Navidea Biopharmaceuticals' (NAVB) CEO Michael Goldberg on Q4 2017 Results - Earnings Call Transcript

Navidea Biopharmaceuticals (OTC:NAVB) Q4 2017 Earnings Conference Call March 8, 2018 4:30 PM ET

Executives

Jed Latkin - Chief Financial Officer and Chief Operating Officer

Michael Goldberg - President and Chief Executive Officer

Analysts

Operator

Please stand by. Good day and welcome to Navidea Analyst Call. Today's call is being recorded. At this time, I'd like to turn the call over to Jed Latkin. Please go ahead.

Jed Latkin

Thank you. And welcome everyone to this morning's - this evening's earnings conference call. This call will cover Navidea's financial and operating results for the fourth quarter and full year ended December 31, 2017, along with the discussion of our goals and milestones for 2018. Following our prepared remarks, we will open up the conference call to a question-and-answer session. Our call today will be led by our Chief Executive Officer, Dr. Michael Goldberg.

But before we begin our formal remarks, I would like to remind everyone that some of the statements on this conference call may be considered forward-looking statements within the meaning of Section 27A of Securities Act of 1933 as amended and Section 21E of the Securities Exchange Act of 1934 as amended. That concern matters that involve risks and uncertainties that could cause actual results to differ materially from those anticipated or projected in the forward-looking statements. Words such as expects, anticipates, intends, plans, aims, targets, believes, seeks, estimates, optimizing, potential, goals, suggests and similar expressions identify forward-looking statements.

These forward-looking statements relate to the effectiveness of the company's bodily-fluid-based diagnostic tests as well as the company's ability to develop and successfully commercialize such test platforms for early detection of cancer and other indications. The company's actual results may differ materially from those indicated in these forward-looking statements due to numerous risks and uncertainties.

For instance, if we fail to develop and commercialize diagnostic products, we may be unable to execute our plan of operations. Other risks and uncertainties include the company's failure to obtain necessary regulatory clearances or approvals to distribute and market future products in the clinical IBD market; a failure by the marketplace to accept the products in the company's development pipeline or any other diagnostic products the company might develop; the company will face fierce competition and the company's intended products may become obsolete due to the highly competitive nature of the diagnostics market and its rapid technological change; and other risks identified in the company's most recent annual report on Form 10-K and quarterly reports on Form 10-Q as well as other documents that the company files with the Securities and Exchange Commission.

These statements are based on current expectations, estimates and projections about the company's business based in part on assumptions made by management. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Forward-looking statements are made as of the date of this conference call and except as required by law, the company does not undertake an obligation to update its forward-looking statements to reflect future events or circumstances.

I now like to turn the call over to Dr. Goldberg to discuss our third quarter results and clinical activity - our fourth quarter results, sorry - clinical activity, as well as our key clinical and operational objectives into 2018. Michael?

Michael Goldberg

Thank you, Jed, and thank you to everyone joining Navidea's fourth quarter and full year 2017 financial results conference call. I'd like to thank all of you for taking an interest in Navidea at this very exciting time for us. It's been quite a transition year for Navidea, going from a debt-laden, significant cash burn in commercial operation with its own dedicated sales-force focused on a single commercial product without access to any excess capital to invest in the expansion of its pipeline, to what exists today, a debt-free cash flow breakeven company focused on development of new large market commercial opportunities with its FDA approved delivery system, which leverages its best-in-class activated macrophage targeting system.

We were able to advance our core technology on multiple fronts and we experienced the year free from the severe financial constraints the company labored under for over a decade. Navidea has been pursuing a strategy to become a major player in development to commercialization of precision medicine diagnostic products and took on too much debt to focus the development - to fund the development of its in-licensed products and develop the commercial infrastructure to market and sell its Lymphoseek product.

Lymphoseek sales never achieved internal management projections and the decision to build our own sales-force, while paying our distributor over 40% of sales, proved to be ill-advised. However, we remain confident that in the capable hands of Cardinal Health this product will be a success and Navidea's shareholders will retain an opportunity to financially participate in that success.

In Q3 2016, we announced the sale of North American rights to a distributor, Cardinal Health. But it took about seven more months to close the deal as it required shareholder approval. During that time, we're obligated to maintain our sales-force and related commercial expenses and pay the 14% on the CRG and Platinum debt. As most of you well know, CRG, our senior lender, did everything they could to scuttle the deal as they were well aware that Navidea was worth a lot more than the amount they would have paid - they would be paid back upon closing the Cardinal transaction.

They also knew that we - they are fighting us with our own money as they knew they would prevail on the Texas Courts. Their plan is pretty straight forward in retrospect, they sign a deal with Navidea that provides all sorts of cosmetic language that suggest the deal is a five-year term loan, while in reality it's demand note with all sorts of penalties and fees, that can be triggered whenever they want or need the funds.

