FDA and I think a really exciting Phase 3 plan that will really open the door not just to clinical use of this product but, I think, helped very much in the marketing of this, which will be nearer term in the biomarker space.

[Unidentified Analyst:]

Okay. Well, I, for one, do really appreciate your unmasking of the Manocept technology or the CD206 technology and changing the company's direction several years ago when they were on 4694 and 5001, when you recognized Dr. Cope and others' works and unmasked that and changed the company's direction. So, that to me was one of the key turnarounds for the company. My next question on -- in light of what you just mentioned, will the $500 million valuation that was in the SEC documents still drive the eventual authorized shares in MT or will MT come up with a new level of authorized shares?

[Michael Goldberg:]

I'm not sure I understand the question. That valuation was only a valuation at which the preferred investment made by myself and Platinum, 40% by me, 60% by Platinum, $700,000 in total. That only represented the conversion rate of the preferred into Macrophage common stock. That was a conversion price. So, nothing has changed with respect to that conversion price, which means that Platinum can convert their preferred stock into Macrophage common stock at anything below $500 million. So, in essence, that basically means that sets a price or liquidity event for the Platinum would come to about $420,000 of preferred stock. [Indiscernible], as I said, as part of this whole arrangement, I just forfeited all of that, returned it in and got the shares of common stock in the position in Macrophage that enables me to basically make sure that we can now structure Macrophage appropriately. The valuation was a -- it was a fictitious number. It was, again, at that time based on the fact that we thought we had a material ready for testing and we thought that we committed actually, $2.5 million. We thought that with $2.5 million, we would be able to get a lot of animals tested and then get some partnerships. Unfortunately, as I think we've discussed in the past, when we actually funded the first tranche, the first $500,000, we found out that the company did not have the ability -- did not have any material for testing and even worse, didn't have the ability to manufacture the material. And then we had to commit almost a year of time and the vast majority of the first $500,000 we've put in to produce material that never worked and was ineffective. And that was one of the reasons we had to make a change in management, because the management at that time insisted that they can -- know how to make and knew what they were doing with respect to the therapeutics. And the material just didn't work. We wasted a lot of time and a lot of money and eventually, we went to a new vendor and we put in money. In fact, Platinum and I put it another $200,000 with no agreements in place at that time just to make the material, to see if, in fact, we can actually prove whether or not we had something that works. And with that material, the MT2002, the MT1002, that proved to be the material that actually generated the kinds of data we're seeing and generating the data that we're -- you're seeing in the Krabbe mice model.

[Unidentified Analyst:]

I appreciate you going over that again. I thought it would be good to be refreshed. So, right now, there has been no determination on how many authorized shares MT will eventually have at some point, is what you're saying?

[Michael Goldberg:]

Yes, I think just for simple cosmetic purposes, one says we have 100 shares outstanding, 95 are owned by Navidea, five are owned by me. I get the vote because what that allows me to do is to look at investor in the eye and say, okay, you negotiate with me. And we're not going to be [swift] [ph] sawed or subjected to the fact that Navidea needs the money and then Navidea could say, well, if you put $15 million into Macrophage, I really want $5 million. And the venture guy says, I'm not putting $5 million into Navidea. I'm putting everything I wanted to the venture. So, it just makes it much simpler and easier so that we can look them in the eye and say, you're dealing with us. You're dealing with the Macrophage team and don't -- you don't have to look into Navidea. You don't have to look at their finances. You don't have to look at their needs for capital, et cetera. It's not going to enter into the equation. So, right now, there's 100 shares. But if XYZ group wants to come in and they want to put in $10 million, $15 million, we negotiate a deal with them. But if they're going to own x percent post money, then we can create as many shares as we want. There's no issue there. It's just -- it's going to be a negotiation. And hopefully, the more data gets generated, we could get more money for smaller percentages of the company, but it will be what it is.

[Unidentified Analyst:]

Thanks for that clarification. One question on the science side, if you can indulge me. So, is the working towards the P3 therapeutic for KS, has that then basically been put on hold while you do the [pediatric] [ph]?

[Michael Goldberg:]

No. Actually--

[Jed Latkin:]

No. Sorry.

[Michael Goldberg:]

Yes. So, actually, Dr. Cope, who is -- been very, very much in the forefront of the whole KS imaging and therapy side of things, is pursuing still aggressively the imaging. And Jed put that into the slide deck today so you can see there's some upcoming events on the Navidea side for the imaging. But as well, we are working with Fred who has actually identified some potential investors that may have an interest in the KS opportunity. And I have told Fred that I would be very, very supportive of him if he would be interested in actually spinning out another company. This one will be from MT to develop therapeutics in the KS and HIV field because that goes together. So, that's actually something that is a passion of Fred and who's done a lot of the work there. And we have offered Fred, and Fred has some interest. Don't know how far along it is, but that could be another very important event for Navidea, Macrophage and all the investors and so we'll work with him to pursue on the therapeutic side. On the imaging side, that's funded by a grant, and that's ongoing. And if you look at the slides that Jed put up on the website, you'll see there's mention of timing, et cetera, on that program.

[Unidentified Analyst:]

Well, that's great to hear that the KS, HIV therapeutic piece, P1 or IND, is still being pursued. So, I do really appreciate that you really appreciate that. Jed, this question is for you then. Dr. Goldberg, again, thank you for unmasking this whole thing several years ago and changing the company's direction.

[Michael Goldberg:]

Thank you.

[Unidentified Analyst:]

Jed, on the biomarker on the slides that were put out, I did not notice anything on the FDA qualification letter of timeline. Are you still on a timeline for the FDA qualification letter of intent?

