Navidea Biopharmaceuticals, Inc.

Thank you, and thank you all for joining us here today. This call is being webcast live on our website, ir.navidia.com, and a replay will be made available. There is an accompanying slide deck that is also being displayed. Following prepared remarks, we will be conducting a live question and answer session. NaVidia's chair of its board of directors, Mr. Alex Capello, its vice chair, Mr. Kim Scott, and its vice president of finance and administration, Erica Eves, are 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 NVIDIA's molecular diagnostics and immunotherapeutics, which include clinical and regulatory developments and timing of clinical data readouts, along with capital resources and strategic matters, as well as the impact of the COVID-19 pandemic on NVIDIA's business operations. 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 filing with the SEC. With that said, let's begin our update. During the second quarter of 2022 and since, we continue to work on financing for the company. We closed on a $2.5 million bridge loan from the company's vice chair of the board of directors, Mr. Scott, and last month the company completed a rights offering with the investment banking arm of Maxim Group. The company received aggregate gross cash proceeds of approximately 6.2 million in the rights offering. If exercised, additional gross proceeds of up to 11.6 million may be received through the exercise of warrants issued in the offering. The warrants are exercisable immediately, expire five years from the date of issuance, and have an exercise price of 50 cents per share. We also received an accelerated reimbursement payment of $800,000 for certain research and development expenses from a strategic partner. We continue to plan for additional capital raise in the coming months. We have advanced our clinical trials in rheumatoid arthritis as well as our pipeline and other diagnostic indications and in therapeutics. Overall, we've made good progress on our phase 2B trial in rheumatoid arthritis, or RA, comparing imaging to biopsy, and we announced the promising preliminary results and our ability to distinguish the fibroid pathotype from the non-fibroid in our first 11 evaluated patients. These strong early results support our hypotheses and provide great data in support of telmanicept imaging as a biomarker of CD206 expression in joints of patients with RA. We also continue to enroll into the RA Phase III and have recently opened up an additional nine sites for a total of 12 now open. We are also advancing our therapeutics and imaging applications through collaborative relationships with various well-known institutions and investigators across the globe, and we are growing and diligently maintaining the company's intellectual property. The team here works extremely hard and efficiently, and I'm very proud to be associated with this outstanding group of individuals. You may have seen our recent release about the termination of the Jubilant Memorandum of Understanding. This memorandum carried with it binding terms of exclusivity such that we could not entertain discussions or offers from other parties for the rights to our potential commercial product and RA. From the time of the original signing of the MOU to now, we have continued to advance Tolmanisept and RA into the Phase 2B and Phase 3 trials currently underway. The ending of the exclusivity period is a significant opportunity to speak to potential partners with advanced data in hand. In the Capital Royalty Group case, we announced a ruling awarding CRG's attorney fees on their breach of contract claims against NVIDIA and Macrophage Therapeutics. We are disappointed in the court's ruling and do not believe the law and the facts presented at the trial support this ruling. We are discussing our best course of action to pursue in response to this ruling. As we've said in the recent past, there are many things we are working on behind the scenes, and we will provide you with updates as soon as we are able and as appropriate. Now I'd like to provide more detail around the clinical updates. I'll begin with progress in our rheumatoid arthritis program. We continue to enroll into our phase three trial in RA. As I just mentioned, we recently announced that we have opened up nine new sites at the end of August and have enrolled 30 subjects to date. We've done this with about 16 total site months of enrollment. So our per site, per month enrollment rate is significantly greater than the average. The indications we are going for in RA, once again, are one, early prediction of treatment response to a new or first time anti-TNF-alpha therapy, and two, identification of RA patients with low level of localization of tolamycept 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 or not a therapy is working in a patient with RA. Because if a 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 bring with them possible side effects. Our Phase III trial will establish the ability of technetium-99M tilmanisept imaging to serve as an early predictor of treatment response in RA patients switching to an anti-TNF-alpha therapy, addressing this unmet medical need. In NAV332, our comparison study of telmanisept imaging to joint biopsy, this trial remains in active recruitment. As we've announced and discussed previously, the preliminary results of this trial are promising. Our aim is to recruit patients with each of the three pathotypes of RA, to obtain comparative imaging and pathology results. And the trial is designed so that we enroll a minimum of four subjects in each of these three pathotypes of RA, fibroid, diffuse myeloid, and lymphomyeloid. So overall trial size has been expected to range between 12 to 24. To date, we have achieved the minimum or more in two out of three of the 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 telmanicept uptake values and the pathobiology of RA-involved joint tissue. 