May 7, 2014

Biotechnology - Company Update

FOR DISCLOSURE AND FOOTNOTE INFORMATION, REFER TO JMP FACTS AND DISCLOSURES SECTION.
Michael G. King, Jr.
mking@jmpsecurities.com
(212) 906-3520
Navidea Biopharmaceuticals, Inc. (NAVB)
NAVB Announces 1Q14 Results and Provides Updates on Lymphoseek Launch
MARKET DATA
Price $1.60
52-Week Range: $1.11 - $3.31
Shares Out. (M): 149.7
Market Cap ($M): $239.5
Average Daily Vol. (000): 929.0
Cash (M): $50
Cash/Share: $0.41
Enterprise Value (M): $269
Float (M): 132.5
LT Debt (M): $26
Source: Thomson Reuters and JMP Securities LLC
FY DEC 2012A 2013A 2014E
Revenue ($M) 1Q $0.0 $0.0 $0.8A
2Q $0.1 $0.2 $1.6
3Q $0.0 $0.4 $1.6
4Q $0.0 $0.5 $2.3
FY $0.1 $1.1 $6.7
EPS 1Q ($0.07) ($0.06) ($0.08)A
2Q ($0.06) ($0.09) ($0.06)
3Q ($0.09) ($0.09) ($0.07)
4Q ($0.07) ($0.10) ($0.07)
FY ($0.29) ($0.35) ($0.29)
Source: Company reports and JMP Securities LLC
STOCK PRICE PERFORMANCE
$3.50
$3.00
$2.50
$2.00
$1.50
$1.00
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Volume (mil.) Price (USD)
MARKET OUTPERFORM | Price: $1.60 | Target Price: $5.00
INVESTMENT HIGHLIGHTS
Sales of Lymphoseek in 1Q14 indicate budding opportunity for growth, while
regulatory filings may act as a near-term catalyst; reaffirm Market Outperform
rating on Navidea Biopharmaceuticals and $5 price target based on our DCF
and NPV sum-of-the-parts analysis. NAVB reported 1Q14 EPS of ($0.08), slightly
better than our estimate of ($0.11), driven primarily by lower than expected operating
expenses. Lymphoseek sales revenue for the quarter attributable to NAVB were ~
$0.627MM, which was lower than our estimate of $0.9MM. These sales figures
represent the third full quarter on the market for Lymphoseek, and while investors may
desire more dramatic growth, there has been a notable 83% increase from the prior
quarter. In addition, the company reported a number of encouraging trends including
strong month-on-month growth in units, expansion of accounts and high customer
retention. We will continue to monitor sales numbers and, for the time being, will not
alter estimates for future sales based on 1Q14 revenue. More important, in our view, is
the evidence of continued execution on expanding the label for Lymphoseek to include
head and neck cancer as well as for more flexible and extended utilization practices.
In our view, upcoming regulatory dates for Lymphoseek may offer near-term catalysts
for value to accrue in NAVB shares.
Review by the FDA and EMA should unlock new markets for Lymphoseek. Recall
that NAVB was granted priority review by the FDA for its sNDA to expand Lymphoseek
labeling for sentinel lymph node detection in patients with head and neck cancer, with a
PDUFA date set for June 16, 2014. In addition, the FDA accepted an additional sNDA for
review to further expand the Lymphoseek label, focusing on more flexible and extended
utilization practices with a PDUFA date set for October 16, 2014. Finally, the European
Marketing Authorization Application (MAA) for Lymphoseek has been accepted by the
EMA, and a subsequent Committee for Medicinal Products for Human Use (CHMP) will
convene a Scientific Advisory Group to discuss elements of the Lymphoseek clinical
study in patients with head and neck cancer. On these fronts, we are encouraged by
Lymphoseeks regulatory progress and expect meaningful acceleration in adoption in
FY14.
Incremental details on its pipeline. The company also made limited comments on its
pipeline, reminding investors that it recently reported positive, single-center results from
the Phase IIb trial of NAV4694 in subjects with Mild Cognitive Impairment, demonstrating
the agents ability to identify beta-amyloid in early stage patients. The company also
reviewed encouraging results at several major scientific forums from Manocept
platform studies in Kaposi Sarcoma and rheumatoid arthritis (RA). Specifically, in an
animal model of RA, Manocept constructs were shown to identify and localize to
disease-state macrophages when administered intravenously, enabling detection of
immune-mediated arthritis with preferential localization in affected joints with little to no localization in
unaffected joints, opening potential avenues to new applications and product opportunities.