[Jed Latkin:]

Yes. Actually, if you look at the timeline slide towards the end, we do have an upcoming meeting in September -- another meeting late September with the group that we've been talking to that is related to the FDA in getting the biomarker qualification. As we've noted before, remember, we don't need FDA approval to get the biomarker in use in clinic. What we're working with this group is to get CD206 as an official target for our tilmanocept. And so we're working with this group to go through -- and mind you, this is all public -- this is all funded through the FDA, not by us, to get this as a qualified biomarker, which will help us. But remember, it's not necessary in terms of starting to sell it to companies. And we are in active discussions with several different groups about using the product in a more advanced way as a biomarker.

[Unidentified Analyst:]

Very good. That was -- I must have overlooked that. Again, I wish you the best, CEO of Navidea. Can you give us a little color on the interim position and a permanent position as CEO, how that's going to move forward?

[Jed Latkin:]

Well, I can't really comment on that. That's going to be up to the Board. But we are currently going to attempt to negotiate a contract for myself to make myself permanent CEO. Obviously, you and I have spoken before, as I've spoken to many investors. I'm very committed to this company. I really enjoyed my time here. I like the challenges. But more importantly, I love the science. As I've said over and over again, my love in the science is a little bit selfish because I think that it will help me as well as other people who suffer from autoimmune diseases in the diagnostic and eventual treatment of those diseases. Because, I think, honestly, as somebody who suffers an autoimmune every day, the treatment options stink, sorry. I mean, they're just not good and diagnostic options are even worse. As anybody who's gone with a colonoscopy and all of the other invasive treatments in diagnostics out there, we really need something that treat this correctly. We really need something that diagnose these things correctly. And we have those products. I understand the frustration of shareholders that it's taken a long time, but similar to what Michael revealed on the call today with the Krabbe disease, this is something we've been working on for over two years. Good things take time. You cannot rush success. And we are doing things the right way. We're not rushing things out the door. But the fastest way you can -- as Michael said in the annual meeting today, the fastest way you could achieve failure is to rush something. We are taking the right steps and you are going to see the fruits of those labor over the next several quarters and years because we really are hitting that sweet spot right now.

[Unidentified Analyst:]

Okay. Well, it's great to hear the companies; both of them are in a pivotal point in their life cycle. And that's how I see all of this, as a -- in a pivotal point. So, I appreciate both of your times. I'm sorry to take so much of everybody else's time. Thank you.

[Jed Latkin:]

Thank you so much Michael. Are there other questions Doug?

[Operator:]

[Operator Instructions] Our next question comes from the line of Jacob [Indiscernible], a Private Investor. Please proceed with your question.

[Unidentified Analyst:]

Yes, hi Jed. This is Jacob [Indiscernible], actually how it's pronounced. My first question relates to the supposed to be vote at the shareholder meeting today, which I wasn't there for. Please explain why the results were delayed until Monday.

[Jed Latkin:]

So, we're actually going to -- there'll be a press release on that in the morning. We were temporarily adjourned on one of the votes, and that was number two, which is the reverse split, because there was a proxy glitch with some of the votes. And so some of the votes needed to be concerned. There was still a number. I believe there were 3 million or so that were still yet to be tabulated. So, we've adjourned until Monday, and we've gotten assurances that those votes will be tabulated by then. So, we're going to announce -- the results of the reverse split vote will be announced on Monday, but the other three items on the agenda all passed.

[Unidentified Analyst:]

Okay. And then secondly, based on the cash that Navidea has on hand, how long is that expected to last based on the current spending that we're doing?

[Jed Latkin:]

Given the plan, we do feel that we can manage our cash out for the next 12 months. However, our capital need, a lot is really going to depend on the final decision as we're working with the FDA on the trial. So, if we -- if it looks like we're going to have to do something more expensive, which is a potential, we would look to probably sometime next year maybe, maybe earlier, depending on what incremental needs that we have, they're not that great. So, it's important to note that the trial itself is not going to be that expensive and the charges are going to be structured over time. So, we currently have enough cash to give us a good runway at least over the next several quarters and then we'll consider as we go forward. I mean the ideal for us is we strike a deal on the biomarker product and start getting revenues there, and that will help us and so that we won't need to access the market. We're really looking to try to optimize our balance sheet. That's why the deal with Dr. Goldberg was so important for us. One of the overhangs on the stock that we saw in the 10-Q with the going concern warning is the working capital; you have to net out your liabilities. So, we were able to move $2.1 million of liabilities, which increases our changing capital, which actually satisfies one of the New York Stock Exchange issues, which is the paid-in capital issue. But that removes the paid-in capital up, and it also removes some immediate short-term liabilities. But that has helped the liquidity situation. So, I would expect that the liquidity is ample for the next several quarters.

[Unidentified Analyst:]

Okay. That [Indiscernible] questions I had. Thank you.

[Jed Latkin:]

Thank you, Jacob.

[Operator:]

There are no further questions in the queue at this time.

[Jed Latkin:]

Okay. I just wanted to thank everybody for tuning in. I really encourage everybody to please go to the website to see the new slide deck. It is a combination slide deck that we'll be using for the near-term. I also want to thank Joel Kaufman, who is one of our business development people, who've spent a lot of time working on these slides. And you'll notice some of the new things on there, which include the addressable market for our products as well as a nice Gantt chart which shows some of the time lines for both MT and Navidea over the next year and a half. Once again, thanks a lot for tuning in and I look forward to speaking to you guys on the next shareholder call.

[Operator:]

Ladies and gentlemen, this does conclude today's teleconference. Thank you for your participation. You may disconnect your lines at this time and have a wonderful day.