They received liens on all our assets, so they can control the outcome of any claims default in such a manner that we are left with no ability or time to defend ourselves. In essence, we sold the entire company for net $20 million as the $50 million they funded went $30 million to pay off existing debt and $20 million in working capital. But for the Cardinal transaction they would have succeeded in buying Navidea for less than one times annual sales when the interest fees and penalties that were paid in were factored.

At the time this deal was entered into, Navidea had an equity value of over $200 million, clearly a pretty good plan, especially when they knew that Houston Courts would rule 100% in their favor. As you can see from the various rulings of the Texas Judge in this case, the Court was going to decide in favor of CRG to the maximum allowed.

We know this since the settlement agreement we signed in Ohio, limited the total amount that CRG could be paid for this note to $66 million. The Judge clearly misread the settlement agreement and focused on the provision that the maximum they could be owed, that could be owed to CRG was $7 million, missing the provision of the global settlement agreement that the Judge must include in his calculation monies already paid to CRG.

When alerted to this error, he simply ignored it and responded that the agreement called for no appeals. Even CRG's own lawyers acknowledge the error in their follow-up filings in the Texas Court. We have hired a new law firm that is highly regarded in appeals in this jurisdiction, who believe that the mathematical error totaling approximately $4.6 million is appealable and based on motions filed with the Appeals Court appears to be accurate as the Appeals Court has stayed the ruling and instructed Judge Engelhart to address this issue.

So far, the Judge has not responded. Yesterday, however, we got a positive ruling on the mandamus and now we wait to supersede this bond ruling in front of Judge Engelhart once again. We'll have one more chance in this courtroom to clearly show the mathematical error and hopefully get the justice we deserve.

We will be asking him to reform the judgment to correct his mathematical error and/or set a bond amount reflecting the $4.1 million credit we are due. If he does not, we may have our day in Court in front of the three-judge Appellate Court. Based on the mandamus ruling, our appellate council believes we should prevail on at least one of these avenues and only owe the lower amount.

Unfortunately until the Judge rules, Cardinal who has provided the letter of credit to pay for the potential $7 million tail on the CRG fiasco, is not making the guaranteed quarterly payments. Hopefully, this gets resolved soon, so we can determine when the Cardinal payments will resume and determine if there will be a gap that needs filling in our cash flow.

Even in the worst-case scenario the cash gap is relatively small and we have options available to us. But at this price, we clearly do not want to act unless we absolutely must. Especially, as we have seen so much progress in all three programs that have not yet been reflected in any fashion in our share price.

The three legs for the Navidea growth stool are imaging biomarkers, imaging diagnostics and therapeutics through the Macrophage Therapeutics subsidiary. On the imaging biomarker front, we have made significant progress and encourage all investors and potential investors to listen to the recent update Q&A call. We have Fred Cope answer a number of questions regarding progress we made on that front.

I'll summarize now, but for more detail please listen to that archived call on our website. We have completed an intravenous study that complements and expands on the subcutaneous study in rheumatoid arthritis. This is the first evidence that one can image the CD206 or mannose receptor in M1-mediated disease. The reason we succeeded while no one else have been able to do so is because our delivery system has much higher affinity than any other technology including monoclonal antibodies to this receptor.

Rheumatoid arthritis is an excellent disease to showcase our technology as it is clearly an M1-macrophage-phenotype-driven disease. And therefore, M1 macrophages were actually thought - and hereto for, by the way, M1 macrophages were actually thought to be CD206 receptor negative. In fact the literature actually uses the presence or absence of the CD206 receptor as an accepted method to differentiate M1 or pro-inflammatory phenotype from M2 or the healing phenotype. The M2 phenotype is tumor supporting, fibrosis causing and angiogenesis supplying, which is a culprit in dry and wet AMD. Diseases like atherosclerosis and NASH are mixed M1 and M2 diseases. Clearly, CD206 is a very important biomarker for any disease, where inflammation in all its various forms is active.

For drug developers therefore, it is critical to understand the qualitative and quantitative status of the inflammatory system and the diseases they are seeking to treat. We have the data now in hand confirm for the first time that using imaging technologies readily available in most healthcare facilities one can image qualitatively, quantitatively and anatomically, the status of the immune system without requiring biopsy, invasive procedures or other approaches.

A new potential application of imaging - of our imaging agent places Navidea squarely in the critically important and commercially valuable effort to address the opioid epidemic. Much of this crisis results from patients who have been prescribed opioids for pain, who then become addicted.

