Navidea Biopharmaceuticals, Inc.
Q2 2015 Earnings Call Transcript

Published: 31 Jul 2015

[Operator:]

Good day ladies and gentlemen and welcome to the Navidea Biopharmaceuticals Second Quarter 2015 Financial Results. At this time all participants are in a listen-only mode. We will have a question-and-answer session later on and the instructions will follow at that time. [Operator Instructions]. Now it's my pleasure to welcome our host for today's conference Ms. Sharon Correia. Please go ahead ma'am.

[Sharon Correia:]

Thank you, Carman. Hello everyone, and thank you for joining us today. I'm Sharon Correia and I'm the Associate Director of Corporate Communications for Navidea. On today's call are Rick Gonzalez, President and Chief Executive Officer; Brent Larson, Chief Financial Officer, Tom Klima, Chief Commercial Officer, Michael Tomblyn, Chief Medical Officer and Fred Cope, Chief Scientific Officer. At the end of the call, we will hold a brief question-and-answer period. Before we get started, we'd like to remind you that during the course of this call, management may make projections or other forward-looking remarks regarding future events or the future financial performance of the company. It's important to note that such statements about Navidea's estimated or anticipated future results or other non-historical facts are forward-looking statements and reflect Navidea's current perspective on existing trends and information. Navidea disclaims any intent or obligation to update these forward-looking statements. Actual results may differ materially from Navidea's current expectations depending upon a number of factors affecting Navidea's business. These factors include, among others, the inherent uncertainty associated with financial projections, timely and successful implementation of strategic initiatives, the difficulty of predicting the timing or outcome of product development efforts and FDA or other regulatory agency approvals or actions; market acceptance of and continued demand for Navidea products, clinical and regulatory pathways, the impact of competitive products and pricing, patents or other intellectual property rights held by competitors, the availability and pricing of third-party sourced products and materials, successful compliance with government regulations and such other risks and uncertainties detailed in Navidea's periodic public filings on file with the Securities and Exchange Commission. Now I'd like to turn the call over to Rick Gonzalez, President and Chief Executive Officer of Navidea.

[Rick Gonzalez:]

Thank you, Sharon, and welcome to our second quarter 2015 results conference call. It is my pleasure and my privilege to provide an update on our business this morning. During the first half of this year as planned we successfully implemented a strategy to transform Navidea which included a new commercial strategy and overhauling of the commercial organization, exercising pricing leverage to reflect the clinical value proposition for Lymphoseek, creating operational efficiencies across the organization, expanding our development pipeline of imaging and therapeutic products in a cost effective manner and securing approximately $18 million of additional capital to fund our plans and strengthen our financial position. Today we’re on a clear path whereby our revenue growth is quickly converting with the reduced operating expenses with the goal of achieving cash flow breakeven in the first quarter of next year. In the second quarter of this year consistent with the aforementioned priority and the stated objectives we laid out in the last two earnings calls, we achieved a 127% year-over-year Lymphoseek growth in year-to-date revenue, continued improvements in key performance indicators and growth targets, deployed our Lymphoseek dedicated field force of 12, exercised pricing leverage confirmed by the clinical value we believe this product offers to patients, physicians and hospitals resulting in a new price beginning on July 31st of this year up $497 a dose or a 39% increase over the existing price. Reported additional data reinforcing the therapeutic potential for CD206 targeting platform Manocept, in Kaposi's Sarcoma and orphan indication that could serve both as an initial point of entry to the market and as a model for other solid tumor type and infectious diseases and finally entered in a collaboration with BIND Therapeutics to explore the potential of attaching our CD206 targeting ligand so they are occurring to co-developed targeted nanoparticles against disease associated Macrophages. As a reminder our core focus will remain the successful commercialization of Lymphoseek and operating the business towards cash flow breakeven in the first quarter of 2016, which will allow us to invest in the expansion of the potential usage for Lymphoseek beyond its currently approved indications. So detail our commercial progress I'll now turn the call over to Mr. Tom Klima, our Chief Commercial Officer. Tom?

