Navidea Biopharmaceuticals, Inc. (AMEX:NAVB) Q4 2022 Earnings Call Transcript

Navidea Biopharmaceuticals, Inc. (AMEX:NAVB) Q4 2022 Earnings Call Transcript March 21, 2023

Operator: Greetings, and welcome to the Navidea Biopharmaceuticals Fourth Quarter Earnings Call and Business Update. . It is now my pleasure to introduce to you, Dr. Michael Rosol, Chief Medical Officer. Thank you, Mike. You may begin.

Michael Rosol: Thank you, and thank you all for joining us here today for the earnings call and business update. This call is being webcast live on our website, ir.navidea.com, and a replay will be made available. Following prepared remarks, we will be conducting a live Q&A session, as you’ve just heard. Navidea’s Chair of its Board of Directors, Mr. Alex Cappello; the Vice Chair of its Board of Directors, Mr. Kim Scott; its Vice President of Finance and Administration, Ms. Erika Eves; and its controller, Mr. Joe Meyer, are all joining me on the call today. During the course of this conference call, we will be making forward-looking statements regarding future events and the future performance of the company. These events relate to our business plans to develop Navidea’s molecular diagnostics and immunotherapeutics, which include clinical and regulatory developments and timing of clinical data readouts, along with capital resources and strategic matters.

All of these statements are based on the beliefs and expectations of management as of today. These statements involve certain assumptions, risks and uncertainties and could cause actual results to differ materially. We assume no obligation to revise or update forward-looking statements, whether as a result of new information, future events or otherwise. Investors should read carefully the risks and uncertainties described within the safe harbor section of our website as well as the risk factors included in the company’s most recent quarterly and annual filings with the SEC. As we begin our update and look back at events from Q4 to date, I thought it would be helpful to reiterate a few of our key areas of focus in our 2023 planning. One, we will continue RA, rheumatoid arthritis, Phase III trial success to full enrollment, NDA submission and FDA approval.

Two, we’ll fully fund the Phase III trial, and the Board of Directors is actively engaged in discussions with capital providers in support of our mission to identify this full RA trial funding. Our goal is to be fully funded this year. Three, we’ll attract and retain the industry’s top biopharmaceutical talent. As our RA development program success grows, so does the need to grow our team to help support key milestone achievements, identify and support key strategic relationships and initiate new PR IR efforts as a way to share our trial and milestone success. As I mentioned a moment ago, on the financing front, the Board of Directors is actively engaged in our financing effort, and we hope to have news to announce there shortly. In the last quarter, we have advanced our clinical trials in rheumatoid arthritis as well as our pipeline in other diagnostic indications and in therapeutics.

We continue to make solid progress on our Phase IIb trial in rheumatoid arthritis comparing imaging to biopsy. And during Q4, we presented at an international conference our updated promising preliminary results supporting tilmanocept’s ability to distinguish the fibroid pathotype from the nonfibroid in the first 13 participants evaluated by the time of the presentation. These strong early results support our hypotheses and provide excellent data in support of tilmanocept imaging as a biomarker of CD206 expression in joints of patients with RA. We also continue to enroll into the RA Phase III and are actively enrolling in 12 sites. We continue to advance our therapeutics and imaging applications through key existing collaborations with well-known institutions and investigators across the globe as we work to grow the company’s intellectual property.

We are proud of the progress we have made and the planning we are putting in place to benefit our associates and our shareholders here at Navidea. Regarding the CRG and Dr. Goldberg litigation matters, the company has that ruling that essentially bracket its exposure in both. We will continue to minimize exposure. Now I’d like to provide a brief update specific to our clinical results. So I’ll begin with the progress in our rheumatoid arthritis program. In NAV3-33, the Phase III, we continue to have good enrollment into this Phase III trial in RA. The initial indications we are pursuing for FDA approval are: one, early prediction of treatment response to a new or first-time anti-TNF alpha therapy; and two, identify RA patients with low level of localization of tilmanocept, who are less likely to respond to anti-TNF alpha therapy.

As we have discussed previously, there is a large unmet need for a reliable early predictor of whether a therapy is working in a patient with RA. Because if the drug is not working, the patient’s disease is not being treated, and this can lead to long-term health consequences, along with unnecessary high drug costs for ineffective therapies that also bring with them possible side effects. Our Phase III trial will establish the ability of tilmanocept imaging to serve as an early predictor of treatment response in RA patients switching to an anti-TNF alpha therapy, addressing that unmet medical need. In NAV3-32, our comparison study of tilmanocept imaging to joint biopsy, we remain in active recruitment. As we’ve announced and discussed previously, the preliminary results of this trial have been promising.