Pain experts have determined that many, if not most opioid prescriptions, the cause of the pain is inflammation. The availability of the tool like what we can provide that enables a real time noninvasive qualitative, quantitative and anatomical description of the inflammation provides clinicians and drug developers with a practical tool to enable the identification of alternative treatments for pain that are non-opioid and non-addictive. Thereby enabling a reduction in the number of patients require opioids for pain in the first place and for those that do require an opioid, a better process for monitoring dose and duration of therapy.

We've expanded our dataset to include now images following IV-administration of our imaging agent in atherosclerosis, we will also image the brains in this population characterized by significant activated immune system. In NASH, where we hope to provide the pharmaceutical industry with a tool that can replace liver biopsy, which will significantly speed the development of therapeutics with this massive unmet medical need, while also significantly reducing their cause of clinical development.

We are planning to initiate studies in inflammatory bowel disease in the near future. This disease is very difficult for the clinicians to treat as they struggle to determine disease status. Many clinicians set their therapeutic plan to coincide with their definition of remission defined as when flare is reduced to a sub-clinical stage as measured by symptoms. It is well-established that sub-clinical inflammation in most cases results in scarring and damage the GI tract, while excess therapy results in toxicities.

We have been told by clinicians that the ability to develop and ability to de-score [ph] GI inflammation and to anatomically identify hotspots will be a game changer in managing these patients.

In cancer, we have two ongoing studies, the first in patients with colon cancer who have metastatic spread to liver. The initial images suggest that by using our agent, we can clearly image the tumor-associated macrophages that surround the metastasis. The second study is in Kaposi Sarcoma patients, where we can also clearly image the tumor, which is a macrophage tumor, and its metastasis. Both of these studies are supported by NIH grants.

These studies are helpful in our efforts to attract customers to buy our imaging agent, in their efforts to develop anticancer therapies, especially in the development of immunotherapeutic products as a status of the tumor microenvironment is critical and designing the right combinations of therapeutic agents and developing a dosing strategy.

Moving onto efforts to gain FDA approval for the diagnostic use of our agents, so that they commercialize for clinical use, we have developed a Phase 3 development plan that will seek approval to market our agent for the use and identifying activate macrophages regardless of the disease. We will be seeking a meeting with the FDA in the new few months to get their buy into the plan. The plan we proposed can be executed for about $3 million and completed in about 18 months from whenever it starts.

Finally, on the therapeutic side, we have made progress on a number of initiatives, which make the program more attractive to potential investors, who can then fund the necessary efforts to advance a few programs into proof-of-concept human testing. The efforts are - the efforts that are modest in cost, we have already initiated and we'll surely initiated additional studies that will be required to initiate proof-of-concept human studies. It's our belief that there remain no new inventions or significant hurdles other than time and money for the development of therapeutics with our delivery system.

As previously discussed, we are actively pursuing high-quality experienced biotech investors to fund the next stage of development of MT. Without the investment, Navidea does not have the funds to provide MT with the complete ability to move to the next level. That being said, we are reasonably advanced with our efforts to attract such a partner, and have developed a business plans for advancing therapeutics at MT based on a number of financing scenarios.

I look forward to answering questions regarding additional details after Jed provides the financial update. Jed?

Jed Latkin

Thank you, Michael. Our consolidated balance sheet and statement of operations have been reclassified as required by current accounting standards for all periods presented to reflect the line of business sold to Cardinal Health 414 as a discontinued operation. Accordingly, this discussion focuses on describing results of our operations, as if we had not operated the discontinued operation during the periods being disclosed.

We recorded an $89.2 million net gain on the line of business sold to Cardinal Health 414 for the year-ended December 31, 2017, including $16.5 million in guarantee consideration, which was discounted to the present value of future cash flows. The proceeds were offset by $3.3 million in estimated fair value of warrants issued to Cardinal Health, $2 million in legal and other fees related to the sale, $800,000 in net balance sheet dispositions and write-offs, and $4.1 million in estimated taxes.

Total revenues for the fourth quarter of 2017 were $395,000, compared to $1 million in the fourth quarter of 2016. Revenues for the full year of 2017 were $1.8 million, compared to $5 million in 2016. Revenues were primarily related to grants and licenses, and do not include the guaranteed earnout payments received from Cardinal Health during 2017.

Research and development expenses for the fourth quarter of 2017 were $1.7 million, compared to $2.1 million in the fourth quarter of 2016. Research and development expenses for the full year of 2017 were $4.5 million, compared to $7.1 million in 2016. The net decrease was primarily a result of decreases in technetium 99m tilmanocept, NAV4694 and NAV5001 development costs coupled with decreased net compensation costs, offset by increases in Manocept platform development costs.

Selling, general and administrative expenses for the fourth quarter of 2017 were $2.2 million, compared to $2.1 million in the fourth quarter of 2016. SG&A expenses for the full year of 2017 were $11.2 million, compared to $7.9 million in 2016. It's important to note that many of these SG&A items were one-offs that should not be repeated in the future.

