US approval of the cancer tracer Lymphoseek, granted on Wednesday, came as something of a surprise given a previous rejection and an approval decision date some six weeks off. But the good news for Lymphoseek’s developer, Navidea Biopharmaceuticals, has been tempered by a drop in its share price.
Navidea’s stock has fallen by 15% over the past two days, wiping nearly $60m off the company’s market cap, and fell a further 7% today as investors took advantage of recent gains and sold on news of the NDA approval, as well as perhaps displaying uncertainty over Lymphoseek's ability to compete against a cheap generic.
Lymphoseek is tilmanocept labelled with a technetium-99 isotope. When injected, it binds to CD206 receptors in lymph nodes, and a hand-held gamma counter is used to locate the lymph nodes draining a primary tumour site. It has been approved for use in breast cancer and melanoma patients undergoing surgery.
Navidea had sought a broader label enabling its use in a wide range of cancers, but it had been apparent for some time that this was not on the cards. The company’s chief executive, Mark Pykett, said on a conference call that the company was “just fine” with the current label as “the vast majority” of cancer surgeries occurred in breast cancer and melanoma patients. Nevertheless, the company is aiming for expanded approval into colorectal and head and neck cancers, among others.
Something borrowed, something blue
Cardinal Health will sell the tracer in the US, where it will compete with a generic dye called isosulfan blue. Cardinal has the largest market share and the largest reach of any of the distributors in the radiopharmaceutical space, but it will still have to work hard: Lymphoseek demonstrated non-inferiority to the dye in phase III trials but no significant advantage.
Lymphoseek will cost $300 per patient; it is not clear how much of a premium this represents to isosulfan blue but it is reasonable to assume that it is dearer. Navidea's ongoing share price slide is also a sign that the market considers the company, and Lymphoseek itself, overvalued, although clearly sell-siders do not think so. The company’s market cap now stands at $290m, and EvaluatePharma’s consensus data pegs Lymphoseek’s NPV at $431m.
The company has no clear news flow. Navidea is also pursuing approval for a broad lymphatic mapping label in Europe, and is seeking a partner there, but timelines are unknown.
Furthermore, its only other late-stage project is AZD4694, a phase II-stage Alzheimer’s disease diagnostic that detects amyloid. The amyloid tracer area could soon become saturated notwithstanding continuing uncertainty over the relationship between amyloid and the disease (GE Healthcare aims for a twofer with Alzheimer’s tracer flutemetamol, January 10, 2013).
The approval for Lymphoseek must have sent quite a jolt through the many short-sellers who were expecting a second refusal; Navidea was the most-shorted stock on the NYSE’s Amex exchange at the end of last month, according to the Wall Street Journal. But if any of them are still short at this point, they stand to make a tidy sum – even though the FDA said yes.