Our aim is to recruit patients with each of the 3 pathotypes of RA to obtain comparative imaging and pathology results. And the trial is designed so that we enroll a minimum of 4 subjects in each of the 3 subtypes of RA: fibroid, diffuse myeloid and lympho-myeloid. So overall trial size has been expected to range between 12 and 24. To date, we have achieved our enrollment targets in 2 out of those — 3 of those pathotype buckets, with patients having had both their imaging and joint biopsies completed. The primary objective of this study is to assess the relationship between joint-specific tilmanocept uptake values and the pathobiology of the RA-involved joints. Knowledge of an individual RA patient’s pathotype may be clinically important because it may predict to which RA therapy a patient is likely to respond.

There is a growing body of literature suggesting that those patients with the fibroid type of RA are much less responsive to the anti-TNF alpha drugs, and so a means of determining whether or not a patient has this particular pathotype is seen as extremely important to a number of key opinion leaders in rheumatology. As of this time, there is no reliable way of assessing a patient’s pathotype of RA other than by doing a biopsy, and we have hypothesized that tilmanocept could provide this information. So we presented updated preliminary results on the first 13 patients back at November’s American College of Rheumatology meeting. That’s the largest rheumatology conference in the world. These results presented there indicated that tilmanocept uptake in the RA-inflamed joints is able to discretely differentiate patients with the fibroid pathotype, that is patients with low macrophage involvement, from those having either the diffuse myeloid or lympho-myeloid types of RA, that is patients with higher macrophage involvement.

So these data also provides support for one of our indications in the Phase III trial. The ability to predict from a baseline scan alone, whether a patient is likely to receive a meaningful clinical benefit from an anti-TNF alpha therapy. Since, as I mentioned, there is increasing evidence that if a patient has the fibroid type of RA, they are less likely to receive significant clinical benefit from anti-TNF alpha therapy. You might recall that in our previously completed Phase IIb study, NAV3-31, that contained a pilot arm looking at the efficacy of tilmanocept imaging at early prediction of treatment response, those patients who exhibited a low level of tilmanocept uptake in their joints on their baseline scan before they started therapy had an almost 90% nonresponse rate to anti-TNF alpha therapy using a clinical gold standard assessment.

Importantly, these promising early results have opened up conversations with pharmaceutical companies who are developing therapeutics for RA, with the possibility of tilmanocept imaging being used as a biomarker in their drug development pipelines. The key differentiator between now and prior discussions we have had with these kind of companies is that we have this additional promising data in hand. And as we move forward and gather more data towards trial completion, if these current results hold, we will be in an even better position for discussions with companies with which to work. We continue to make very good progress on automating the imaging quantification as well, which will have significant benefit for the commercial product. We are working closely with MIM Software, M-I-M, on a definitive agreement for them to be our commercial partner for image quantification of tilmanocept imaging in RA.

So once again, MIM is a leading medical imaging software company based in Cleveland with a large footprint in the nuclear medicine space. We are currently integrating their existing image analysis workflow into our Phase III trial, and their software should be used for the image analysis for this trial as well as our normative database trial data. The workflow for these trials is extremely well designed. And by integrating them into our trials at this stage, this should be helpful for development and integration of a fully automated workflow that they are developing. Already, they have completed a pilot study using data from our earlier trials, demonstrating that they can develop this fully automated application that should be able to robustly reproduce our quantitative imaging reads using our proprietary algorithm.

Photo by National Cancer Institute on Unsplash

This is important for rollout of a commercial product. The ability to perform the quantitative imaging reads rapidly and reproducibly without having to have a bunch of people in the room actually drawing the reference regions of interest will help us go at large scale through this automated method, and that will be critical to large-scale adoption of tilmanocept for RA. Keep in mind that all of this, the image analysis methodology as well as the data upon which it is built, including the normative database you’ve heard us discuss before, is not only critical to driving the most accurate and sensitive objective read of our RA images, but it also serves as a significant barrier to entry to possible competitors in this space. You might have also seen the conversion of a provisional patent application to an A1 patent application earlier this month.

This application involves using clinical and serological markers in combination with our imaging readout to possibly improve our predictive capacity for treatment outcome over using our imaging alone. So we will have IP protection on combinatorial approaches as well if they work and if granted. We have data from the NAV3-31 Phase IIb trial that I just referenced that was completed a while ago that suggests this indeed might work. In the diagnostics pipeline development, we’ve completed preclinical studies on gallium-68 tilmanocept for PET imaging and related next-generation Manocept imaging agents. We work on this in collaboration with researchers at the University of Alabama at Birmingham or UAB. We’ve also completed work on our NIH-funded preclinical studies for evaluating gallium-68 tilmanocept in various new imaging agents similar to tilmanocept in a mouse model of atherosclerosis.

