LIFESCI ADVISORS
June 8, 2011
Neoprobe ASCO 2011 Follow-up Note
Company Note
We recently attended the American Society of Clinical
Oncology (ASCO) meeting in Chicago, where we attended
the Neoprobe poster discussion session and the analyst event
held later on June 6th. This note attempts clarify some of the
controversy surrounding Lymphoseek.
Andrew I. McDonald, Ph.D.
(415) 205-0591
andrew@lifesciadvisors.com
Tyler Van Buren, M.Sc.
tyler@lifesciadvisors.com
Sulfur Colloid is Not FDA Approved. As we previously
described in our initiation report (www.lifesciadvisors/
clients/neoprobe), lymphatic mapping procedures for
sentinel lymph node identification originally used
Lymphazurin™ (isosulfan blue) 1% or patent blue V 2.5%.
Lymphazurin™ is the only FDA approved agent indicated for
lymphatic vessel delineation. Tc-sulfur colloid was originally
designed in 1969 and approved for imaging of the liver,
spleen, and bone marrow, but was never approved by the US
FDA for use in lymphoscintigraphy, lymphatic mapping, or
lymph node biopsy procedures. It is very important to note
that while the use of Tc-sulfur colloid, in conjunction with
blue dye, has emerged as the preferred method of lymphatic
mapping, the requirements for FDA approval of new
lymphatic mapping agents call for comparisons to FDA
approved agents. In this case, vital blue dye (VBD) is the only
approved agent and therefore the appropriate comparator.
Ticker
ASCO Discussion Session. We attended the discussion
session at ASCO in Chicago where Dr. Michael Sabel talked
about the results of the NEO3-09 study, which were
presented in a poster earlier in the day. While Sabel noted the
high level of Lymphoseek performance versus VBD, he also
noted that going forward he would like to see Lymphoseek
performance characterized relative to Tc-sulfur colloid.
While this may be a relevant and important question related
to Lymphoseek’s ultimate success in the marketplace, it is
more of a commercial question than a regulatory question an important distinction. At the end of the day, a head-tohead comparison of Lymphoseek and Tc-sulur colloid is not
required for FDA approval.
Short Interest (% of Float)
LIFESCI ADVISORS Equity Research
NEOP
Price
$3.88
Market Cap (M)
$579
EV (M)
$569
Shares Outstanding (M)
149.2
Avg. Daily Vol.
1,183,180
52-week Range:
$1.50-$5.48
Cash (M)
$9.7
Net Cash/Share
$0.06
Debt (M)
$0.0
Annualized Cash Burn (M)
$6.8
Years of Cash Left
1.4
Short Interest (M)
5.98
7.1%
FY Dec
2009A
2010A
2011
EPS:
Q1
$0.01A
($0.03)A
($0.05)A
(GAAP)
Q2
($0.21)A
($0.64)A
NA
Q3
($0.34)A
($0.03)A
NA
Q4
($0.00)A
($0.03)A
NA
FY
($0.54)A
($0.72)A
NA
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LIFESCI ADVISORS
NDA Acceptance Now a Major Catalyst. We are surprised by the controversy of whether or not
Neoprobe chose the correct comparator in its Phase III studies, as Lymphazurin™ is the only FDA
approved agent, and, hence, the only agent the FDA could sanction as a comparator. We suspect that
FDA’s acceptance of the Lymphoseek NDA submission, which is expected to occur approximately
30 days following filing, will help to resolve the controversy. If the NDA is accepted, the FDA will
review the filling as complete. Acceptance of the NDA should lead to resolution of this controversy
sooner (~3Q) rather than later.
Commercial Advantages of Lymphoseek. The advantages of Lymphoseek over VBD have been
showcased in the results of the NEO3-05 and NEO3-09 Phase III studies. The advantages of
Lymphoseek over Tc-sulfur colloid were highlighted by the Company at their ASCO analyst event
(http://neoprobe.com/ASCO2011.asp), and include rapid clearance from injection site, high
retention in first draining nodes, rapid lymph node uptake, flexible administration (as Dr. Sabel
noted), low radiation absorption, cGMP compliance and “on-label” use. Dr. Anne Wallace also
noted less injection site pain as a major advantage over Tc-sulfur colloid. While it is fair for doctors
like Dr. Sabel and for investors to want to see these attributes highlighted in a “head-to-head” study
against Tc-sulfur colloid, these trials will ultimately be done as Phase IV “marketing studies,” not as
registration studies.
Arguments for Commercial Success. The practice of using off-label Tc-sulfur for lymphatic
mapping is acceptable when there are no alternatives. The situation could change dramatically,
however, with the approval of Lymphoseek. Upon approval, Lymphoseek would be the only
radiopharmaceutical approved for lymphatic delineation. Obviously, there are several unknowns,
which make it hard to predict the level of commercial success. These unknowns include drug price,
levels of reimbursement, adoption rates, expansion into other types of cancer and the either real or
perceived clinical and legal liabilities associated with continued use of the off-label Tc-sulfur colloid.
In addition to the clinical arguments for replacing the off-label agent, there may be a strong legal
argument for the widespread adoption of Lymphoseek. Doctors and hospitals may not want to risk
being sued for prescribing an off-label product (when something goes wrong) when Lymphoseek is
the FDA-approved radiopharmaceutical.
Upcoming Expected Milestones
•
•
•
•
•
•
•
•
3Q11- Submit NDA for Lymphoseek to FDA
2H11- Request RIGScan EU Scientific Advice
2H11- FDA acceptance of NDA for Lymphoseek/ announce PDUFA date
2H11- Potential for interim data from NEO3-06 Lymphoseek Phase III Trial
2H11- Finalize RIGS protocol with FDA and EMA in the US and EU
2H11- Re-initiate RIGS manufacturing
1H12- FDA marketing clearance/ approval for Lymphoseek
1H12- Re-initiate human clinical studies of RIGScan
About Neoprobe: More information on Neoprobe can be found in our Initiation of Coverage
Report at http://www.lifesciadvisors.com/clients/neoprobe.
LIFESCI ADVISORS Equity Research
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LIFESCI ADVISORS
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