[Tom Klima:]

Thank you Rick, and good morning everyone. I've been doing this for a very long time going on 20 years and I can tell it's been a remarkably active six months in Navidea during which time we've overhauled the entire commercial strategy. In mid-May we achieved an important milestone by fully deploying a Lymphoseek dedicated 12 person's field force, which has allowed us for the first time to directly target the treatment team with the focus on the surgical oncologists. Our newly deployed field force is now executing on a brand new strategy reflective of Lymphoseek's current product profile enabled by the expanded label. The field force is calling all the right customers with the right frequency and delivering the right message to educate customers about Lymphoseek's clinical value proposition and triggering its adoption and utilization. The Lymphoseek sales cycle is estimated to be between four months and six months, therefore although there are early signs of a positive impact, we expect to see the full effects of their efforts in Q3, Q4, and beyond. Importantly, we feel confident we’re targeting the right customer base which accounts for approximately 80% of the immediate Lymphoseek opportunity. Visibility for the product within the medical community continues to expand significantly. Lymphoseek clinical data presented recently at several important medical meetings including the Society or Surgical Oncology, the American Society of Breast Surgeons, the International Conference on Innovative Approaches to Head and Neck Oncology and the American Head and Neck Society Annual Meeting, reinforcing Lymphoseek's clinical value proposition. Our rich clinical experience allows us as well as independent clinical researchers to continue to generate data which further support our proposition that Lymphoseek should be the preferred agent for all sentinel lymph node biopsy procedures. The talks being given at these medical conferences are being increasingly delivered by leading surgical oncology thought leaders, elevating the peer recognition for the product. In addition to this data, we are also seeing a marked increase in interest from existing and potential customers as part of our interactions at these conferences, reinforcing the value we believe Lymphoseek offers to the oncology treatment teams and patients. Consistent with this feedback, I'm happy to report that we’re making great progress with our commercial plan and against our 2015 key performance indicators. During the quarter Lymphoseek procedures in new customer account are tracking the forecast having achieved Lymphoseek usage in nearly 19,000 surgical procedures in the first half. We realized if we kept the sequential growth in the number of procedures of 14% compared to Q1, 2015 notably ahead of the anticipated impact from the fully deployed sales forces and as we have stated before, we continue to maintain a high reorder rate which tells us that once the customer use Lymphoseek they continue to reorder it. Based on the first half commercials performance we remained confident we will achieve our $10 million to $12 million Lymphoseek revenue target for 2015. I would now like to turn the call over to our Chief Medical Officer, Dr. Michael Tomblyn.

[Michael Tomblyn:]

Thanks Tom. I’m really excited to join the call today to share the direction we’re having with life cycle management. As an oncologist who left clinical practice within past few years it’s really gratifying to be part of the platform with the potential to impact the lives of countless patients. Looking ahead to where we’ll go with Lymphoseek, we continue to make progress in the second quarter towards evaluating new market opportunities under our expended label for lymphatic mapping of solid tumors, developing applications for technetium manocept outside the current Lymphoseek label and other disease areas and willing patient reported outcomes with Lymphoseek and initiating efforts to assist institutional efficiencies that could been seen with Lymphoseek. Regarding the new market opportunities we’re beginning to see early use of Lymphoseek in selected areas outside of the big three tumor types such as cervical cancer, endometrial cancer and ano cancer as well as in other application. While early used outside sentinel lymph node label is encouraging. We’re actively collecting input and partnering with clinical investigators to identify tumor types that we should initially pursue as well as gaining understanding of what post marketing trials will be required. As part of the strategy there are recently completed studies that we’ll be reporting data over the coming months ongoing [indiscernible] and investigators issued studies and several planned studies including the grand funded multicenter cervical cancer trial, clinical studies in endometrial and anorectal cancers and the initiation of the study this September in pediatric patients. Applying technetium 99m tilmanocept to sentinel lymph node biopsy and lymphatic mapping is just the start for this product. Earlier this week we announced the received of the grand to collaborate with Massachusetts general hospital on the development of the product detect and potentially treat damaging plaque involved in atherosclerosis and the progression of cardiovascular disease. Yesterday we announced that the NIH awarded in a video grand to fund a clinical study to detect the presence of Rheumatoid Arthritis, being able to detect RA earlier who can have a tremendous impact on managing or slowing disease progression and being able to distinguish the patients’ condition from osteoarthritis can prevent patients from undergoing unnecessary treatments. In aggregate these new markets present great opportunities for growth of our existing FDA and EMA approved products. Regarding patient reported outcomes, we believe top line data presented in the second quarter showing a statically significant induction in injection site paying with Lymphoseek versus Sulfur Colloid in breast cancer patients is a key differentiator of Lymphoseek and could have a major influence on certain selection as an imaging agent. For surgeons the patient’s experience is critical, particularly pain. The complete data from the study has been accepted for publication in the annals of surgically oncology and will be available soon. To assist institutional efficiencies a head-to-head study of Lymphoseek versus Sulfur Colloid in breast cancer patients was initiated to evaluate the [indiscernible]. The goal is to document the positive impact on patient throughput and cost for the hospital. The study has accrued 40% of this patient and is expected to be completed this year. The data from this study can provide us with the valuable information to bring administrators and hospital networks who are involved in their institutional wide purchasing decision which are becoming increasingly driven by operational efficiencies. Lastly, I like to comment on the recent publication and Lymphoseek in the journal of immunology. This paper provided for the first time a very rigorous examination of Lymphoseek’s mechanism of action is specifically confirmed our internal data and clinical experience showing how selective and specific the manocept based agent is in identifying CD206 expressing macrophages, which are markers of tumor cells. Amongst all of the recent interest in immune-oncology drugs manocept based Lymphoseek represents one of its not the first immune-oncology based imaging agent. As a natural extension the same mechanism of action opens up opportunities for applying our manocept platform to the design and development of other immune cell targeted diagnostic and therapeutic. I’ll now turn the call over to our Chief Financial Officer, Brent Larson to review the financials in greater detail. Brent?