Work on another important set of preclinical studies was completed with our collaborators at UAB. This work explored varying the molecular weights of tilmanocept-like constructs and evaluating their biodistributions, following intravenous injection with and without competitive blocking. Results showed that by varying the molecular weights of these compounds and introducing competitive blocking agents, it was possible to significantly increase localization of tilmanocept-like imaging and therapeutic constructs to target tissues like tumors while concurrently reducing localization to off-target organs such as the liver. These results show a path to improving our diagnostic imaging and to greater and more effective targeted delivery of our therapeutic constructs to tumors and other sites of macrophage and valve pathology.

We presented these results at the Society of Nuclear Medicine and Molecular Imaging meeting last summer, and these were electronically published on March 7 of this year in the Journal Molecular Imaging and Biology, and you can access that online. On the therapeutic assets front, we are advancing our candidates in the oncology and anti-inflammatory spaces in preclinical studies with the goal of filing investigational new drug applications to advance to human trials in 2024. These filings will be significant inflection points and opportunities for licensing and partnering deals for the company. Work on new drug delivery constructs and new targeted payloads has also progressed. These new constructs carry new drug payloads that may be more effective than doxorubicin for beneficially altering the immune status of tumor macrophages, for example.

Results in mouse models have demonstrated that when administered alone or in combination with another cancer drug, these therapeutic constructs significantly reduce the rate of tumor growth by an average of 76%. Some of our results covering new bisphosphonate payload constructs were presented at the Tumor Myeloid-Directed Therapy Summit meeting. More recently, on November 10, the full spectrum of results for the paclitaxel and novel bisphosphonate constructs were presented at the Annual Meeting of the Society for Immunotherapy of Cancer held in Boston. In addition, we completed what’s called a maximum tolerated dose study in mice for our bisphosphonate-carrying construct. The results of this study will facilitate design of studies intended to evaluate anticancer efficacy of this construct in the future.

All of our preclinical work with potential cancer immunotherapy constructs are intended to enable Navidea to choose a lead candidate for macro-type-, phenotype-altering drugs for oncology indications. Preclinical studies are also ongoing in leishmaniasis. Leishmaniasis is a vector-borne chronic disease caused by a protozoan parasite that replicates in CD206-positive macrophages. It is transmitted to humans through the bite of infected sandflies found in parts of the tropics, subtropics and Southern Europe. It’s rare in the United States, but in more tropical countries where the sandfly vectors are found, it is a common serious and potentially life-threatening disease. The U.S. FDA has designated leishmaniasis as a neglected tropical disease, making new therapeutics of this disease potentially eligible for what’s called a priority review voucher that Navidea could sell potentially for more than enough to back cover the cost of development as well as accelerate a number of other pipeline candidates.

Previously, Navidea scientists and our collaborators at the NIH published research results demonstrating that high CD206 expressing macrophages play a role in the dominant form of the disease. This project has advanced significantly in the last year with results from 3 separate experiments showing that a novel construct created by Navidea has significant therapeutic potential to control leishmanial infections in mice. Concurrent with reduced numbers of these parasites, alterations in the immune status of the lesions that are caused by leishmaniasis were observed with potential implications for the mechanism of action of our novel therapeutic construct. Additional experiments are ongoing or our plan to follow up on these very promising initial results.

That brings me to our overall intellectual property front. We received notification of issuance of a patent from the United States Patent and Trademark Office for the company’s application titled Compositions And Methods For Altering Macrophage Phenotype. This patent covers the ability of our constructs to stimulate an immune response against tumors through targeted delivery of payloads that change the nature of macrophages to make them more pro-inflammatory. Efficacy of these constructs has been demonstrated in preclinical studies, including the ones I just spoke about. We have also received notifications of issuance of patent application of patents in Israel and in Canada. Please refer to the earnings call press release from earlier today for more detail.

So we continue to submit new provisional applications and work on our pending ones. We have filed a new provisional patent application describing a new chemistry for addition of mannose sugars to our mannosylated dextran-based imaging and therapeutic constructs. This new chemistry results in a different linkage holding the mannose onto our constructs, one that is more stable than the linkage currently used, and is designed to facilitate commercial scale-up and production of our next-generation imaging and therapeutic constructs. In partnership with our excellent patent attorneys, we have an active IP protection strategy for the company that will provide needed protections and rights to both our current diagnostic and therapeutic agents as well as to our next-generation molecules and disease indications.