Legal costs were significant in 2017, totaling over $3.8 million. We also had a number of one-off asset disposal charges, a charge for the transfer of the Blazer Parkway lease and several severance payments that won't be repeated. The company also paid out bonuses post the Cardinal close and accrued for the regular 2017 bonuses for the full company.

Navidea's net loss attributable to common stockholders for the quarter ended December 31, 2017 was $4.1 million or $0.03 per share compared to a net loss of $3.9 million or $0.02 per share for the same period in 2016.

Navidea's net income attributable to common share stockholders for the quarter ended December 31, 2017 was $74.9 million or $0.47 per share compared to a net loss of $14.3 million or $0.09 per share for the same period in 2016. Navidea ended the quarter with $4.6 million in cash and investments. Now - I'd now like to turn over to the operator quickly for Q&A. Operator, if you're standing by, please open it up for questions.

Question-and-Answer Session

Operator

I'll be happy to. [Operator Instructions] And our first question today will come from [Auvy Oppenheimer] [ph], a private investor.

Unidentified Analyst

Yes, hi, thank you for taking my call. I wanted to know - I appreciate your perspective on the Texas Court of Appeals ruling, and wanted to know if you could comment further on the setting of the supersedeas bond and how that would be funded? Or that have any impact on cash operations?

Jed Latkin

Thank you, Auvy. So the supersedeas bond would be limited to the full amount of the judgment, of the ruling. So, it'll be technically capped at a maximum of $7 million. We have a Letter of Credit at PNC Bank right now for $7 million. So our appellate attorneys feel that any supersedeas bond hearing would basically assume the LOC as the backup for that bond. And so, we do not anticipate that we would need any extra funds in relation to that.

As to when Judge Engelhart is going to actually hear the supersedeas bond that we do not know. That's uncertain as of this date. But the fact that the court did recognize the mandamus is quite a significant step in the right direction.

Unidentified Analyst

Okay. Thank you. The other question I have is for Michael I think maybe more. You mentioned the plan to work with the FDA for approval of generally imaging diagnostic of activated macrophages at a cost of about - I think you said $3 million in 18-month process. I wondered if you can provide some more like color on whether Navidea is waiting for the outcome of that CRG litigation or seeking additional funding for that process to start. Or again, just basically when would that sort of approval process or whatever work is needed get initiated and what is necessary to make that sort of happen?

Michael Goldberg

Sure. So we believe that the plans for that are pretty well done. In fact, we had a meeting with one of the three main sites to be running this study yesterday, and we've qualified all the sites and, as you well know, Auvy, the complexity that goes into making sure the clinical studies are done properly.

It's a very, very inexpensive study. We believe that statistically and numerically, we've got a robust study while, from a cost perspective, I think it's a highly reasonable expenditure. The amount of time it takes is somewhat subject to how many centers we bring in and how many clinicians we get involved. As again, you well know, it's probably the limiting factor here is not patients, it's camera time. So we can add more centers that's more expensive.

So those kinds of questions and issues will be addressed a little bit later on. But the first point here is to get the buy-in from FDA sort of at the minimum. And if you always want - you can always expand the number of centers. So if they agree that three is sufficient and we want to go to five, that won't be a problem. But if they say five is required and we go in with three, obviously, that raises the cost and changes some of the logistics around for us.

So those are the kinds of issues that we're addressing. We're going to get things pretty well tightened up as soon as we can and approach the FDA. And again, as you may know, the clock ticks. When you notify the FDA, they can come back to you, and you better be ready should they be ready to set up a meeting and review everything in detail. So we think we've got all the pieces in place.

The CMC section and everything else has been locked up now and I think we're in excellent, excellent shape. And again, we believe that getting this kind of approval opens us up to potential use of this clinically, along the lines of things we've talked to you about and others, who have an interest in exploring the product. Now, we can do that with an investigator IND or under our existing IND. But actually, once we have an approval, it makes things a lot easier.

Unidentified Analyst

Okay. Thank you. It's all the questions I have.

Operator

And next will be [Mike Reshell] [ph], a private investor.

Unidentified Analyst

Yeah, thank you for taking the call. I'd like to thank you for doing the Q&A a few weeks ago. That was very useful for investors. I have a set of three to four questions here. Can you provide a real brief update on the oral and topical studies that you have ongoing?

Michael Goldberg

Very briefly, there are actually no studies ongoing with the oral and topical. The work is to develop those formulations. So before we actually do the studies, the question is, you have to create the formulation. So what we're doing is exploring animal models. We've brought a - really, the world's experts in creating macromolecule oral and topical formulations as a sort of a little bit of a diversion. But the team that we have in place doing the work is the same team that developed the oral GLP that has now successfully completed Phase 3 testing by Novo Nordisk. So this is the premier group in technology and approaches to development an oral macromolecule.

