Navidea Biopharmaceuticals, Inc.

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.novidia.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. Novidia's Chair of its Board of Directors, Mr. Alex Capello, the Vice Chair of its Board of Directors, Mr. Kim Scott, its Vice President of Finance and Administration, Ms. Erica 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 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. 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. 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 or rheumatoid arthritis phase three trial success to full enrollment, NDA submission, and FDA approval. We'll fully fund the phase three 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 PRIR 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 Telmanisept's ability to distinguish the fibroid pathotype from the non-fibroid 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 Telmanisept 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 NVIDIA. Regarding the CRG and Dr. Goldberg litigation matters, the company has had rulings 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 NAV 333, the phase three, we continue to have good enrollment into this phase three 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 telmanisept who are less likely to respond to anti-TNF-alpha therapy. As we have discussed previously, there is a large unmet need for reliable early predictor of whether 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 also bring with them possible side effects. Our Phase III trial will establish the ability of telmanicept 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 NAV 332, our comparison study of telanosept 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 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 the three subtypes of RA. fibroid, diffuse myeloid, and lymphomyeloid. So overall trial size has been expected to range between 12 and 24. To date, we have achieved our enrollment targets in two out of those three 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 telmanicept 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's 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 Tomanicept 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 telmanicept uptake in RA inflamed joints is able to discreetly differentiate patients with the fibroid pathotype, that is patients with low macrophage involvement, from those having either the diffuse myeloid or lymphomyeloid types of RA, that is patients with higher macrophage involvement. So these data also provide support for one of our indications in the Phase III trials. 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, NAV331, that contained a pilot arm looking at the efficacy of tolaminocephal imaging at early prediction of treatment response, those patients who exhibited a low level of telmanose uptake in their joints on their baseline scan before they started therapy had an almost 90% non-response 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 telmaniceft imaging being used as a biomarker in their drug development pipelines. The key differentiator between now and prior discussions we have had with these kinds 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 telmanisept imaging and 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 three trial and their software should be used for the image analysis for this trial as well as our normative database trial data. Their 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. 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 a room actually drawing the reference regions and the regions of interest, will help us go at large scale through this automated method, and that will be critical to large-scale adoption of Telmanisept 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 deriving 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 NAV331 phase 2B 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 clemanisept for PET imaging and related next-generation manisept 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 tomanisept and various new imaging agents similar to tomanisept 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 telmanosep-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 telmanosep-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-involved pathology. We presented these results at the Society of Nuclear Medicine and Molecular Imaging meeting last summer. And these were electronically published on March 7th 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 and 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 reduced 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 10th, 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 best bisphosphonate-carrying construct. The results of this study will facilitate design of studies intended to evaluate anti-cancer efficacy of this construct in the future. All of our preclinical work with potential cancer immunotherapy constructs are intended to enable NVIDIA 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 sand flies found in parts of the tropics, subtropics, and southern Europe. It's rare in the United States, but in more tropical countries where the SAM5 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 NVIDIA 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, NVIDIA scientists and our collaborators at the NIH published research results demonstrating that high CCD206 expressing macrophages play a role in the dominant form of the disease. This project has advanced significantly in the last year, with results from three separate experiments showing that a novel construct created by NVIDIA 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 are planned 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 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 monosylated 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 Lymphaseq front, regarding Lymphaseq Europe and the rest of the world, our strategy has been and remains to find the right partners for marketing and distribution for Lymphaseq 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 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. Progress continues, and as of this time, we're advancing towards completion of these and readiness for clinical and commercial supply. This work has implications for Lymphaseq in China and LymphoAIM in India, as we need to be able to supply a steady and reliable stream of product to 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 2B imaging to biopsy trial and the Phase 3, 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 Erica now for the financials.

Thank you, Mike. As announced last week, I will be leaving NVIDIA 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.

Thanks, Erica. And for the first time, hello, everyone. Total revenues for the three-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 debts 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 in the NIH supporting MANICEP development, and increased license revenue from transitional sales up to MANICEP in Europe. Research and development expenses for Q4 were $1.1 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. NVIDIA'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. NVIDIA'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 40 cents per share for the full year 2021. NVIDIA ended the fourth quarter of 2022 with approximately $2 million in cash and cash equivalent. And with that, I'll throw it back to you, Mike.