REVIEW OF 1Q14 RESULTS
NAVB reported $752K in total revenue; however, sales of Lymphoseek comprised $627K, while the
remainder came from grants and other revenue. While this sales number was below our estimate of
$900K and the Street estimate of $917K, we are maintaining our sales forecasts for 2Q14 and following
year. As stated previously, the company reported EPS for the quarter of ($0.08) vs. our estimate of
($0.11) and Street consensus of ($0.10). Results from the quarter are compared to our estimates in
greater detail in Figure 1.

FIGURE 1. Actual Results vs. JMP and Consensus Estimates
Navidea Biopharma (NAVB)
JMP Estimates vs Consensus and
Actuals
Actual
JMP
Estimates
Consensus Variance
Gross Income 0.63 0.89 0.92 (0.26)
Operating Expenses 9.14 14.00 - (4.86)
R&D Expense 5.23 9.50 - (4.27)
G&A Expense 3.91 4.50 - (0.59)
Operating Income (Loss) (8.58) (13.28) - 4.70
Other Income (Expense) (3.16) (1.61) - (1.55)
Net Income (11.74) (14.90) (11.74) 3.15
Diluted Shares Outstanding 144.8 141.1 - 3.68
Diluted EPS (GAAP) (0.08) $ (0.11) $ (0.10) $ 0.02 $
1Q14 Results

Source: JMP Securities LLC and NAVB press releases and presentations


CHANGES TO OUR MODEL
We have updated our model to reflect actual 1Q14 results. Beyond adding these results, we have also
decreased our R&D assumptions for FY14 from ~$41MM to $27MM based on actual 1Q14 R&D spend,
and guidance from NAVB for FY14 R&D spend between $25MM - $30MM. The result of these
changes is a reduction in our operating expense forecast from ~$60MM to $43.8MM for FY14. In
addition, we have lowered our operating expenses for 2015 from ~$65MM to $47.3MM and in 2016
from $70MM to $51.1MM. Based on these changes, we are decreasing our 2Q14 estimates from
($0.10) to ($0.06), and lowering our FY14 estimate to ($0.42) from ($0.29). Likewise, FY15 EPS was
increased from ($0.39) to ($0.26) and FY16 from ($0.21) to ($0.07). These changes are further detailed
in Figure 2.
Navidea Biopharmaceuticals, Inc. (NAVB)
May 7, 2014 2

FIGURE 2. Changes to Our Model
Navidea Biopharma (NAVB)
Changes to I/S 2Q14E 3Q14E 4Q14E FY 2014E FY 2015 FY 2016
Old New Old New Old New Old New Old New Old New
Gross Income 2.1 1.6 1.4 1.6 1.7 2.3 6.7 6.7 18.2 19.4 60.6 60.6
Operating Expenses 14.7 10.1 15.4 11.4 16.2 13.2 60.3 43.8 65.2 47.3 70.4 51.1
R&D Expense 10.0 6.0 10.5 7.1 11.0 8.7 40.9 27.0 44.2 29.1 47.8 31.5
G&A Expense 4.7 4.1 5.0 4.3 5.2 4.5 19.4 16.9 20.9 18.2 22.6 19.7
Operating Income (Loss) (12.9) (8.7) (14.3) (10.1) (14.8) (11.3) (55.3) (38.7) (52.6) (33.8) (25.4) (6.2)
Other Income (Expense) (1.6) (0.9) (1.6) (0.9) (1.6) (0.9) (6.5) (3.8) (6.5) (3.8) (6.5) (3.8)
Net Income (14.5) (9.6) (15.9) (11.0) (16.4) (12.3) (61.8) (42.5) (59.2) (37.6) (31.9) (10.0)
Diluted Shares Outstanding 148.6 152.5 156.5 160.6 164.8 169.1 147.7 147.7 150.6 150.6 153.6 153.6
Diluted EPS (GAAP) (0.10) $ (0.06) $ (0.10) $ (0.07) $ (0.10) $ (0.07) $ (0.42) $ (0.29) $ (0.39) $ (0.25) $ (0.21) $ (0.07) $

Source: JMP Securities LLC, NAVB SEC filings, and NAVB press releases and presentations
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FIGURE 3. Updated Income Statement