So we're all very confident that we can develop the product. The question is, which product are we going to develop? So in addition, we are synthesizing, both for IP purposes and for performance purposes, different molecular weights and different backbones, and all that work is actively on its way. We've made some new compounds, which will dramatically expand our patents as well as provide us with extra degrees of freedom with respect to formulating the product.

But clearly, and I think your question is an important one, and that's the reason we put it so much effort into this so early, because if our oral steroid product is as effective as it appears to be, clearly, this is something that could be used by many in a lifelong setting. Because remember we don't cure disease, we just prevent the damage that the disease caused.

So in diseases like rheumatoid arthritis, we don't stop the body from wanting to attack itself, but what we do is basically take the bullets out of the gun, so that it can't do that. And that's going to be a chronic lifelong therapy. And the problem with using steroids today is that the side effects are worse than the damage caused by the disease. And the benefit that we all bring to the table is to be able to stop specifically the inflamed cells from causing damage, but have no effect on other cells, because they don't express the receptor that our delivery system targets

But clearly, if you're on chronic therapy, it'd be desirable to have an oral product, or if it's a skin condition, probably a topical product. So that is high-priority, but it's not something that's on the critical path, but it's definitely something that is very interesting. In fact, very recently, we're on call with someone who's looking at an ophthalmic indication. As they indicated in the prepared remarks, AMD, age-related macular degeneration, is a very, very significant problem.

And the therapies that exist today are only good for the wet form, which is late in the disease, which is principally an M2-derived macrophage-derived disease. There is no therapy today for M1 disease. In fact, there's really no good way other than optical exam to even diagnose the disease, and no good way to monitor it. So we think we can use our imaging agent to monitor and diagnose the disease.

But very importantly, by stopping the M1 macrophage, we think we could have a product that could treat the 90% of AMD patients that currently are untreatable. So that's a massive, massive market opportunity. And clearly there, we would be going against products that are currently injected directly into the eye every two to four weeks. And we think we can have a product that could be oral.

And we think that because of the nature of our product, and again, if we can make it even smaller, it'll make it that much more effective. It will cross the blood-brain barrier, get to the back of the eye, and we have some very intriguing IP building around that to create what we think would be the dominant product in both the wet market, which has now three major players, and the dry market, which is 9 times bigger than the wet market, which has absolutely no therapeutics on the market today.

Unidentified Analyst

Well, that was excellent. Just a quick, you said it's not on the critical path. So can it be funded through at least the animal studies with your cash? Or do you have to get a - some kind of grant?

Michael Goldberg

We can get a grant, but I think, more importantly, that's something we're going to partner sooner rather than later, because in addition, there's a lot of expertise to skills in terms of just getting out those patients, getting to the retina docs, getting to the ophthalmologist. What we've learned in the past is we've got to focus and stick to what we're best at. And what we're best at is, is understanding how to apply the technology and develop the new - the derivatives of the carrier and to identify the right initial targets.

And what we've learned is actually from talking to some very, very sophisticated investors, and they've really - as I said in the prepared remarks, we've honed in a couple of business models that go towards types of funding that we're looking to get. The objective here is to show the quickest proof-of-concept in humans that we can and get the product on the market, and then we could dramatically expand the use of the product post-approval.

So we're not going to try to bite off too much. We're not going to try to get to a point, where we have to either issue debt or do anything like that. And surely, we're going to avoid as much as we can.

And I think again with the mandamus ruling that came down today and with some other things that we have going on, we'd like to be in a position not to have to do any kind of financings at these prices, and be in a position to accelerate our programs and do it in a way that is preserving as much value to our investors going forward as we can.

And we're not going to look to take on too much right now on the hope that it pays off even better later on. We're going to go in a very methodical fashion, using the resources that we have. And if we get additional resources, we have some grants that we'd apply for, some partnerships that we think are exciting that are in the works. All of those things will be accelerating. We just don't want to get into the position this company has been in for too long too many times in the past, where our eyes are bigger than our mouths, if you will, and we take on more than we can handle.

So I think that there's no need, as we indicated. Oral and topical are critical. We know how to do it. We know we're going to be able to do that. But since it's not on a critical path, we're not going to divert resources from things that are in the critical path to pursue that any more aggressively than we are.

Unidentified Analyst

Okay. I appreciate that. Here's my second question. You brought it up in a conference call a while back and then it was discussed in the Q&A. And that's on the glioblastoma study, where the academic entity - working with the academic entity, bring localization. A question, who approached who on that? This is really exciting. Who approached who? Or can you not disclose that?

