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By Patrick Crutcher

Transformational pending catalysts at Neoprobe Corporation (NEOP) will dictate where this stock goes in 2011. We are expecting positive news on several fronts over the next few months. Most importantly, Neoprobe is expected to announce top-line results from their Phase 3 trial using Lymphoseek in breast cancer and melanoma; this is data needed in order to file their NDA with the FDA (expected soon after the data release). They are also still awaiting news about a potential uplisting to the AMEX. These are critical catalysts for the future of NEOP, which should help determine how 2011 is going to unfold.

The most important catalyst to their future is the expected announcement of top‐line safety and efficacy data from their Lymphoseek Breast & Melanoma (NEO3-09) superiority trial. Once we hear about the completion of the study, we should expect the results soon thereafter. Based on the comments made by David Bupp (CEO of Neoprobe) at their analyst day, NEO3-09 results are expected sometime in early Q1. NEO3-09, was initially designed to support post-marketing labeling for Lymphoseek after the approval of initial product labeling in the NDA and show superiority over currently used dyes. Originally, they were going to submit the NDA in 4Q 2010, but the FDA wanted them to include the data from this trial as a part of their submission. They hope to get a priority 6-month review for Lymphoseek and file sometime at the end of Q1 or beginning of Q2.

The inclusion of NEO3-09 clinical data provides them with more robust data and the opportunity for commercial launch of Lymphoseek with enhanced product labeling. In the 3Q 2010 conference call, CEO David Bupp commented that the performance in NEO3-09 (Superiority trial) remained consistent with the results of the successfully completed NEO3-05 trial (Breast & Melanoma trial). It is an open-label study, so Neoprobe should have a very good idea how things are going. Full data will be out in early March at the Society of Surgical Oncology meeting.

Lymphoseek (Technetium Tc99m DTPA-mannosyl-dextran) is a proprietary radioactive lymphatic mapping targeting agent. Essentially, Lymphoseek is designed to identify sentinel lymph nodes that may be predictive of determining whether a patient’s cancer has spread into the lymphatic system. They have already run a very successful Phase 3 trial in melanoma and breast cancer, in which Lymphoseek also has demonstrated superior site clearance and nodal binding characteristics, increased reliability, and a pain-free injection. Their Phase III breast and melanoma cancer trial results were 97% accurate with a 0% false-negative. They have begun a trial in head and neck cancer for post-marketing claims. They estimate the market for Lymphoseek to be more than $450 million on a world-wide; this can obviously increase with additional claims and labeling.

Once Lymphoseek is approved, NEOP has a revenue sharing agreement with Cardinal Health (NYSE:CAH) to market and distribute it. Cardinal Health is the dominant player in the radiopharmaceutical market, so they will be able to tap a vast portion of the U.S. market. The terms of the agreement are for a period of five years from the date of FDA approval, wherein Neoprobe will receive a 50% share of each patient dose sold. Lymphoseek appears to be exactly what this company needs in order to really boost revenues and support development of their RIGScan CR.

Their RIGScan CR is the future of the company and any updates on its’ clinical development will be positives.The device originally came before the FDA in 1997. It’s original Biologic License Application (BLA) was not approved in 1997, citing a lack of documentation quantifying the patient survival benefits. However, a retrospective survival study by Schneebaum et al. 2004, showed a very apparent survival advantage. The potential market for the RIGScan is roughly $2-3B, based on company’s estimates.

NEOP’s RIGScan CR is designed to identify and evaluate potentially tumor-associated tissue in patients with colon or rectal cancer. It is a monoclonal antibody-based radiopharmaceutical tracer that binds to metastatic tissue. It provides surgeons with real-time information used to locate tumor components not detectable by conventional methods, and assist in the more thorough removal of the potentially cancerous tissue. In November, they announced that the FDA had granted them a Type B pre-IND meeting to review its RIGS technology BLA. Dr. Mark Pykett, Neoprobe executive VP and chief development officer, said, “We see the RIGS technology as a potential game-changer in the diagnosis of colorectal and other solid-tumor cancers that have long been some of the most difficult to treat and deadly forms of cancer.”

RIGS BLA response includes plans for new biologic manufacturing to support the pivotal studies, the design of a new prospective Phase III RIGS trial based on results of NEO2-14 Phase III study, which showed very positive diagnostic and patient outcome data. This prospective Phase III trial will evaluate the RIGS technology in subjects with primary or recurrent hepatic patients, as the RIGS technology had excellent previous clinical success in this patient population. They also intend to request the Phase III study review under the SPA provisions. Additionally, they hope to file the revised protocol with the EMEA after things have been squared away with the FDA, in order to unify the approach in both the U.S and Europe. The potential market for the RIGScan is roughly $2-3B, based on company’s estimates.

NEOP recently began the process of uplisting to AMEX. This will be an ongoing process, but one would hope the sooner the better. The AMEX listing committee recently met on January 6th, so it is possible we could be hearing news this quarter. If they were to uplist, it would be an incredibly positive event, since it would increase liquidity and the availability for institutions to invest in them. It’s been important that the stock has maintained the $2 price level, which is required to uplist to AMEX. They recently strengthened their books by adding $6M with four institutional investors for 1.5M shares each back in November. We encourage investors to look through the presentations at Neoprobe’s Analyst Day, since they provide a great review of the company and timelines for the next 12 months. We expect 2011 to be a very interesting year over at Neoprobe.

Disclosure: Long NEOP

More Information:

Neoprobe presentations at their Analyst Day.

Neoprobe PR detailing their Analyst Day.

Neoprobe Pre-NDA meeting with FDA.

Source: Pending Neoprobe Catalysts Will Shape 2011