[Brent Larson:]

Thank you, Michael. Before I start to sum up the key financials takeaways from this morning’s release I’d like to offer a few comments from the perspective of someone has witnessed the evolution of the company for a slightly extended period of time. Having been a part of the team to build and ultimately monetized the device business, I gain more confidence with each passing the weeks, increases in Lymphoseek sales with the decision to move back in the pharmaceutical development was the right one. With the creative contributions and relentless energy from our management team from those newest members from whom you’ve just heard, to those who has been around just a bit longer. Change is definitely taking place and it is yielding results. Our second quarter 2015 product sales were $2 million compared to $1 million for the second quarter of last year, which represents an increase of 88% year-over-year. For the six months ended June 30, 2015 Lymphoseek product sales were $3.8 million compared to $1.7 million for the first half of last year, an increase over 127% year-over-year. We continue to be pleased with the continuous growth of Lymphoseek which has yet even to realize the impact from the deployment of the field force and the new commercial strategy and Tom and his team are implementing. Gross margins on Lymphoseek product sales grew to 83% for the second quarter of 2015. This improved result was due impart to our continuous efforts to improve manufacturing efficiencies but also to our ability to sales written previously reserved inventory. We expect to see a positive impact on our margins from this situation continuing to the third quarter as a result of the additional regulatory extension of the product's exploration day. Moving on to operating expenses, we've provided a summary of our declining expenses in this morning's release and we’ll be providing even greater detail on our upcoming Form 10-Q. But for the moments I would like to draw your attention to our progress in reducing quarterly operating expenses, which declined from $10 million in the second quarter of last year to $6.4 million in the second quarter of this year and $19.2 million for the first half of last year down $15.8 million for the first half of this year. We’re committed to exercising strong fiscal discipline and we’re pleased to see it borne out in our financial results. Our press release also discloses details of our net losses attributable to common stockholders and losses per share as required by GAAP and which includes cash interest expense on our outstanding debt is while significant non-cash charges associated with our debt related instruments. However while these losses are indeed decreasing overtime the real story here is the decline in our net losses from operations. Our net loss from operations was $3.8 million for the quarter ended June 30, 2015 compared to $9.2 million for the same period in 2014 and $11.6 million for the first six months of 2015 compared to $17.8 million for the same period in 2014. We ended the quarter with $15.8 million in cash which provides us a sufficient run rate including our debt to achieve our stated goal of cash flow breakeven in the first quarter of next year. As you can see a very encouraging trend is emerging under this leadership team. Our approach to have proactive and aggressive commercial strategy and the corporate cultural building is allowing the organization to accomplish more with less as reflected by our increased sales and declining losses. These trends are fully expected to continue and we look forward to updating you again on our third quarter call. I'll now turn the call back over to Rick.