On the Lymphoseek front, regarding Lymphoseek Europe and the rest of the world, our strategy has been and remains to find the right partners for marketing and distribution for Lymphoseek and other company pipeline candidates in Europe and beyond. The reason for this is we are focusing on the long-term strategy of partnering for marketing and distribution. On the drug manufacturing and supply front for both Lymphoseek and the RA product, we have been and continue to work with a new active pharmaceutical ingredient or API supplier as well as a final drug product supplier. Progress continues. And as of this time, we are advancing towards completion of these and readiness for clinical and commercial supply. This work has implications for Lymphoseek in China and Lymphoaim in India as we need to be able to supply a steady and reliable stream of product through our partners in these countries.

So these are just some of the highlights of the last quarter that we wanted to touch on for this update. We remain largely focused on the RA pipeline, specifically the Phase IIb imaging, the biopsy trial in the Phase III, while we continue to support and push 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 and our network of clinical trial sites and academic research collaborators for all of their hard work. Our business strategy remains to advance our pipeline products to key inflection points and seek appropriate partnerships for commercialization and marketing. So with that, I’ll close the update — summary update. I want to thank you, and I’m going to turn it over to Erika now for the financials.

Erika Eves: Thank you, Mike. As announced last week, I will be leaving Navidea at the end of the month. Our current Controller, Joe Meyer, will be taking over many of my responsibilities. So I’d like to introduce all of you to Joe, who will now read the financial results for the fourth quarter and full year of 2022. Joe?

Joseph Meyer: Thanks, Erika. And for the first time, hello, everyone. Total revenues for the 3-month period ended December 31, 2022, were approximately $1,000 compared to $50,000 for the same period in 2021. Total revenues for the year ended December 31, 2022, were $66,000 compared to $532,000 for the same period in 2021. The decrease was primarily due to the 2021 partial recovery of debt previously written off in 2015, the 2021 receipt of reimbursement from Cardinal Health of certain research and development costs, decreased grant revenue relative to small business innovation research from NIH supporting Manocept development and decreased license revenue from transitional sales up to Manocept in Europe. Research and development expenses for Q4 were $1 million compared to $1.4 million for the same period in 2021.

R&D expenses for the full year 2022 were $6.0 million compared to $5.1 million for the full year 2021. That year-over-year increase was primarily due to increased drug project expenses and increased employee compensation, including incentive-based awards, offset by decreased regulatory consulting expenses. Selling, general and administrative expenses, or SG&A, for Q4 were $1.3 million compared to $2.3 million for the same period in 2021. SG&A expenses for the full year 2022 were $8 million compared to $7.5 million for the full year 2021. Following the ruling by the Texas Court in August 2022, the company recorded $2.6 million of legal fees in SG&A pursuant to the CRG judgment. The year-over-year increase was also due to increases in insurance and depreciation and amortization, partially offset by decreases in employee compensation, including fringe benefits and incentive-based awards, expenses related to European operations, travel, legal and professional services, investor relations and shareholder services, general office expenses, facilities costs, losses on the abandonment of certain intellectual property, and franchise taxes.

Navidea’s net loss attributable to common stockholders for Q4 was $3.5 million or $0.11 per share compared to $3.7 million or $0.12 per share for the same period in 2021. Navidea’s net loss attributable to common stockholders for the full year 2022 was $17.2 million or $0.56 per share compared to $11.7 million or $0.40 per share for the full year 2021. Navidea ended the fourth quarter of 2022 with approximately $2 million in cash and cash equivalents. And with that, I’ll throw it back to you, Mike.

Michael Rosol: Thank you, Joe and Erika. Thanks for everything, Erika, that you’ve done over the years, not just my years here, but before. And now I’d like to open up the call to questions. I’ll let the moderator do that more professionally than I just did. Joining me for the Q&A session, of course, will be the folks here in this room, myself, Erika, Joe. And then indeed, we have Alex Cappello, the Chair of our Board; as well as Mr. Kim Scott, the Vice Chair.

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Q&A Session

Operator: . And the first question comes from the line of Edward English, a private investor.

Edward English: Mike, this is Eddie English. Before I ask my first question, though, I would like to extend a shout-out to Erika Eves for the 30-plus years of service and support, not only to Navidea but us, shareholders, and to wish her the very best in her new endeavors. With that, Mike, the elephant in the room based on the report that came out this afternoon, in my mind, is the current cash position with only $2 million at the end of the fourth quarter and a historical cash burn rate of $800,000 to $1 million a month. Can you shed some light on how far in the future you all can operate with your existing cash reserves?

Michael Rosol: Eddie, thanks for the question, and I appreciate the shout-out. I’m sure Erika does to her.

Erika Eves: Thank you. Appreciate it.

