What We Expect Going Forward From Navidea Biopharmaceuticals Inc (NYSEMKT:NAVB)

We've followed Navidea Biopharmaceuticals Inc (NYSEMKT:NAVB) pretty closely over the last year or so. The company is embroiled in litigation, the outcome of which essentially could decide its future as a drugmaker, and this has weighed heavily on its market capitalization throughout 2016. A curveball hit press last month, and the company jumped almost 200% on this particular news, but there are a number of elements that must be resolved before any implications of this deal can pan out.It's going to be a pretty busy next few quarters for the company and its shareholders, as the litigation, alongside a development program and commercialization operation, all weigh in on valuation. With so many inputs, we expect some volatility, and as such, Navidea could become a great momentum play near to medium term.Here is what we are watching.By way of a quick introduction, the company is in dispute with one of its creditors, CRG, a healthcare investment management firm, based on a $50 million loan extension issued to it last year. Navidea needs to pay, and CRG wants to dip its hand into Navidea's accounts to reclaim. CRG went to a Texas court and picked up the right to do this, but Navidea appealed and temporarily halted this CRG right.The date for appeal brief submission is October 23, and this should offer some insight into how the two companies are approaching the situation. In turn, this submission has the potential to be a major catalyst if it shines any light in favor of one entity or the other.In the background, Navidea has struck a tentative deal with its lead distributor, Cardinal Health, to sell its primary asset (or least, the rights to North American sales of its primary asset), Lymphoseek, to Cardinal for $80 million upfront plus milestones.This would allow Navidea to pay off CRG, retain some cash, get rid of its interest expense and secure a potential revenue stream from Cardinal's sales efforts going forward. Simple, right?Well, not really.CRG has a lien on the rights to the Lymphoseek product, which it picked up as part of the original loan agreement. As soon as this situation resolves, Navidea is going to take CRG to court for (presumably) material impact reasons. CRG knows this, and won't release the lien, which means Navidea can't sell the rights to Lymphoseek to Cardinal (because technically, right now, it doesn’t own them).It's a sort of stalemate, and it' all going to come to a head when this appeals ruling hits press.If Navidea wins the ruling, CRG has no right to dip into the former's account, and there's no justifiable reason for CRG to stave off the Cardinal deal. It might as well take its $50 million and batten down the hatches in anticipation of a letter from Navidea's legal team.If Navidea loses the ruling, it's going to get its account raided, and could realistically be out of business within a couple of quarters. This is a very messy scenario, in which the latter will probably head into bankruptcy in an attempt to shield some of its assets, its creditors (principally CRG) circle for Navidea's assets and – presumably – the Cardinal deal gets called off.So, how can an investor take action against these possibilities?We think the first of the two situations is by far the more likely, purely based on the fact that Navidea has the $80 million resolution in place when it approaches the appeals court, and therefore that the most likely outcome is that the CAH deal goes through, Navidea walks away from CRG and the latter is subject to a flurry of lawsuits based on its impact on Navidea's operations.This, of course, is a very bullish scenario for Navidea, and that's what our current bias is based on. Long term long heading into a resolution (based on our perceived 80% chance of Navidea's success in the appeal) and near term long on the brief submission reinforcing this opinion.Subscribe below and we will bring you our interpretation of the appeal as and when it plays out!Disclosure: We have no position in NAVB and have not been compensated for this article.