Michael Goldberg

I can't give out any details except to say that, I don't know who - how do you define who approached who. There are collaborators that we've worked with, who may become familiar with our technology. They speak to other people and the other person then said, boy, I'd really like to try it in this. So that's how this one came about.

There was - someone that we're collaborating with was collaborating with someone else in the area of glioblastoma and they put us together. So, I guess, you could say they came to us, but it may be that we went to them. That being said, it's very obvious that the tumor microenvironment is absolutely critical in glioblastoma. And just today, another company failed trying go after glioblastoma directly.

There are publications recently about those who tried using CAR T. And they were very, very effective at getting the T-cells to basically get trenched and actually grow post-injection. But it didn't work, because they just couldn't get through the tumor microenvironment to the tumor. So you now have these activated T-cells against tumor antigens, but they just couldn't get to the tumor antigens.

So it's just - the more people find out about our product, the more people come to us and speak to us. And that's a program that is definitely accelerating. In fact, very recently, they've contacted us and asked for more information as they're expanding their grant application in that area. And I believe there's a second group actually who's come to us as well, completely independent to the first, that wants to explore this both on the imaging side and on the therapeutic side.

Unidentified Analyst

Yes, with higher visibility with Senator McCain, obviously, this has very high visibility to it. And so that was why it was intriguing about the timing of this. Let me divert to one more question. It appears that the conceptual thinking on an empty spin-off has evolved quite a bit or has evolved through different types of possibilities. You briefly mentioned it in your prepared remarks. So are we - is there anything you can share more than what you did in your remarks or is it just evolving?

Michael Goldberg

As often happens, you got to follow the golden rule, [we'll give us] [ph] the golden rules. So if we're looking for money from investors, they're going to have a say in what the nature of the business is going to be. And so, in terms of the evolution of this, I think the core strategy remains the same. We don't believe it's prudent for Navidea to put itself back into financial jeopardy in order to finance macrophage. We believe that macrophage has serious opportunities that need to be funded, as I indicated, from a technical perspective, from a science perspective. The research and the core development is over. I think we've shown with enough animal studies and enough different dosing regimens that the product works, and it works as advertised.

At this stage, it's now the basic blocking and tackling to get these products into the regulatory queue and through the approval process. That's the expensive time consuming effort that, well, grants will help, and I think we've been relatively clever in developing, again with some very sophisticated investors, who are exploring this with us, opportunities for some pretty quick, pretty easy hurdles, in terms of clinical endpoints to get something approved.

But long-term, this is going to require multiple different formulations. It's going to require significant investment and scale up in manufacturing. It's going to require a significant amount of work in toxicology short, long term stability, those kinds of testing. There are no shortcuts. It has to be done properly. It has to be done right. And it doesn't make sense to do it with something you're not going to commercialize. You've got to wait until you have the final formulation to do it all right.

So I don't think that the strategy is so much evolving, as it's one that is, by its very nature, flexible, and we have multiple degrees of freedom, because we control the asset. And it's our objective to make sure that this asset becomes a highly valuable asset to the Navidea shareholders, so that when it succeeds, which we have very high confidence that it will, the Navidea shareholders will realize a significant value from it.

And I think the only thing that we had mentioned previously is, we believe that by bringing in high quality investors and demonstrating really exciting data like we have and we will continue to do with these various programs that we've done underway that the Navidea stock will reflect that value as investors realize that Navidea will not need to raise money, and that the only way to invest in the Macrophage Therapeutics story is through Navidea, in which you can get both a liquid stock and an option on a very, very valuable potential technology.

And then whether it's spun out or whether it's IPO, and then Navidea over time sells its position, either way, it will reflect in the share price. And we believe in a very meaningful way for which it just doesn't, in any way, reflect today.

Unidentified Analyst

Well, I appreciate you make an observation on those two potential routes. They both sound like things you've talked about in the past. Two observations before I leave this. First, as a shareholder, I am so very appreciative, and I hope others are, of your repetitive comments that we're going to live within our means the best we can and grow this company. That is so refreshing, and hopefully, someday, the market will get that you're not going to go out and issue equity to stay within your means, only maybe.

And secondly, I'd like to recognize Dr. Cope and the team that works scientifically. I just can't believe the brilliance of these people. And the fact that they're there at Navidea, it's just so amazing to me as a shareholder that, that brilliant sits there and has developed what's been developed. And to you, Dr. Goldberg, thank you for unmasking that when you came in there in 2014 and 2015 and pushing the company in that direction. And that's all my comments.

Michael Goldberg

Well, we thank for your support and we thank all our investors, I think, this has been a very, very difficult process for all of us. As you all know, I'm - I think the largest investor in the company, so I share your pain. But I do think that we have great, great assets. I think we have great people. And I think we just needed a strategy that was right-sized and properly designed for the assets that we have.