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 an invasive biopsy. And we have hypothesized that Telmanisept could provide this information. We previously discussed those preliminary results that I mentioned on the first 11 patients. These results indicated that telmanicept uptake in RA inflamed joints is able to discreetly differentiate patients with the fibroid pathotype, i.e. those with low macrophage involvement, from those having either the diffuse myeloid or the lymphomyeloid pathotypes of RA, i.e. those with high macrophage involvement. Seven of the subjects had relatively low levels of telmanicept uptake, All seven of these subjects were found to have the fibroid pathotype. Of the remaining four subjects, three had the diffuse myeloid pathotype and one had the lymphomyeloid. Furthermore, those subjects with either one of these two pathotypes had, on average, more than three times the telanosept uptake as the average subject with the fibroid pathotype. So we have been able to clearly classify patients as either fibroid or non-fibroid based on our imaging results taken before the biopsy in those 11 cases. These data also provide 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 a fibroid pathotype 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 2B study, NAV331, that contained a pilot arm looking at the efficacy of telmanisept imaging at early prediction of treatment response, those patients exhibiting a low level of telmanisept uptake in their joints on their baseline scan had an almost 90% non-response rate to anti-TNF-alpha therapy using a clinical gold standard assessment. You can look for these preliminary results to be presented at an upcoming conference, along with full study results from this previous Phase IIb study, NAV331. Finally, these biopsy trials are notoriously slow recruiting, but in fact, our recruitment rate over our number of sites is faster than what our lead PI indicated he would expect. Specifically, in our planning phase, we were told that if we could open 10 sites for recruitment, we could achieve our enrollment figures in about 18 months. Due in large part to resources, as well as COVID and site reopening issues, we have only been able to open three to date for enrollment. From the opening of our first of three sites to now is 18 months. As usual, the clinical operations team has done a great job at exceeding expectations, where we've almost completed enrollment in the same time period with roughly a third of the sites. We continue to make very good progress in automating the image quantification as well, which will have significant benefit for the commercial product. We have the letter of intent and continue to work closely with MIM software on the full agreement for them to be our commercial partner for image quantification of telmanicept imaging in RA. Once again, MIM is a leading medical image software company based in Cleveland with a large footprint in the nuclear medicine space. They completed a pilot study using data from our trials demonstrating that they can develop a fully automated application that can robustly reproduce our quantitative imaging results using our proprietary algorithm. This will be important for rollout of a commercial product. The ability to perform the quantitative reads rapidly and reproducibly and at large scale through automated means is critical to large scale use of telmanosep for rheumatoid arthritis. Keep in mind that all of this, the imaging 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 deriving the most accurate and sensitive objective read of our images, but it also serves as a significant barrier to entry to possible competitors in this space. We will continue to work with MIM to finalize the terms of the partnership and we'll make an announcement when done. In other areas of our diagnostics pipeline development, in cardiovascular disease, the group at Massachusetts General Hospital in Boston has published the results of the investigator-initiated atherosclerotic plaque imaging study that we helped to support. The data are promising in terms of localization of to sites of atherosclerotic plaque and were in line with what was reported in the pilot study we co-published with them previously. We press release the publication, and you can find reference to it there. Preclinical studies on Gallium-68 tilmanisept for PET imaging and related next-generation manisept imaging agents have progressed significantly through internal work at NVIDIA and through extramural collaborations with researchers at the University of Alabama at Birmingham or UAB. We have completed work on our NIH-funded preclinical studies for evaluating Gallium-68 tilmanisept and various new imaging agents similar to Comanisept in a mouse model of atherosclerosis. Work on another important set of preclinical imaging studies was completed and presented at the recent Society of Nuclear Medicine and Molecular Imaging meeting, and the manuscript is currently in peer review. This work looked at a method to increase the localization of our imaging agent to target tissues, while additional technology was designed to block off-target imaging agent localization to the liver. which is a major site of localization when telmanisept is administered intravenously. These studies were highly successful, showing that we can dramatically increase localization of a new telmanisept-like imaging agent to tumors while simultaneously significantly blocking off-target localization to the liver. On the therapeutic assets front, we are advancing our candidates in the oncology and anti-inflammatory spaces in preclinical studies. Work on new drug delivery constructs and new targeted payloads has 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. Some of these results covering new bisphosphonate payload constructs were recently presented at the tumor myeloid directed therapy summit meeting as well. This work is about advancing to a lead candidate for macrophage phenotype altering drugs for oncology indications. In vitro studies examining the ability of our dexamethasone constructs for inflammatory indications have shown positive results as well, demonstrating macrophage phenotype change These constructs will soon be tested in preclinical models. 