[Rick Gonzalez:]

Thank you Brent. Looking further ahead in our growth plan, the core Manocept platform for imaging agents can be tailored to the design of novel therapeutics that target faulty immune cells. As we've stated this platform specifically target activated macrophages which are implicated in many diseases. If we substitute the tracer with a therapeutic agent on to the Manocept molecular backbone, we can potentially develop novel targeted treatments designed to selectively deliver an agent that can kill or alter disease associated macrophages and/or potentially tumor cells. As many of you are aware important proof of concept data were reported in July by our subsidiary Macrophage Therapeutic at a Specialized Medical Conference which showed that a Manocept-Doxorubicin drug conjugate or MT-1001 can be targeted to and dose dependently taken up in CD206 positive Kaposi’s sarcoma tumor cells and tumor associated macrophages. This Manocept drug conjugate resulted in apoptotic test of the Kaposi’s sarcoma tumor cells and tumor associated macrophages. Cy3 Manocept and a Cy3 Manocept-Doxorubicin conjugated quantitatively permitted the evolution of tumor burden, tissue uptake of Manocept and tumor response to therapy in [indiscernible] and technetium 99m tilmanocept injected subcutaneously could detect Kaposi’s sarcoma tumor region at both coetaneous and suspected extra coetaneous sites demonstrating that this technique could provide a novel meanings for routine patient assessment. What is so compelling about this data is that for the first time we've been able to very selectively kill tumor associated macrophages known as TAMs which historically have been difficult to accomplish. We accomplish this because tumor associated macrophages highly express the CD206 receptor of cell surface protein which Manocept is specifically designed and proven to target. As part of our development strategy we will for the time being rely on collaborations and partnerships to advance a product into clinical trials so that we don't detract resources from our core business. We now have two collaborations in place. Last year we formed the joint venture R-Nav with Rheumco to design Manocept conjugates for various applications on pragmatic disease in animals and human and in June of this year we formed the collaboration with BIND Therapeutics to combine Manocept as a targeting ligand with their accurin, a best in class nanoparticle which we believe can be an elegant approach to delivering high levels of therapeutic payloads. Given the more versatility of Manocept and the many indications in which disease associated macrophages are implicated. We have identified several potential collaborative opportunities that could support our development efforts. So to conclude our prospects are strong. We are on track or ahead of schedule across many of our stated objectives and metrics that we have laid out for Lymphoseek in the global lymphatic mapping and sentinel lymph node biopsy markets. Our beachhead is for three solid tumors where sentinel lymph node detection is a standard of care and where we’re now developing the market for other solid tumors. So collaborations with leading academic institutions, partners and the NIH, the development of new applications for Manocept -- technetium 99 link Manocept in new disease area such as cardiac and rheumatoid arthritis are getting underway and we have identified several others that we think the product could improve the diagnosis in better form the treatment of disease. Lastly we continue to focus our energies on growing the top-line, maintaining our operational efficiencies and continuing our path towards cash flow breakeven early next year. With that operator I’d like now to open the call to Q&A.

[Operator:]

Thank you. [Operator Instructions] Our first question is from the line of Stevehen Dunn from Life Tech Capital. Your line is now open.

[Stevehen Dunn:]

I want to talk a little bit about the -- I’ll start off with pricing here, moving from $357 procedure of $497, a 39% increase. What kind of feedback have gotten that would support that and what about the pricing of existing -- are you going to raise the price of the existing customers who are currently reordering? Is that going to be for new customers, is it going to be for both across the board, how is that pricing going to roll out based on the feedback?

[Rick Gonzalez:]

Steve good morning and the question around pricing is more of a question around value. It is our fundamental belief that the clinical value proposition that Lymphoseek presents has to be harmonized with the price where we believe in that equation there was room for pricing leverage to be accomplished, therefore we instituted that 39% price increase. I’ll ask Tom Klima to comment on the feedback he has received, but it’s a market wide price increase effective July 31st. Tom?

