May 16, 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
Eric Joseph, PhD
ejoseph@jmpsecurities.com
(212) 906-3514
Navidea Biopharmaceuticals, Inc. (NAVB)
Lowering Price Target to $3 on Pipeline Restructuring
MARKET DATA
Price $1.39
52-Week Range: $1.11 - $3.31
Shares Out. (M): 150.7
Market Cap ($M): $209.5
Average Daily Vol. (000): 675.0
Cash (M): $26
Cash/Share: $0.21
Enterprise Value (M): $269
Float (M): 132.5
LT Debt (M): $31
Source: Thomson Reuters and JMP Securities LLC
FY DEC 2012A 2013A 2014E
Revenue ($M) 1Q $0.0 $0.0 $0.8A
2Q $0.1 $0.2 $0.6
3Q $0.0 $0.4 $0.8
4Q $0.0 $0.5 $1.2
FY $0.1 $1.1 $3.4
EPS 1Q ($0.07) ($0.06) $0.19A
2Q ($0.06) ($0.09) $0.16
3Q ($0.09) ($0.09) $0.12
4Q ($0.07) ($0.10) $0.10
FY ($0.29) ($0.35) $0.57
Previous FY NC NC ($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: $1.39 | Target Price: $3.00
INVESTMENT HIGHLIGHTS
Navidea Biopharmaceuticals reprioritizes its pipeline away from Alzheimers and
Parkinsons candidates to focus on the Lymphoseek launch; reaffirming our
Market Outperform rating, but lowering our price target from $5 to $3. As detailed
on the conference call, Navidea intends to wind down development of NAV4694 and
NAV5001 diagnostic detection candidates for Alzheimers and Parkinsons diseases,
respectively in an effort to preserve cash and avert shareholder dilution through equity
financing. Concurrent with this announcement was a change in leadership, with Dr.
Michael Goldberg now serving as interim CEO (replacing Dr. Mark Pykett). In our view,
the anticipated benefit to cash flow from these changes, while important near term, fall
short of off-setting the value attributed to the developing pipeline on an NPV basis. As
such, we are decreasing our year-end price target for NAVB shares from $5 to $3, based
on DCF ($3.69) and SOTP ($3.05) valuation methodologies.
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 aimed at expanding the Lymphoseek label to permit more flexible and extended
utilization practices, with a PDUFA date set for October 16, 2014. Positive outcomes
from both decisions could help expand Lymphoseek target markets beyond breast,
melanoma and head and neck cancer potentially to colorectal cancer, gynecologic
cancers, and other solid tumor types. Similarly in Europe, we maintain a positive outlook
on the ongoing review of Lymphoseek by CHMP, and expect that an EMA label will
include a claim for sentinel lymph node detection based on the submitted head and neck
data. On these fronts, we are encouraged by Lymphoseeks regulatory progress and
expect meaningful acceleration in adoption in FY14.
FIGURE 1. Upcoming Milestones

Product Timing Milestone
Lymphoseek
2Q14 Colorectal cancer data
2Q14

June 16, 2014
Oct 16, 2014
CHMP recommendation on Lymphoseek approval in
Europe
PDUFA for Head and Neck Cancer
PDUFA for label expansion