Michael Rosol: Yes. In any event. So Eddie, great question. Really, it’s no secret that the company has been in a resource limited environment, but we are optimistic that we’ll have something to announce around capital infusion soon. As I mentioned, the Board — members of the Board are working diligently on this, and that’s really all that we can say about it at the current time. I appreciate the question, though. So that’s really what we can say right now.

Edward English: Okay. One follow-up, and I’ll abide by the rules and then go back in the queue because I have a few more. But my next question is around your plans to become NYSE-compliant by July 28. Are you all on schedule to meet that deadline? Or what can you tell us about that?

Michael Rosol: I’m going to let Erika use her great financial wisdom to have one — she should have something to say on this last Q&A. Go for it, Erika.

Erika Eves: One final word for me. Yes. So obviously, one of the biggest issues facing us is the NYSE cure that is required, and I think the financing that the Board is currently working on should go a long way towards satisfying the requirements. And so I would say at this time, expectations are that we will indeed become — regain compliance with NYSE by the end of the cure period.

Operator: And our next question comes from the line of with — another private investor.

Unidentified Analyst: Yes. I appreciate you touching on Lymphoseek a few minutes ago. I wanted to — hopefully, you can expand a little bit on that. I know that it’s been 8 years since we’ve retained the international rights to selling Lymphoseek. And in all that time, it appears we’ve not been able to generate any significant revenue. And I wanted — if you could put your honesty on this, is there something more specific that we could do to make this happen? Or is Lymphoseek a lost cause at this point?

Michael Rosol: Yes. Great question. I’m happy to answer and give you as much transparency as possible. So that’s a summerlong story that I’ll try to stick to a shorter version of. So as you and others know on this call, we — Navidea had licensed the European rights to Lymphoseek to a company called Norgine. And they’re a fine company. Their strategy, we might say, was probably not optimal strategy for penetrating the market of sentinel lymph node biopsy assessments or lymphoscintigraphy in Europe. And it’s not all just on their strategy. See, in Europe, there is a viable competitor for Lymphoseek. It’s a version of — it’s a colloidal compound. There are different names, but one of the common names is Nanocoll. And it’s a pretty good agent, right, for — and it’s relatively inexpensive.

In fact, it’s actually very inexpensive, and it’s pretty good. We and others, and there’s a growing body of research that supports this, suspect or believe that there are advantages to Lymphoseek over this product that has really dominated the market in Europe for years. So Norgine didn’t do maybe the optimal strategy for penetrating a market that already has a viable product. We do think there are advantages to it. And to be fair to Norgine, it’s been years in the making that researchers have produced publications that support what I just said is our belief, that Lymphoseek has advantages. So one thing we think Norgine did maybe that wasn’t what we would do is they priced Lymphoseek at a premium without having enough of these data in hand to make the case in the very highly regulated European market to adopt Lymphoseek over a good product.

That make sense? So what we have done is we brought back the rights, as you probably know, Lymphoseek Europe to Navidea. And we’ve spent a significant amount of time getting our API and drug product development processes in gear so that we could potentially supply the European market as well as the rest of the world with Lymphoseek and/or the RA product. So with all of that said, we are actively in discussions with possible partners for Lymphoseek in Europe because it is not just us and some KOLs who believe there are advantages of Lymphoseek to Nanocoll or these Nanocoll and related products, but there are other possible partners who believe it as well. Having said that, it’s — there is a viable product out there, and so the case must be made strongly in a very highly regulated environment in Europe.

So there are a lot of — it’s not quite as smooth sailing as it is in the United States. That’s maybe too much flavor or detail for you. But it is a product that we think has advantages over the existing product that dominates, and we are in discussions. And if I didn’t say that in this call, I think I did, we’ve said it before. And so we’ll continue to have those and see what the market will bear, but we’re optimistic. That’s about as honest as I can be.

Operator: And the next question comes from the line of , a private investor.

Unidentified Analyst: Yes. Erika, like everyone, we wish you well in the future. Thanks for your 31 years. And Joe, welcome on board. My question — initial question is observation first. I think there’s a great under-appreciation for this patent that you received on the M1/M2 reprogramming in the TAMs that I just felt the market appreciated it yet, and I don’t know if many investors had appreciated it. To me, it seems quite outstanding. But taking that as an observation, there’s also been a lot of science developed, Dr. Rosol, over the last little while that M1/M2 programming, whether in reverse or inverse, also may be applicable in many other diseases and inflammations. Can you expand on that a little bit? And do you believe that you will be — we’ll be seeing patent applications on that in the future?

