Just when it appeared that Navidea Biopharmaceuticals Inc. (NYSEMKT: NAVB) was beginning to settle down after shaking up its board, unrest in the company continues and shares are going down. One the recent development is what comes across as a serious red flag: resignation of the independent accounting firm with a reason.
Independent accountant resigns
Navidea Biopharmaceuticals Inc. (NYSEMKT: NAVB) said that BDO USA, LLP decided to stop being its auditing firm, thus triggering delays in 1Q2016 regulatory filings. BDO did offer a reason for terminating its agreement with Navidea, thus heightening uncertainty in the stock. According to Navidea, there were no disagreements or disputes with BDO that could be linked to the firm’s departure.
Sudden exit of an auditing firm is something that investors should take seriously. Although it is never always a sign of bad things, in most cases it is.
To deal with the abrupt exit of BDO, Navidea Biopharmaceuticals Inc. (NYSEMKT :NAVB) has tapped Marcum LLP to be its replacement accountant.
Filing delays at Navidea Biopharmaceuticals Inc. (NYSEMKT: NAVB)
Navidea managed to secure the approval of the U.S. Securities and Exchange Commission (SEC) to delay 1Q2016 filing until May 17. But the company did release unaudited financial results for the quarter. It said revenue more than doubled to $4.7 million from $2.1 million in the corresponding quarter in 2015. The company’s quarterly losses also decreased sharply to just $2.1 million compared to $7.4 million in the like quarter a year ago.
Navidea Biopharmaceuticals Inc. (NYSEMKT: NAVB) recently reorganized its board, a move that helped it to avoid a proxy fight. As part of the reorganization, the company named Jed Latkin as its caretaker COO. But instead of Latkin reporting directly to the CEO as is the norm in most companies, he will instead report directly to the reshaped board. It is worth pointing out that Latkin used to be a portfolio manager at a fund that is Navidea’s largest investor.
However, Navidea’s board and executive shakeup didn’t sit well with everyone. One of the company’s lenders, Capital Royalty Partners II L.P, claimed the company was in default of a $60 million loan after it changed its board. As such, Capital Royalty sought to freeze Navidea’s bank account, a move that could have made it difficult for the company to operate.