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 sand flies found in parts of the tropics, subtropics, and southern Europe. Leishmaniasis is rare in the U.S., but in more tropical countries where the sand fly vectors are found, it is a common, serious, and potentially life-threatening disease. We published work in 2017 demonstrating that high CD206-expressing macrophages play a role in the dominant form of the disease. And recently, we have renewed preclinical studies with one of the world leaders in this area and have promising early results from two preclinical studies. A third replication study is currently underway. And so our therapeutic pipeline is robust and moving forward. That brings me to our overall intellectual property front. We received notification of issuance of patents from the USPTO for our patent application covering a Manisept-based therapeutic for leishmaniasis. We continued to submit new provisional applications and work on our pending applications as well. We have filed two new provisional patent applications, one describing a new degradable linker for dexamethasone and paclitaxel-containing MANACEP therapeutic constructs, and the other describing novel bisphosphonate-containing MANACEP constructs used in studies I mentioned a few minutes ago. These constructs are being evaluated preclinically for effects on macrophages and in animal models of oncology and inflammatory indications. We have filed five new provisional patents in total since December 30th of 2021. We also received a decision of grant for patent application in Japan for claims related to targeted delivery of a wide range of therapeutic payloads attached to MANICEP platform-based constructs using a degradable hydrozone linker. So we have an active IP protection strategy that we believe will provide needed protections and rights to both our current diagnostic and therapeutic agents as well as to our next generation molecules and disease indication. Now, on the drug manufacturing and supply front for both Lymphaseq 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. We will keep you up to date as this progresses. But as of this time, we are advancing towards completion of these and readiness for clinical and commercial supply going forward. On the LymphoSeq Europe and rest of the world front, you might have seen our recent press release announcing publication of a manuscript by an Australian investigator using Tilmanisept. This was the first such study coming out of Australia, and this investigator and his colleagues are enthusiastic about using LymphoSeq in Australia going forward. We are also in early discussions about potentially licensing Lymphaseq Europe with possibilities for a long-term relationship with other diagnostic pipeline products as well. Prior challenges to penetrating that market were pricing and competition, but with appropriate pricing and a number of studies demonstrating the strengths of Lymphaseq and Sentinel lymph node indications, we feel there's an excellent opportunity there for the right partner. 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 2B imaging to biopsy trial and the Phase 3, while we also continue to support and push for progress on our other diagnostic and therapeutic indications. As always, I want to thank the team here for their tireless efforts. to keep things moving and our network of clinical trial sites and academic research collaborators for all of their hard work. Our strategy remains to advance our pipeline products to key inflection points and seek appropriate partnerships for commercialization and marketing. So thank you. With that, I'd like to turn the call over to Erica for the financial updates. Erica?

Thanks, Mike. Brief review of the second quarter results. Total net revenues for the second quarter of 2022 were $57,000 compared to $261,000 for the same period in 2021. Total net revenues for the first half of 2022 were $57,000 compared to $385,000 for the same period in 2021. The decrease was primarily due to the 2021 partial recovery of debts previously written off in 2015. the 2021 receipt of reimbursement from Cardinal Health of certain R&D costs, decreased grant revenue related to grants from the NIH supporting MANICEP development, and decreased license revenue from transitional sales of to MANICEP in Europe. Research and development expenses for the second quarter of 2022 were $1.7 million compared to $1.5 million for the same period in 2021. R&D expenses for the first half of 2022 were 2.9 million, compared to 2.7 million for the same period in 2021. The increase was primarily due to increased employee compensation, including incentive-based awards, and increased recruiting fees, offset by decreases in drug project expenses and regulatory consulting expenses. Selling general and administrative expenses for the second quarter of 2022 were 1.3 million, compared to $1.4 million for the same period in 2021. SG&A expenses for the first half of 2022 were $3.1 million, compared to $3.7 million for the same period in 2021. Decreases in employee compensation, including fringe benefits and incentive-based awards, travel, investor relations, general office expenses, facilities costs, and franchise taxes were offset by increases in insurance, director fees, losses on the abandonment of certain intellectual property, and legal and professional services. NVIDIA's net loss attributable to common stockholders for the second quarter of 2022 was 3 million or 10 cents per share compared to 2.7 million or 9 cents per share for the same period in 2021. NVIDIA's net loss attributable to common stockholders for the first half of 2022 was $6 million, or 20 cents per share, compared to $5.6 million, or 20 cents per share, for the same period in 2021. NVIDIA ended the second quarter of 2022 with $328,000 in cash and cash equivalents. As Mike mentioned previously, the company received aggregate gross cash proceeds of approximately $6.2 million in the recent rights offering. And this exercised additional gross proceeds of up to $11.6 million may be received through the exercise of warrants issued in the rights offering. The company estimates that it currently has enough cash to continue operations into the first quarter of 2023. And finally, as previously disclosed, the company is not currently in compliance with the NYSE Americans continued listing requirements related to stockholders' equity. The NYSE American has accepted the company's plan to regain compliance, and the company continues to provide quarterly updates to NYSE as required under the plan. The company has until July 28, 2023 to regain compliance with the stockholders' equity requirements. And now I'd like to turn it back over to Mike.

Thank you, Erica. So we're now going to open it up for a question. Let me remind you that you have myself, the Chief Medical Officer, Mike Rozal, Erica Eves, VP of Finance and Administration, as well as our Chairman of the Board, Alex Capello, and our Vice Chair of the Board, Mr. Kim Scott, on the line, and as well as our Investor Relations person, Jeff Smith.