Michael Rosol: Yes. Thanks, Mike. Right on all counts and good questions. So some background for the folks who are so in-depth into the field. Very broadly speaking, there are — macrophages can be pro-inflammatory, stimulate an immune response. That’s the so-called M1 macrophages that you just heard Mike refer to. And then there are M2 macrophages that are more — they have the opposite kind of effects. The wound healing, they quiet down the immune response. Some people would say, in tumors, paradoxically, they’re pro-tumor, actually. So there are these kind of extremes of the macrophage in the macrophage world. And looking at changing the phenotypes of the macrophage, driving them from one of those, the M1, for example, to the M2 or vice versa is a very hot topic across the world because macrophages are very powerful and prevalent cell type in the body, and they’re involved in almost all diseases, really.

And so the opportunities there to help people to treat diseases is enormous. Macrophages play a key role in cancer growth and metastases. And in cancers, the macrophages that dominate in and around the cancers are the kind of wound-healing, so-called pro-tumor types of macrophages that actually act as a kind of force field around the tumors to prevent the body’s natural immune response from attacking the tumors. And so what we and many other organizations are doing across the globe related to specific cancer is we’re looking at therapies that — or treatments that might change the phenotype or the nature of the macrophage and drive them from the wound-healing M2s to the pro-inflammatory M1s. And if you can do that in people who have cancer and in those tumors themselves, you can then rally the body’s immune response to attack the cancer.

And as of May of 2021, to give you an idea of how large these efforts are globally, to do just what I told, there were 606 clinical trials that we’re running or have been completed just to do what I just said related to cancers. It’s a huge field. And you know what’s cool about it is, really, we’re at the forefront of that, not necessarily in the progression of our therapeutic constructs into humans, but in the technology and what our drugs have been show — what we have been able to show they can do in the in vitro or preclinical phases. So we’re right there at the leading edge of this incredibly large opportunity field or space to help patients and to treat a large number of diseases from cancers to others. I can get into that in a moment.

And that patent that Mike referenced was about — was giving us our intellectual property around using our constructs to change the phenotype of the nature of macrophages, as I just described. And yes, there are going to be a whole series of patents that follow suit or applications around that. The fact that we can target macrophages of all type, the M1s, the M2s and everything in between, with our construct means that we can deliver all sorts of cool things, payloads, they’re called loosely, to the macrophage. And we can perturb them and drive them in different directions. And we have a very flexible, adaptable molecule that has all sorts of really great advantages over what almost every other group out there is using. So I’m not just saying that because I work here.

It’s proved. And so we have this great opportunity to be able to really shake up the world in these therapeutic domains. And one of the major thing holding us back as a small company, of course, has been resources, financial resources. So we’re very good at making a lot happen with a little. And so our goal, of course, this year, and you’ve heard it before, but I believe significantly that things are different now than they used to be, our goal is to be fully funded so that we can help drive those things towards first-in-human trials, which is where we can — those kinds of inflection points are opportunities for large investments, whether they be partnering or license deals or whatever, or whatever we might decide to do. So we’re trying to drive them towards that.

So I might have gone astray from what you originally asked, but that patent is very important. There will be others coming along the way that are related. There are some already. You just don’t know about it yet because they’re not published. And this is a very hot and exciting area in not just cancer research but in other diseases. So I’ve mentioned in cancer, you want to drive the M2 or wound-healing pro-tumor type macrophages to M1 pro-inflammatory. In many other diseases, including almost all inflammatory and infectious diseases, you want to do the opposite. You want to take the inflamed pro-inflammatory macrophages that are doing a lot of stuff to try to attack whatever the infectious agent is, but the body has a hard time controlling those things precisely.

So what you want to do is you want to drive those towards the more wound healing-type. And we have data suggesting that we can do that with our dexamethasone constructs. So we can perturb the macrophages and drive them in one direction or the other. And with that, the world is kind of our oyster, and almost every disease is touched by the macrophage, or the macrophage plays a central or critical role. So that’s my spiel. Hopefully, I addressed your question, Mike.

Unidentified Analyst: You did an excellent answer. So my follow-up on that is an observation that I can make, and maybe you can’t opine on it. But I think it’s opening up the IND that will really open this up to the world. And on that, do you have any other guideline you can give us into 2024 on your target range for that IND?

Michael Rosol: Yes, sorry. Thanks. I think that’s still our goal and our objective. Obviously, it will be really helped — will have significant help propelling us forward with full funding, but that is still an achievable goal because we’ve advanced some of these significantly in the preclinical space. And what you want to do to get towards that IND, the other kind of 2 dominoes that need to fall, roughly speaking or at a high level, are you need to establish that in preclinical models that your construct or your therapy is safe and tolerated, and there are some specific studies you have to do for that. But they’re very well known and established and we can box those out, and we’ve already accounted for those in our time line.

