Are Short Sellers On to Something at Navidea Biopharmaceuticals Inc (NAVB)? – Cardinal Health, Inc. (CAH)

Burning down the house
Making sure there’s enough cash to cross the finish line is another concern, and my Foolish colleague Rich Smith recently noted Navidea has been burning through cash like a house afire. It’s had to tap the public equity markets on several occasions recently to give itself a cushion, but at the end of January it issued yet another 1.5 million shares in an effort to raise $4.4 million more.

Investors might be more worried about the dilution their suffering if all Navidea had was just that one marker in its portfolio. But because it is also actively developing three additional radiopharmaceutical agent platforms — NAV4694 for diagnosing Alzheimer’s, NAV5001 for diagnosing Parkinson’s, and RIGScan to help surgeons, particularly, to locate colorectal cancer — they’re likely more willing to cut it some slack for the time being. Success with Lymphoseek will give it the wherewithal to finance its other programs, though don’t be surprised if after approval and its stock prices spikes Navidea quickly hits the equity market again for more fast cash.

While NAV4694 is probably the next best thing it has with plans for commencing phase 3 studies early this year, it still means we won’t see revenues from it until 2016 at the earliest. Worse yet, Eli Lilly & Co. (NYSE:LLY) already won FDA approval last year for an Alzheimer’s disease imaging agent  and it received the European nod in January.

With NAV5001 and RigScan even further out on the schedule — RigScan is essentially a backburner project at this point — Navidea needs Lymphoseek more than ever and the short sellers are betting it will fall short.

Don’t sell yourself short
No doubt this moment has been a long time coming and harboring some skepticism isn’t exactly unwarranted, but I’m willing to bet it does make it over the top, so I’m rating Navidea on Motley Fool CAPS to outperform the broad market indexes.

Share your views in the comments box below on whether short sellers should be squeezed till it hurts or if the stock ought to be shorted till the sun don’t shine.

The article Are Short Sellers On to Something at Navidea Biopharmaceuticals? originally appeared on Fool.com and is written by Rich Duprey.

Fool contributor Rich Duprey has no position in any stocks mentioned, and neither does The Motley Fool.

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