And we're fortunate that we have this proprietary technology. It was getting long in the tooth. Its patent shelf life was close to exploration. But by getting in when we did and because of some of the changes that were made, we now think we have a whole new lifeline in terms of patent extensions as well as new patents, that will provide us with some tremendous assets that we have the time.

And I think the interest to get developed properly without mortgaging the company so that we're betting everything on one study, because even though, as I say, I think there are no technical hurdles left in front of us either on the imaging side or on the therapeutics side, stuff happens. You can design a study. For some reason, not every study works out perfectly, even if the product works. So we just don't want to put ourselves in the position that we're playing Russian roulette and we get that bad bullet.

We're playing this we think conservatively. We're playing it to maximize the potential of the assets. As we said, we think that the risk in the assets are now just time and money, and those are things that we can control to some degree. So, I think it's a good time and I think we're properly positioned. And again, we really do appreciate the support of all the investors, who've been through multiple iterations. And as I said before, I think this time we got it right.

Unidentified Analyst

Thank you.

Michael Goldberg

Thank you.

Operator

[Operator Instructions] And next will be [Harry Fukes] [ph], a private investor.

Michael Goldberg

Harry?

Unidentified Analyst

Can you hear me? Can you hear me now?

Michael Goldberg

Yeah.

Jed Latkin

Yeah. Yeah.

Unidentified Analyst

Okay, good. Thanks for taking my call. Just wanted to know if there was one thing that's going to be a trigger - first of all, I got to ask this since we're having - I think I'm going to be the last caller here. So I got to be quick about this here. Can Cardinal literally hold up the payment until the LOC is resolved? Do they have that right and the privilege to do that?

Jed Latkin

Well, they can, because what they can do is they can hold it up, but only until the payments owed total the amount of the Letter of Credit, because remember the deal of the global settlement agreement was the maximum amount we can owe is $7 million. And so Cardinal - and we are currently in discussions with them every day over this topic - they can hold it up until they're - until we start getting that. But we're - I assure you that we are currently looking at looking at various options and making sure that, that does not hinder the business progress whatsoever.

Unidentified Analyst

And…

Jed Latkin

As we said earlier, actually on the last Q&A session that we did was we have prefunded a whole bunch of our trials. So for instance, KS, the NASH, and the cardiovascular are all going forward and are all currently funded. So it does not and should not affect any of the progress while we are currently in discussions with Cardinal. And we're currently waiting for the hopefully favorable ruling from Judge Engelhart.

Unidentified Analyst

Right, so the best case scenario, though, I mean, it seems like the mandamus is a bit of slap in the face to him obviously, and I'm not trying to eat crow or anything like that, good or bad, at least for his sake. I mean, what I'm saying is what's the ETA, the worst-case ETA that he issues and preventing Cardinal from acting positively towards us?

And honestly, what - best case scenario, what is the next revenue stream, should things fall properly here? I mean, it doesn't seem like the European side is going to be anything inspirational here. And if you can just also - just give a little more clarity on the Sinotau resolution as well. Thank you.

Jed Latkin

Okay, so let's take that in order. So the mandamus is not necessarily a slap in the face as it's just reiterating. And as - if you read the mandamus ruling, it s just reiterating to go through and correctly read the global settlement agreement as it is. We make the point that they, i.e., CRG has pointed out that that $4.1 million was supposed to be deducted that was part of the agreement that is part of what he had to rule on. And he just simply forgot it.

I think that in the heat of moment, we didn't really get to get in front of him and present the case properly. We will have our day in court, and it's really a two-step process. The first step is, we could go in and speak to Judge Engelhart. And if he rules as we think he will, which he'll say, you're right. You only have to put a $2.8 million bond, then that is essentially acknowledging the fact that, that's all owe them, and then we can move on from there.

If, however, he says, well, you have to put a $7 million bond up, that's okay, also because we have a Letter of Credit and then it goes to the appeal process, and they would then rule, while we have the bonds is - the payments are frozen, and now let's just consider the math.

And they feel as if you read the mandamus ruling, it does seem quite favorable to us, and we are encouraged by that. In terms of some of the other question that you had, the next one was you were talking about the next revenue stream? Or what was the one…

Unidentified Analyst

Yes, then Europe and then Sinotau.

Jed Latkin

Well, let's address Europe first. So sales have begun in Europe. We did receive payments from Norgine, but as it's just ramping up, they've been very small. The good thing about it is, they have been able to realize a quite a substantial price increase over what we have in the U.S., and they're selling it for approximately $1,500 a dose. And it is launched in five territories right now. So that is going to pick up over the next six to 12 months.