And then the other thing you have to do is show that you can actually make the drug in a scalable fashion and it’s reliable and safe to be injected. And so those are the other 2 dominoes that need to fall. It’s fairly reasonable for us, we think, to get to those in the time lines you’ve seen with the caveat always we need to be resourced properly.

Operator: And the next question is a follow-up from Edward English, a private investor.

Edward English: Again, Dr. Rosol, I’m curious, I’ve noticed in what’s available to us in the public and the securities and exchange filings that there haven’t been any stocks granted to the Board of Directors since late November. I haven’t seen any Form 4s. Has something changed with the compensation for the Board? Are they now receiving cash? Or can you elaborate on what’s changed? And if so, why?

Michael Rosol: Go on, Erika, please.

Erika Eves: Yes. So in late 2021, the directors adopted a compensation plan for the next 12 months. Due to our funding situation, many of the directors have chosen to defer compensation until we achieve full funding. And so I can’t really speak for the Board, but I believe that, that may have had something to do with their decision to not award themselves an additional package this year. I think that they are probably waiting until we feel like they don’t have to defer any longer.

Alexander Cappello: Actually, several months ago, all of us were — had cash payments suspended. So we’ve all been working several months without compensation and some for the whole year.

Edward English: Next question, a follow-up, and that will be my question for the day. You still have the third-party assessment for the use of the tilmanocept in the RA program. It’s still out on the site, and it has revenue projections that are quite appealing. And I’m just curious if you all still stand by those projections. I think there’s some $41 million in revenue projected for the year 2024. Have those projections slipped or changed in any way?

Michael Rosol: Yes, this is Mike. So the numbers, I think, are solid numbers in terms of the market potential and the growth curves even. Those are always based on modeling. In terms of the time lines, I mean the — we’re doing our best to meet the time lines that are on the investor deck that is out there right now. But to be honest, some of these projections were based on opening up a full suite of sites or a larger number of sites at a certain stage and then going forward from that period. And we’ve been, frankly, in a resource limited environment for a while now. So some of these things are just naturally going to be pushed forward unless — and this is where it gets very complicated. So I’m not giving you double talk, I’m giving you real talk.

Unless the — we could open up more sites than we built into the original model. Enrollment is always something that we have some control over but not full. And then there are several other factors that are — including the trial size, which is variable based on the response rate to the anti-TNF alpha therapies. So you put all of that into the hopper, the resource limited environment where we have not been able to open up all the sites we wanted to yet and some of these other variables, and they can kind of counteract each other. So you end up with the same resolution of everything at the same time or might be driven forward or even happen earlier. So more likely than not, it gets pushed forward a little bit if you have to run a long time without a full complement of clinical trial sites open.

And that’s kind of where we are now. So I hope that doesn’t sound hand-wavy. But like those — the first revenue generated may be pushed off a bit, but the numbers themselves and the trajectory, once it happens, we still stand by and believe because we have a good idea of the competitive landscape. And the data that we’re bringing to the table so far are significantly better than anything I’ve seen out there. That make sense?

Edward English: Yes. If I could summarize, I think you’re telling me the potential is still there and it’s very robust, but the timing could go either way.

Michael Rosol: You got it. Yes.

Edward English: Okay. Well, I’ll end it there and just say certainly looking forward to some news soon on your financing.

Operator: And the next question is a follow-up from , private investor.

Unidentified Analyst: Yes. Dr. Rosol, 2 follow-up questions. You mentioned briefly that as you advance the science engagement, future funding partners improve. Are those still active talks ongoing on the RA partner potential? Is that still in the works and still progressing?

Michael Rosol: Thanks, Mike. Yes, that’s a — and there’s a complicated answer behind that. The answer is yes, we’re still in — and I’ve said this, so I can say it now. We’re in discussions related to the implementation of — or the use of tilmanocept in partnership with other drug development companies. And those are — there’s a lot of interest in the NAV3-32 Phase IIb study for that. In terms of the overall business partner for RA, I think there are opportunities to discuss as we roll with other possible — with possible business partners as we roll into — through the trials. But really, and again, to be honest, what I think, Mike Rosol, the place where you’re in the best position to get the most bang for your buck is when you’ve completed the trials and have strong data in hand.

From that point on to — all the way to and into or through FDA approval, that puts you in the strongest position, I believe, because then you have a proved-out, to one degree or another, diagnostic. So again, if you want me to be completely honest here, doing deals earlier, you usually — you give up something because there’s more risk, right? It’s all about the rNPV, right? So the longer we can go, if we can be fully funded and drive this towards completion of a trial, good data, FDA NDA submission, believe me, then we’re in the strongest position to do a deal. So I think that’s the strategy that you should pursue, at least if you can, and we’re trying to do that strategy. It doesn’t mean if something happens in the intervening months or so, we’re not turning it away, we’re listening.