[Tom Klima:]

Thanks Rick and thanks Steve. I can tell you that is every brand I’ve ever worked on in almost 20 years, you always evaluate the value proposition that the product offers along with the price and I can tell you since I’ve been at Navidea, we’ve looked close at the price of Lymphoseek and we’ve really looked to our customers to interact about where you tell us what the appropriate price would be and both Rick and I and others have speculated that the price was too low since launched. So we feel very confident about the price increase and so far we’ve really not heard much of anything from our customers a planned pricing, we notified our customers too about 30 days ago and so far we’ve heard very little feedback, if anything especially on the surgeon side that they feel confident that the product offers value and the price is appropriate.

[Stevehen Dunn:]

Okay. So just want to walk through the sales metrics and I’ll jump back in the queue here. Rick are you guys still on track for 50,000 procedures this year?

[Rick Gonzalez:]

Yes, Steve that’s a great question. As I commented in my prepared remarks, the sales force is rolled out mid to late May, so it’s been a short period time since we’ve been in the field. We have done some positive anecdotal feedback yet, the quantifiable effect on revenues will be as expected, will be see in Q3, Q4. Tom do you have any additional comments on that?

[Tom Klima:]

Yes, Steve again we’ve got a great plan we’ve got -- we’ve hired great people and we’re tracking to our plan right now. Anecdotal we’re hearing a lot of successes, access so far not been an issue. Our reps are targeting right customers and having access to the entire treatment team and anecdotally we’re hearing in every geography successes and large accounts that are about to come online. So we feel confident with the guidance we’re giving.

[Stephen Dunn:]

All right. So if I can just sharpen the pencil a little bit on this, we had 19,000 procedures in the first half. If we’re going to have 50,000 in the full year that means 31,000 in the second half which will be a 63% increase in procedures in the second half from the first half. And if I extend out the old pricing on the first half and the new pricing on the second half have 127% increase in dollars. So 63% increase in volume in the second half and 127% increase in dollars in the second half and our target to that $11 million, is that the correct when look at this?

[Rick Gonzalez:]

Steve that is one way I’m looking at it. If you look at doing the math that you walk through, the logic make sense. What we are looking for is measurable, quantifiable significant impact from our commercial efforts. The efforts that are seen by Lymphoseek this time around is something that the brand has never seen, it's targeting the right customer with the right message therefore based on the revenue projections we have stated our confidence level to that equation and that logic is there, however on the upside there is potential upside if based on the sales force impact that could be beyond that.

[Operator:]

Our next question is from Steve Brozak from WBB. Your line is now open.

[Steve Brozak:]

I have got two questions here. One just on overview what's your strategic thinking behind Lymphoseek in other indications and applications specifically cardiovascular and RA and you can go on as long as you like for other indications specifically any oncological indications?

[Rick Gonzalez:]

Our excitement with Lymphoseek is much bigger than just the indicative uses in the current PI. We understand that the targeting mechanism and role that macrophages play have not only a role to play and therapeutic as we’re embarking on with macrophage therapeutics, but also have a fundamental value in diagnostics. When we look at Lymphoseek in its current approved formulation and the current label there are additional usage that we've seen and we've gotten the support from as you see recently with NIH grants both in cardiovascular rheumatoid arthritis, and these are markets that are quantified in the billions of dollars for the diagnostic value of something like Lymphoseek which is so targeted and so specific to CD206 receptors that are viewed. Our confidence also comes from our clinical experience with Lymphoseek in the current approved indication and the comfort that after having discussed an ultimate route of administration which will be IV with the FDA, we’re confident that we can expand the label under the current I&B granted that we have to do some additional testing to support the IV route of administration, but nonetheless it opens up a world that is much, much bigger in a market that is much bigger than current labeled indication. The other aspect of it is that can be done with non-dilutive capital coming from brands, so that gives us again a great deal of comfort based on expertise, experience and history in successfully securing grants and completing and meeting the aims of the grant to move from Phase I to Phase II additional funding. So we have the internal experienced expertise and reputation to be able to tap into that very important resource which will allow us to develop expanded uses of Lymphoseek beyond its current labeled indication.