Michael Goldberg

So that clearly, the next main revenue stream that we are expecting, and it'll take time for that to kick in as well, is the use of our technologies, our biomarker in clinical studies. We've already heard from one entity that has 20-some-odd studies ongoing that may have an interest in applying this. And as we indicated before this is something, where we could negotiate whatever prices we want, because it's not reimbursed by governments or insurance companies. This is paid for as a cost of business by the company using it.

And we can make the argument that by using our products, even if we charge a significant premium over what they would pay you, let's say, to use Lymphoseek in the U.S. or even the product in Europe at 3 times the price, that it's justified, because it'll help them lower their cost much more broadly and lower their risks. So that would be the next stream.

And then again, I think as indicated, while it's not a revenue stream per traditional accounting rules, I think once macrophage gets funded, people will realize that the acid that Navidea controls has tremendous value, and that will, I think, attract a lot of interest in the stock, because we're not going to be doing lots of finances into macrophage. We'll do the one, and that one, as we generate lots of data, we'll generate a lot of interest. And the only way to play that is to play it through owning Navidea stock.

Unidentified Analyst

And the Sinotau resolution, can you give us more clarity on that?

Jed Latkin

So the Sinotau - so on the technetium 99 tilmanocept in China, basically there were some givebacks originally as we were discussing with them last February into the closing of the Cardinal deal. We were able to basically successfully gain back a lot of what we had talked about in the original contract as well as add a few other key points that we feel will help us long term. And we're going full guns blazing right now. We are sending them the full date package. It's going to take three years, though, to get approval on China.

So China is a very - an interesting market, but it's a moving target. They do not have the CFDA, does not have a set list of how things get approved. So I would not expect to see anything meaningful out of China probably for three years, before we see any sales. But we have reached the agreement. The lawsuits have been dropped, and we're moving ahead with them.

Unidentified Analyst

That's awesome. Finally, we can put that in the back burner then. Anything going on in any other Asian countries, like Japan?

Jed Latkin

So Japan, we submitted the dossier in October, which included all of our data as specifically focused on Asian patients. They can take up to nine to 12 months to review that. We have already lined up the center that if and when we need to do approvable trials there, we already have where it's going to be done, and we're already making the arrangements to get funding from a government grant similar to the NIH grant that we get here, so that won't cost us any money. And we also have some preliminary term sheets out to some potential partners, but those wouldn't come until after we either know that we're going to get approval in Japan or we started the approvable trials in Japan.

As for India, that has been submitted. We are going with a few more pieces of data we need to get them. We're expecting some questions from them, come the end of April. We will answer those questions at the end of April. And then after that, they probably have another six to nine months to review. And then we hope that they won't need any other trials, and that will start sale some time in 2019.

Unidentified Analyst

Well, thank you both. Jed, I just want to say, I think it's going to be a tacit approval, if not more enthusiastic from everybody else here, that since your arrival here you've also helped immeasurably with the health and wellbeing of this company. Thank you very much. And I'm done.

Jed Latkin

Thank you. Okay. I appreciate it.

Operator

[Operator Instructions] And our next question comes from [Mike Reshell] [ph], private investor.

Unidentified Analyst

Sorry, this is a follow-up question. On 4694 lawsuit, can you give us anymore progress there, Jed?

Jed Latkin

Yes…

Unidentified Analyst

And I would like to do - yeah, and I'd like to say with the last investor we really - I really appreciate what you brought to the company, in the way of stability too. So go ahead.

Jed Latkin

Thank you, Mike. So with 4694, as you know, we signed the term sheet about a month-and-a-half ago. We are currently drafting the agreement and the agreement is going to take - it's going to take a couple of forms. Most importantly, it's really going to be focused on the research side of it, which is to get the product into as many research facilities as possible. And then potentially have those people sign on to use the product in the future, and then go and get the ultimate approval.

I would anticipate that we will have the agreements signed probably, I would say, within the next two to three weeks. We're really just going back and forth on some of the terms on the term-sheet just to go through the global agreement. It's a fairly extensive agreement, and it has like three or four different steps to it. So we just need to get it done. And I do anticipate that we should have something in the next several weeks.

Unidentified Analyst

Thank you.

Operator

And at this time, there are no questions.

Jed Latkin

Okay. So we just wanted to thank everybody for calling in. This is going to be a very exciting year for the company. I mean, really when you look at the trails that we have ongoing now and the data that were going to start coming in as well as everything that we have going on in Macrophage Therapeutics, it's really going to be a very exciting year. And we thank all of you for sticking with the company and we look forward to speaking with you again on our next batch of Q&A call, which will probably be in a month from now.

Operator

Well, thank you. And that does conclude today's conference. We do thank you for your participation today.