But we want to make the best that we can of what we’ve got here. And really, that’s the story. So…

Unidentified Analyst: Well, I think taking that approach of extracting the best value with the most informed and progressed results is — would be the desired way to go. And I think I’ll finish with the comment that you made in the rheumatoid arthritis treatment patent application that should encourage people on this and in 2 of the embodiments in 106 and 111. It was stated that the exciting perfect prediction and remarkable test responses were generated in that testing for the treatment. Can you expand on any of that? Because that just exemplifies and amplifies the potential of this RA, the results you were seeing in the treatment RA — of the RA patent application. Can you comment?

Michael Rosol: Sure. So thanks for that. That patent is primarily about the — using a combinatorial approach for achieving a better prediction capacity for our imaging agent for predicting treatment response in RA. And so we know that our — that in the data so far, tilmanocept imaging is a very good predictor in the data so far of clinical outcome at 3 and 6 months. And what we started to look at after the Phase IIb study was, could — is it an independent and additive predictor to other clinical serological biomarkers, which for the most part or entire part have really kind of failed to be adequate on their own or even in combination? Although there’s a lot of people looking at different combinations. So we looked at our imaging prediction in combination with all sorts of different clinical and blood-based, that’s what I mean by serological, biomarkers that are normally obtained in RA patients.

And we looked at these in all sorts of different cool ways, and what we found was that it looks like — and we only have limited data to date. But it might be that our — if we take our very powerful imaging readout and combine it with some readily available and already validated clinical biomarkers, we might be able to improve our prediction capacity, in some circumstances, the upwards towards a sensitivity of 100, right, or perfect. Never going to be perfect across the world, across everybody, across all time. But it’s really about taking a combinatorial approach of our imaging readout with other biomarkers that are available. And it looks like there might be value there. And by filing that patent, then of course, we have the intellectual property protection.

And insofar as it relates to therapeutics, that should be therapeutic-agnostic. Although to date, we’ve only looked at the anti-TNF alphas. So the exciting thing there is, what we’ve learned to date is our imaging readout is an objective, independent predictor of whether or not a patient is getting better or not from treatment of an anti-TNF alpha or with an anti-TNF alpha. It’s independent of all the other clinical and serological or blood-based biomarkers. That’s one, and it’s really strong. If you add some of those, and we’re looking to see which is the best combination, then you might improve your prediction, or not much closer because there’s not even a lot of ceiling left, but even closer to the ceiling of getting it right all the time or most of the time or the vast majority of the time.

So that’s really cool and promising. So we’re really trying to get to what is the optimal predictive capacity for any patient. Is their drug going to work or not? Or is it working or not early? Now related to the therapeutics, it’s less specific in that it’s not really specifically outlined in that patent. However, the fact that we can deliver and we’ve demonstrated that we can deliver an imaging probe to RA-inflamed joints, and we can do this reliably, repeatedly and stably, it should not escape your attention that then we could easily swap that out for a therapeutic. So we believe that we also have a potential powerful therapeutic in our hands, pardon the pun of hands. But — and that remains to be explored more fully when the company is funding.

But indeed, we have the potential for a powerful therapeutic. And what we’re doing in that patent application is showing that on the diagnostics side, we really have all the bases covered. That make sense?

Unidentified Analyst: Yes. So on a therapeutic, did you guys do — have you done any preclinical, just small test to see if that therapeutic validated that concept you just talked about that’s not in the patent? Have you tried anything? Or I imagine you have.

Michael Rosol: Yes. There were preclinical studies that have been done in the past, and there was some promise to those. So let me leave it at that. But really — and we have a plan for how we can go forward and really flesh that out. But in the limited data that I’ve seen to date, and much of this predates my time here, there was already promise shown. And we know a lot more than we knew then, so I think it’s only — we’re only in a better position.

Operator: There are no further questions at this time. And I would like to turn the floor back over to Dr. Mike Rosol for any closing comments.

Michael Rosol: All right. I think you’ve heard enough from me today. I want to thank you for joining us today for your engagement and all of your questions. Once again, I want to thank Erika for all her hard work here over the years. And welcome, Joe, here to the fray, at least the public-facing fray. I’m sure he’s going to be great and have a fun time. And hopefully, we’ll be talking to you, folks, before too long. So thank you, and have a great evening.

Operator: This concludes today’s conference. You may disconnect your lines at this time. Thank you for your participation, and have a great day.