[Steve Brozak:]

Obviously, that gets us excited now. I'm going to go back to some granular questions and specifically one, you didn't get any kind of sales benefit from the sales force that you just putting in the current numbers, I understand that. But you did go out there and start to understand how sales cycle works for Lymphoseek when you have your sales force in place. Can you go over what the cycle looks like and again you can be as specific as possible. So I would like to know more about how you go out there, make the meetings, how long it takes for use and then adoption, and again you can use any anecdotal situation you want to talk about. So if you could describe that and then I'll jump back in the queue.

[Rick Gonzalez:]

So our understanding of the commercialization required to make Lymphoseek successful comes -- emanates from the experience that this team brings together. And it’s -- there is two dimensions to it, number one is commercial experience on the ground, dealing with greater [ph] pharmaceuticals and other products and hospital sales into the oncology space, but also the clinical perspective that -- and unique view that we have, having Dr. Michael Tomlin on board with us and being able to ground us in what we’re doing and why we’re doing it. At the end of the day we’re so confident that Lymphoseek offers a clinical value proposition which is relevant and compelling to all members of that treatment team inclusive of the patient, but focus primarily and driven by the surgical oncologist that gives us great confidence and great enthusiasm to go out and communicate this to the marketplace. For more specifics on the granularity of the process and what we've seen early on our sales force I'll let Tom to comment on that.

[Tom Klima:]

It's a good question, when I first came to Navidea we had a pilot program where we had two people in the field and we had a hypothesis that the sales cycle would be roughly six months and I can tell you that we've hired good people too as Ricks pointed a minute ago with the lot of experience and existing relationships, our hypothesis remained that the selling cycle is between four months and six months and frankly one of the biggest challenges we faced so far which is a very solvable challenge is that inertia. You have these accounts that have been doing the same thing for a long period of time and it's really a process by which we get introduced to the right people, we go through an educational process and then there is an entire administrative change that happened. And what we’re seeing is, just really I would say, positive receptivity to the product profile and the value proposition, but doesn't really shorten the time where you have to go in and educate the entire account, the entire treatment team and then go to the administrative change to get Lymphoseek adopted at the institution. So in short we’re seeing a lot of positive feedback but the sales cycle is still roughly four months to six months and if anything, we could maybe have some we have some efficiencies with our experienced sales force but 4 to 6 months is what we’re seeing.

[Steve Brozak:]

Just one follow-up on that, when you talk about the education, once you’ve educated these practitioners, what -- at that point then you’re pretty much uncomfortable in saying that you have them sold and now it’s just a question of going on to the next instead of practitioners, is that an accurate description?

[Rick Gonzalez:]

Yes, I think it’s probably little bit more complicated than that. Usually within an institution we find a champ and start and that champion can be in either new to the medicine department, maybe the surgical oncologist. So we feel we have opportunity to both move on and get new accounts are you’re suggesting, but also in most of our existing large accounts there is opportunity to expand utilization. Let say anecdotally that the head and neck surgeons have adopted Lymphoseek, but maybe not the breast surgeons. So there is opportunity to expand utilization within even some of our larger accounts.

[Tom Klima:]

So Steve to extend on that I think there are two lever that are being pulled by our commercial team, number one is capitalizing on the reorder rate that we see, we continue to see improvement on that reorder rate of existing accounts. But the other lever is utilization within existing account and the expansion of used to an adoption amongst the surgical teams in a particular institution. So those levers are being pulled simultaneously and there are the two levers that are driving the commercial strategy and everything that we do day and day out in the field.

[Operator:]

Thank you. And our next question is from Stephen Dunn from Life Tech Capital.

[Stephen Dunn:]

Thanks for taking my follow ups here. Now that we’re leveraging Lymphoseek, or at least the Manocept scaphoid [ph] to other diagnostic uses outside of cancer, every diagnostic use has a potential therapeutic side of it depending on a payload. The long term thinking is the diagnostic piece staying in let staying in Navidea and the therapeutic going to in the Macrophage Therapeutics, so what’s the long-term thinking on how this is going to be split up, if at all?