Source: Navidea press releases and presentations

FIGURE 2. Updated Discounted Cash Flow Model
Discount Cash Flow Model 2014E 2015E 2016E 2017E 2018E 2019E 2020E 2021E 2022E 2023E 2024E 2025E
Terminal
value
Product Revenues
Lymphoseek - US Breast Cancer and Melanoma Sales 2.9 7.4 18.9 27.3 32.3 36.2 42.8 45.1 47.5 50.1 52.8 55.6
Lymphoseek - EU Breast Cancer and Melanoma Sales 0.3 5.3 11.5 16.8 21.1 24.0 25.5 25.9 26.2 26.6 27.0 27.4
Lymphoseek - US and EU Head and Neck Cancer Sales 0.1 1.1 2.3 3.2 3.9 4.9 5.1 5.3 5.5 5.7 5.9 6.2
Lymphoseek - ROW - Breast cancer and melanoma sales 0.0 2.0 6.2 12.8 17.0 29.5 49.2 64.5 67.8 67.9 68.1 68.2
Lymphoseek - ROW - Head and Neck cancer sales - 1.1 2.4 3.9 8.2 13.0 13.8 14.6 15.5 15.7 15.8 16.0
NAV4694 - US and EU revenues
Other
Total Revenues 3.3 17.0 41.4 63.9 82.4 107.7 136.4 155.4 162.5 166.0 169.6 173.4
Cost product sales 0.6 1.4 3.3 5.1 6.6 8.6 10.9 12.4 13.0 13.3 13.6 13.9
COGS as % of revenue 17% 8% 8% 8% 8% 8% 8% 8% 8% 8% 8% 8%
Royalties paid to UCSD on Lymphoseek sales 0.4 1.7 4.1 6.4 8.4 10.6 13.6 15.7 16.4 16.7 17.1 17.4
Gross Profit 2.4 14.0 34.0 52.4 67.3 88.4 111.8 127.3 133.1 136.0 138.9 142.1
R&D expense 22.2 23.3 24.5 25.7 27.0 28.4 29.8 31.3 32.8 34.5 36.2 38.0
R&D as a % of revenue 677% 137% 59% 40% 33% 26% 22% 20% 20% 21% 21% 22%
SG&A expense 16.2 17.2 18.2 19.3 20.5 21.7 23.0 24.4 25.8 27.4 29.0 30.8
SG&A as a % of revenue 494% 101% 44% 30% 25% 20% 17% 16% 16% 17% 17% 18%
Total operating expenses 38.4 40.5 42.7 45.0 47.5 50.1 52.8 55.7 58.7 61.9 65.2 68.8
% Margin 1170% 238% 103% 70% 58% 47% 39% 36% 36% 37% 38% 40%
Operating income (EBIT) (36.1) (26.5) (8.7) 7.4 19.9 38.4 59.0 71.7 74.5 74.1 73.7 73.3
Taxes 0.0 0.0 0.0 0.4 3.0 7.7 14.8 17.9 18.6 18.5 18.4 18.3
Tax rate 0.0% 0.0% 0.0% 5.0% 15.0% 20.0% 25.0% 25.0% 25.0% 25.0% 25.0% 25.0%
After tax operating income (36.1) (26.5) (8.7) 7.0 16.9 30.7 44.3 53.8 55.8 55.6 55.3 54.9
Discount year 0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0 9.0 10.0 11.0
Discount factor 1.0 1.1 1.2 1.4 1.5 1.7 1.8 2.0 2.2 2.5 2.7 3.0 1,299.1
PV (Cash flow) (36.1) (24.0) (7.1) 5.2 11.3 18.5 24.1 26.5 24.9 22.4 20.1 18.1 427.2
Residual cash flow 531.02 $
+Cash and Cash equivalents 26.0
Company value 557.0
-Long-term debt on 12/31/12 6.9
Value of equity 550.1
Fully diluted shares outsanding on 12/31/14 149.19
Price/share 3.69 $
Blended Discount rate 10.6%
Longer-term growth rate 5.0%

Source: JMP Securities LLC and Company Reports


Navidea Biopharmaceuticals, Inc. (NAVB)
May 16, 2014 2
FIGURE 3. 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 1.6 0.6 1.6 0.8 2.3 1.2 6.7 3.3 19.4 17.0 60.6 41.4
Operating Expenses 10.1 9.4 11.4 9.7 13.2 10.2 43.8 38.4 47.3 40.5 51.1 42.7
R&D Expense 6.0 5.4 8.7 5.6 8.7 6.0 27.0 22.2 29.1 23.3 31.5 24.5
G&A Expense 4.1 4.0 4.5 4.1 4.5 4.2 16.9 16.2 18.2 17.2 19.7 18.2
Operating Income (Loss) (8.7) (9.0) (11.3) (9.1) (11.3) (9.2) (38.7) (35.9) (33.8) (26.5) (6.2) (8.7)
Other Income (Expense) (0.9) (0.9) (0.1) (0.9) (0.9) (0.9) (3.8) (3.8) (3.8) (3.8) (3.8) (3.8)
Net Income (9.6) (9.9) (12.3) (10.1) (12.3) (10.1) (42.5) (39.7) (37.6) (30.4) (10.0) (12.6)
Diluted Shares Outstanding (152.5) 147.7 169.1 150.6 169.1 153.6 147.7 149.2 150.6 152.2 153.6 155.2
Diluted EPS (GAAP) (0.06) $ (0.07) $ (0.07) $ (0.07) $ (0.07) $ (0.07) $ (0.29) $ (0.27) $ (0.25) $ (0.20) $ (0.07) $ (0.08) $