Income statement ($MM) 2011A 2012A 2013A 1Q14E 2Q14E 3Q14E 4Q14E 2014E 2015E 2016E 2017E 2018E 2019E 2020E
Product Sales and Royalties
Lymphoseek - US Breast Cancer and Melanoma Sales 0.6 0.6 0.6 1.6 2.2 5.5 10.9 16.8 24.6 29.4 34.7 42.8
Lymphoseek - EU Breast Cancer and Melanoma Sales - - - - - - 3.6 11.5 16.8 21.1 24.0 25.5
Lymphoseek- Rest of World - Breast cancer and melanoma sales - - - - - - 2.0 6.2 12.8 17.0 29.5 49.2
Lymphoseek - US and EU Head and Neck Cancer Sales - - - 0.0 0.1 0.1 0.8 1.3 1.9 3.3 4.9 5.1
Lymphoseek - ROW Head and Neck Cancer Sales - - - - - - 1.1 2.4 3.9 8.2 13.0 13.8
NAV4694 US and EU Sales - - - - - - - 22.3 74.7 144.9 250.1 399.9
Other 5.6 - - 1.0 - - 1.0 1.0 - - - - -
Total Product Sales 5.6 0.0 0.6 0.6 1.6 1.6 2.3 6.7 19.4 60.6 134.8 223.9 356.2 536.3
License & Grant Revenues 0.6 0.1 0.5 0.1 - - - - - - - - - -
Total Revenues 6.3 0.1 1.1 0.8 1.6 1.6 2.3 6.7 19.4 60.6 134.8 223.9 356.2 536.3
Cost of Goods Sold 1.8 - 0.4 0.2 0.1 0.1 0.2 0.5 1.6 4.8 10.8 17.9 28.5 42.9
Royalties paid to UCSD on lymphoseek sales 0.0 0.0 0.1 0.2 0.2 0.6 1.8 3.8 6.0 8.1 10.5 13.6
Royalties paid to AstraZeneca on NAV4694 Sales 0.0 0.0 0.0 0.0 0.0 0.0 0.0 3.0 3.0 5.0 0.0 0.0
Milestones payment to AstraZeneca 0.0 0.0 0.0 0.0 0.0 0.0 2.5 4.0 0.0 0.0 0.0 0.0
Gross Profit 4.5 0.1 0.8 0.6 1.4 1.3 1.8 5.1 13.5 45.0 115.0 192.9 317.3 479.8
Research & Development 15.4 16.9 23.7 5.2 6.0 7.1 8.7 27.0 29.1 31.5 34.0 36.7 39.6 42.8
Selling, general and administrative 10.3 11.2 15.5 3.9 4.1 4.3 4.5 16.9 18.2 19.7 21.2 22.9 24.8 26.7
Total operating expenses 25.7 28.1 39.2 9.1 10.1 11.4 13.2 43.8 47.3 51.1 55.2 59.6 64.4 69.6
Operating Profit (Loss) (21.2) (28) (38.5) (8.6) (8.7) (10.1) (11.3) (38.7) (33.8) (6.2) 59.8 133.2 252.9 410.2
Total Other Expenses, Net (0.9) (1.2) (4.3) (3.2) (0.9) (0.9) (0.9) (3.8) (3.8) (3.8) (3.8) (3.8) - -
Gain (Loss) from Continuing Operations (22.1) (29.157) (42.7) (11.7) (9.6) (11.0) (12.3) (42.5) (37.6) (9.9) 56.0 129.4 252.9 410.2
Pre-tax Income 5.6 (29.2) (42.7) (11.7) (9.6) (11.0) (12.3) (42.5) (37.6) (9.9) 56.0 129.4 252.9 410.2
Preferred Stock Dividends (0.1) (0.0) (0.0) - - - - (0.0) (0.0) (0.0) (0.0) (0.0) (0.0) (0.0)
Provision for Income Tax - - - - - - (2.8) (19.4) (50.6) (102.6)
Net Income 5.5 (29.2) (42.8) (11.7) (9.6) (11.0) (12.3) (42.5) (37.6) (10.0) 53.1 110.0 202.2 307.6
Basic GAAP net loss per common share 0.06 $ (0.29) $ (0.35) $ (0.08) $ (0.06) $ (0.07) $ (0.07) $ (0.29) $ (0.25) $ (0.07) $ 0.34 $ 0.69 $ 1.24 $ 1.85 $
Diluted GAAP net loss per common share 0.06 $ (0.29) $ (0.35) $ (0.08) $ (0.06) $ (0.07) $ (0.07) $ (0.29) $ (0.25) $ (0.07) $ 0.33 $ 0.67 $ 1.20 $ 1.80 $
Basic shares outstanding 90.5 99.1 121.8 144.8 152.5 160.6 169.1 147.7 150.6 153.6 156.7 159.8 163.0 166.3
Diluted shares outstanding 90.5 99.1 121.8 144.8 152.5 160.6 169.1 147.7 150.6 153.6 161.4 164.6 167.9 171.3

Source: JMP Securities LLC, NAVB SEC filings, and NAVB press releases and presentations

