No Quick Approval Here

It looks like Navidea Biopharmaceuticals (NYS: NAVB) won't have a quick turnaround to gain approval of Lymphoseek, a diagnostic used to map lymph nodes that may contain cancer cells.

Earlier this month, the company announced that Food and Drug Administration had issued a Complete Response Letter because the agency had issues with the manufacturing of Lymphoseek.

At the time, Navidea wasn't willing to put a timeline on the response but implied it was a minor issue having to do with Good Manufacturing Practices at its contract manufacturer. GMP issues are easier to deal with than changing how a product is made or how a company confirms reproducibility. Just ask Discovery Laboratories (NAS: DSCO) that took seven years to clear up manufacturing issues.

The issues could still be simple, but they're not that simple. Yesterday the company disclosed that it's scheduled a meeting with the FDA for the middle of next month. Having to sit down with the FDA for a meeting speaks volumes about how complex the issue is. If it was a minor issue -- something that could be cleared in two weeks like Forest Labs (NYS: FRX) and Mylan (NAS: MYL) did -- the details of what needs to be completed could likely get hashed out via the phone.

There's another sign that this isn't a minor issue: Navidea said it expects the FDA to classify its response to the CRL as a class 2 response, which would result in a six-month review period. If it was a minor issue without much additional documentation required, the agency would give the response a class 1 review that shortens the review period to just two months.

The added four months isn't ideal, especially since Navidea is running low on cash, but the bigger worry is that the more complex the manufacturing issue, the more risk there is that Navidea can't satisfy the FDA on its next attempt. Since we get only one side of the story, investors should make sure they're being adequately compensated for the added risk they're taking on.

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