[Rick Gonzalez:]

Yes, so right now when we look at our five year horizon we look at having the teams concentrate on advancing these programs to delivery tangible result. So for data in the diagnostic fees with the expansion of Lymphoseek into other diagnostic applications the team -- the regulatory team, our scientific team and development teams will be hard it work to advance those. While that is happening our Macrophage Therapeutics team is looking at the development of therapeutics. They are a bit different in the path to follow and the regulatory requirements to be matched. Remember Lymphoseek and the expansion of label and expanded indications are what is current formulation, so that bit of a more shorten similar straight forward process and it would be to develop therapeutic, however they will happen in sequence. The idea here is that Manocept is such a good targeting mechanism for this CD206 receptor on activated Macrophages that with diagnostics leading into therapeutics is just the logical progression and it’s actually a maximization of the value of the targeting mechanism itself. So we view this in a sequential fashion, but they’re being worked on and current by both teams without one distracting from the other. So into the future I expect the teams to continue to work in this fashion and the Macrophage Therapeutics program is extremely exciting. It’s a program that it’s based on sound scientific findings as you heard on the call, its experts like doctors Dr. Michael Mcgrath are very, very excited about what their observations are and feel there is a solid foundation to develop therapeutics in certain diseases particularly Kaposi Sarcoma and others that can yield the value that we believe that Manocept targeting platform deserve. So again a lot more coming, a lot of activity but hopefully we will all work every soundly and in a very calculated strategic fashion to maximize these programs and maintain our fiscal discipline.

[Stephen Dunn:]

Just the quick housekeeping question on Rheumatoid Arthritis. If I recall R-Nav, your R-Nav joint venture was the end game was to use the Tin-117 isotope on the Manocept backbone. But if I recall part of that the first step of that partnership or joint venture was to use Lymphoseek as the diagnostic agent in Rheumatoid Arthritis. So what you announced the other day yesterday Rheumatoid Arthritis is that under the R-Nav joint venture and if not, why not I guess?

[Rick Gonzalez:]

The grant is a Navidea grant, the R-Nav as you stated has four components to it, one of which is Lymphoseek for diagnostics, the other is using Tin-117 for diagnostic and therapeutic purposes both in RA. But the grant that was received is Navidea grant.

[Stephen Dunn:]

Okay. Thanks very much.

[Operator:]

Thank you. And our last question is from the line of Steve Brozak from WBB. Your line is now open.

[Steve Brozak:]

Thanks again for picking up the follow up. I am just going to go straight into what you’re just talking about Rick. You just completed a transaction or deal with the BIND and I want to know about how you look at that in terms of, can we expect that type of organization operation certainly in the future with macrophage. And what should we look at because you've obviously been pretty deliberative and been painstaking in describing how you are not going to look to spend any internal funding on macrophage. So what can we expect about that into the future?

[Rick Gonzalez:]

The philosophy and the strategy behind macrophage therapeutics is to develop or co-develop drugs with partners that would come in and help us take not only maybe bring payloads or other things on the Manocept backbone, but [indiscernible] development of this in order to do this in a non-dilutive way. BIND is a great example of two very, very quick and nimble and strong companies coming together to meet to bring their technologies, we bring the Manocept technology they bring the accurin and we put them together. Keep in mind that the BIND agreement is development collaboration agreement which if in fact the proof of principle is proven effective by adding synergistic effect of adding accurin on to the Manocept backbone then that leads to a much bigger discussion of what next. Our idea and our thinking and the interest that we’re seeing from many, many different companies is just that. Now the level of partnerships can be decided upon depending on what the aims and the goals are and what the parties are willing to bring to the table, but it is the strategy that we believe that is sound, we believe and we’re seeing a lot of interest already, the team is hard at work to secure additional partnership so BIND is just a first of many partnerships to come.

[Operator:]

And this ends our Q&A session. I would like to turn back the call to our President and CEO Rick Gonzalez for any final remarks.

[Rick Gonzalez:]

Thank you Carman. And thank you everyone again for your time. And we look forward to updating you on the progress of our commercial business and development pipeline on our third quarter earnings call. Have a fantastic day.

[Operator:]

Thank you for participating in today's conference. This concludes the program. And you may all disconnect. Have a wonderful day everyone.