Source: JMP Securities LLC and Company Reports

Navidea Biopharmaceuticals, Inc. (NAVB)
May 16, 2014 3

FIGURE 4. Updated Income Statement
Income statement ($MM) 1Q14E 2Q14E 3Q14E 4Q14E 2014E 2015E 2016E 2017E 2018E 2019E 2020E
Total Product Sales 0.6 0.6 0.8 1.2 3.3 17.0 41.4 63.9 82.4 107.7 136.4
License & Grant Revenues 0.1 - - - - - - - - - -
Total Revenues 0.8 0.6 0.8 1.2 3.4 17.0 41.4 63.9 82.4 107.7 136.4
Cost of Goods Sold 0.2 0.2 0.1 0.1 0.6 1.4 3.3 5.1 6.6 8.6 10.9
Royalties paid to UCSD on lymphoseek sales 0.0 0.1 0.1 0.1 0.3 1.7 4.1 6.4 8.4 10.6 13.6
Gross Profit 0.6 0.4 0.6 1.0 2.5 14.0 34.0 52.4 67.3 88.4 111.8
Research & Development 5.2 5.4 5.6 6.0 22.2 23.3 24.5 25.7 27.0 28.4 29.8
Selling, general and administrative 3.9 4.0 4.1 4.2 16.2 17.2 18.2 19.3 20.5 21.7 23.0
Total operating expenses 9.1 9.4 9.7 10.2 38.4 40.5 42.7 45.0 47.5 50.1 52.8
Operating Profit (Loss) (8.6) (9.0) (9.1) (9.2) (35.9) (26.5) (8.7) 7.4 19.9 38.4 59.0
Total Other Expenses, Net (3.2) (0.9) (0.9) (0.9) (3.8) (3.8) (3.8) (3.8) (3.8) - -
Gain (Loss) from Continuing Operations (11.7) (9.9) (10.1) (10.1) (39.7) (30.3) (12.5) 3.6 16.1 38.4 59.0
Pre-tax Income (11.7) (9.9) (10.1) (10.1) (39.7) (30.3) (12.5) 3.6 16.1 38.4 59.0
Preferred Stock Dividends - - - - (0.0) (0.0) (0.0) (0.0) (0.0) (0.0) (0.0)
Provision for Income Tax - - - (0.2) (2.4) (7.7) (14.8)
Net Income (11.7) (9.9) (10.1) (10.1) (39.7) (30.4) (12.6) 3.4 13.6 30.6 44.2
Basic GAAP net loss per common share (0.08) $ (0.07) $ (0.07) $ (0.07) $ (0.27) $ (0.20) $ (0.08) $ 0.02 $ 0.08 $ 0.19 $ 0.26 $
Diluted GAAP net loss per common share (0.08) $ (0.07) $ (0.07) $ (0.07) $ (0.27) $ (0.20) $ (0.08) $ 0.02 $ 0.08 $ 0.18 $ 0.26 $
Basic shares outstanding 144.8 147.7 150.6 153.6 149.2 152.2 155.2 158.3 161.5 164.7 168.0
Diluted shares outstanding 144.8 147.7 150.6 153.6 149.2 152.2 155.2 163.1 166.3 169.6 173.0

Source: JMP Securities LLC and Company Reports

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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 16, 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 and Eric Joseph
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 15, 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 57.86% Buy 254 57.86% 99 38.98%
MARKET PERFORM Hold 137 31.21% Hold 137 31.21% 17 12.41%
MARKET UNDERPERFORM Sell 5 1.14% Sell 5 1.14% 0 0%
COVERAGE IN TRANSITION 43 9.79% 43 9.79% 0 0%
TOTAL: 439 100% 439 100% 116 26.42%
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 16, 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
without notice. These data are neither intended nor should be considered as an offer to sell or a solicitation or a basis for any contract for
the purchase of any security or other financial product. JMP Securities LLC, its affiliates, JMP Group LLC, Harvest Capital Strategies LLC,
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LLC is a member of FINRA, NASDAQ, and SIPC.
Navidea Biopharmaceuticals, Inc. (NAVB)
May 16, 2014 7
Jeffrey H. Spurr
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(415) 835-3903
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Navidea Biopharmaceuticals, Inc. (NAVB)