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Company Description
Navidea Biopharmaceuticals is a Dublin, Ohio-based biopharmaceutical company engaged in the development and commercialization of
radiopharmaceutical targeting agents used by physicians for Intraoperative Lymphatic Mapping (ILM) or gamma-guided surgery during the
surgical treatment of solid tumor cancers, as a means to improve surgical results.
Investment Risks
Clinical/Regulatory Risk. Navideas clinical trial results may not be sufficiently compelling to convince regulatory agencies of clinical benefit
relative to the side effect profile, leading to requests for additional studies and/or non-approval of the companys products.
Commercial Risk. Navideas products may not obtain the market penetration and sales forecast by our estimates or those of the company
given the established marketplace for existing competitive products. Additionally, the company may be unable to renew the partnership for
Lymphoseek with Cardinal Health, which expires five years after NDA clearance, and may fail to secure a Lymphoseek commercial partner
in the EU or a development and commercialization partner for NAV4694.
Financing Risk. If Lymphoseek sales fail to meet our projections, Navidea may not have sufficient funds to develop and commercialize its
pipeline products. The company will likely need to seek additional dilutive financing via the capital markets.
Competitive Risk. Lymphoseek faces competitive pressure from sulfur colloid, which was recently approved by the FDA for lymph node
mapping in breast cancer and melanoma patients. Our sales estimates depend on Lymphoseek taking market share away from sulfur colloid.
Market Risk. Small-cap biotechnology stocks are inherently volatile and often illiquid. They are only appropriate for investors with a high risk
tolerance.
Navidea Biopharmaceuticals, Inc. (NAVB)
May 7, 2014 5
JMP FACTS AND DISCLOSURES
Analyst Certification:
The research analyst(s) who prepared this report does/do hereby certify that the views presented in this report are in accordance with my/our
personal views on the securities and issuers discussed in this report. As mandated by SEC Regulation AC no part of my/our compensation
was, is or will be directly or indirectly related to the specific views or recommendations expressed herein. This certification is made under the
obligations set forth in SEC Regulation AC. Any other person or entity may not use it for any other purpose. This certification is made based on
my/our analysis on the date of this reports publication. I/We assume no obligation to update this certification to reflect any facts,circumstances
or events that may subsequently come to my/our attention. Signed Michael G. King
JMP Securities Disclosures:
JMP Securities currently makes a market in the security of Navidea Biopharmaceuticals, Inc.
JMP Securities was manager or co-manager of a public offering of securities for (Navidea Biopharmaceuticals, Inc.) (NAVB) in the past 12
months, and received compensation for doing so.
JMP Securities Investment Opinion Definitions:
Market Outperform (MO): JMP Securities expects the stock price to outperform relevant market indices over the next 12 months.
Market Perform (MP): JMP Securities expects the stock price to perform in line with relevant market indices over the next 12 months.
Market Underperform (MU): JMP Securities expects the stock price to underperform relevant market indices over the next 12 months.
JMP Securities Research Ratings and Investment Banking Services: (as of May 6, 2014)
JMP Rating
Regulatory
Equivalent
# Co's
Under
Coverage
%
of
Total
Regulatory
Equivalent
# Co's
Under
Coverage
%
of
Total
# Co's
Receiving
IB
Services in
Past 12
Months
% of Co's
With This
Rating
MARKET OUTPERFORM Buy 254 58.12% Buy 254 58.12% 102 40.16%
MARKET PERFORM Hold 135 30.89% Hold 135 30.89% 17 12.59%
MARKET UNDERPERFORM Sell 5 1.14% Sell 5 1.14% 0 0%
COVERAGE IN TRANSITION 43 9.84% 43 9.84% 0 0%
TOTAL: 437 100% 437 100% 119 27.23%
Stock Price Chart of Rating and Target Price Changes:
Note: First annotation denotes initiation of coverage or 3 years, whichever is shorter. If no target price is listed, then the target price is N/A. In
accordance with NASD Rule 2711, the chart(s) below reflect(s) price range and any changes to the rating or price target as of the end of the
most recent calendar quarter. The action reflected in this note is not annotated in the stock price chart. Source: JMP Securities.
Navidea Biopharmaceuticals, Inc. (NAVB)
May 7, 2014 6
JMP Disclaimer:
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revenues from the Firms institutional sales, trading, and investment banking departments as well as on the quality of the services and activities
performed that are intended to benefit the Firms institutional clients. These data have been prepared by JMP Securities LLC for informational
purposes only and are based on information available to the public from sources that we believe to be reliable, but we do not guarantee
their accuracy or completeness. Any opinions and projections expressed herein reflect our judgment at this date and are subject to change
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Navidea Biopharmaceuticals, Inc. (NAVB)
May 7, 2014 7
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(415) 835-3903
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Navidea Biopharmaceuticals, Inc. (NAVB)