Expert Financial Analysis and Reporting

Introduction

I am really outraged. The long awaited phase 3 results for DCVax-L in newly diagnosed and recurrent glioblastoma multiforme were a stunning success. The data was peer reviewed and presented at the prestigious New York Academy of Sciences on May 10, 2022. I discuss the data at length in this report and I am confident that you will share my conclusion. I also dissect a note from Adam Feuerstein of Stat News that claims in a poorly written and worse reasoned article that the trial failed. This was cited by short sellers as the reason for a collapse in the stock price on May 10. F-stein’s article “It took years, but the failure of Northwest Bio’s brain cancer vaccine is now in the open” draws exact opposite conclusions from the NYAS paper. It is an astonishing mishmash of misinformation that caused a lot of damage.

After reading his article, I think that objective observers will share my outrage with Feuerstein. If so, I am calling on you to join me and hundreds or perhaps thousands of investors. We are demanding that Feuerstein’s employer Stat News, acknowledge the misinformation and delete the article from its website, acknowledge that the trial met its endpoint and deal harshly with Feuerstein. Many, including me, believe he should be fired. If you want to join with me, I suggest that you convey your feelings to the appropriate people at Stat News whose e-mail addresses are listed below:

Rick Berke, Co-founder of Stat News: rick.berke@statnews,com

Linda Henry, CEO: linda.henry@statnews,com

John Henry, Co-founder of Stat News: john.henry@statnews,com

Angus Macauley, COO: angus.macaulay@statnews,com

Matthew Herper: matthew.herper@statnews,com

Adam Feuerstein adam.feuerstein@statnews,com

On what should have been a day of triumph, the stock was destroyed. Later in this report, I turn to Jim Cramer to explain how hedge fund managers can create and use false news to manipulate stocks. Note that Cramer hired F-Stein as his protégé at TheStreet.com. Here is a recap of the stunning price collapse on May 10.

May 9:

Stock closed at $1.80

May 10

9:30 am   Opened at $1.27 even though there was no public information on results in the trial

11:10 am  Price was $1.24 as the presentation began

11:40 am  By the end of the presentation the price was $0.75

12:40 pm Low price of the day was $0.38

4:00 pm Stock closed at $0.75

The stock decline on May 10, 2022 was correlated with Adam Feuerstein’s article on Stat News entitled “It took years, but the failure of Northwest Bio’s brain cancer vaccine is now in the open.” His report was widely circulated to news outlets, some of whom reiterated Feuerstein’s demonstrably false claims that the trial had failed without bothering to read, let alone analyze, the report.

The number of market makers for Northwest is usually about 6, but on May 10, there were 13 market makers; more market makers facilitates shorting. Hmmm. There were 77 million shares traded on May 10 and I believe that based on past experience that 90% could have been counterfeit shares (created through naked shorting).

My sources suggest that the shorts probably committed about $30 million of capital to create the impression that the data presented was disappointing and drive the stock price down. In looking at the above price behavior, it is clear that the stock manipulation scheme kicked into gear at the market opening before anyone had any idea of what was going to be presented. Then as the presentation went on the stock was consistently under pressure. This was even though the presentation can only be viewed as extremely positive.

After noon, the usual cast of hedge fund bloggers writing anonymously under pseudonyms lit up the chat rooms claiming that the trial failed to reach the primary endpoint of median progression free survival. They echoed claims that F-stein made in his report. All of this was a cover for the naked shorting that was taking place.

In this article, I present Feuerstein’s report in full and my critique of his demonstrably false assertion that the trial failed. I obtained the report from a posting on IHub that was sent to me. I have not edited the Feuerstein report in any way. However, I do add editorial comments at certain points (they are italicized) to interject actual facts into what I consider to be his work of fiction. I am stunned at how he grossly misrepresented the results of the trial as presented at the New York Academy of Sciences on May 10. His comments are frankly childlike and totally misrepresent the data that was presented.

To Understand How Outrageous F-stein’s Article Is, You Need to Understand the NYAS Presentation That Concluded That the  DCVax-L Phase 3 Trial Was Extremely Positive

The NYAS presentation can be viewed on You Tube at this link. Some of the key data slides are as follows:

Slide 29: Kaplan Meier analysis shows that DCVax-L met median overall survival primary endpoint in newly diagnosed GBM with a strong p value of less than 0.002.

Slide 30: Survival tail in ndGBM showed 13.0% of patients alive at five years versus 5.7% in control group. This is every bit as impressive as survival tails for the checkpoint inhibitors in recurrent non-small cell lung cancer and recurrent melanoma, cancers which are roughly equivalent to glioblastoma in terms of survival. The survival tail results were instrumental in their achieving more than $15 billion after five years on the market.

Slide 39: Kaplan Meier analysis shows that DCVax-L met median overall survival primary endpoint in recurrent GBM with a strong p value of less than 0.001.

Slide 40:The survival tail for DCVax-L in recurrent GBM showed that at 30 months 11.1% of GBM patients were alive versus 5.1% in the control arm.

The Primary Endpoints of the DCVax-L Trial Were Based on Survival; F-stein Falsely Claimed That Progression Free Survival Was the Primary Endpoint

The government website Clinical Trials.gov is the authoritative place for information on clinical trials. You can see the description of the DCVax-L phase 3 trial at this link. The trial was designed to evaluate the impact on survival time, as well as safety, in patients following treatment with DCVax(R)-L, an immunotherapy treatment for GBM. The control arm was based on 1,366 patients who received standard of care in several glioblastoma trials that ran concurrently with the DCVax-L phase 3 trial. The primary and secondary outcome measures are clearly stated as:

1. The primary objective of this study is to compare overall survival (OS) between patients randomized to DCVax-L and control patients from comparable, contemporaneous trials who received standard of care therapy only, in newly diagnosed glioblastoma. [ Time Frame: Until death ]

Secondary Outcome Measures :

1. The first secondary objective is to compare overall survival (OS) between patients randomized to placebo who received DCVax-L treatment following disease recurrence, and control patients from comparable, contemporaneous clinical trials, in recurrent GBM. [ Time Frame: Until death ]

In judging how dishonest the Feuerstein article is, it is critical to understand that progression free survival is not part of the statistical analysis plan. It is not even a secondary endpoint. However, Feuerstein falsely stated that the trial was a failure because it did not show statistical significance on progression free survival. This is just a blatantly false representation of results. He just made it up. The presentation at the NYAS also clearly stated that the endpoints were as presented in Clinical Trials.gov. F-stein chose to ignore this in his note.

 

The Feuerstein Report Blatantly Misrepresents Actual Results as Presented at NYAS

Here is Feuerstein’s full article with my comments in italics interspersed. I obtained this article from an IHub posting that was sent to me.

 

It took years, but the failure of Northwest Bio’s brain cancer vaccine is now in the open

By Adam Feuerstein May 10, 2022

 

After years of delays and excuses, Northwest Biotherapeutics finally disclosed on Tuesday the final results from a late-stage clinical trial of its personalized cancer vaccine administered to patients with brain tumors. The treatment’s data are as bad as expected — performing worse than a placebo.

(SmithOnStocks comment. Over the last nine years, F-Stein has penned more than 500 negative comments on Twitter, TheStreet.com, IHub and Seeking Alpha. All were negative and all were based on no evidence and dripping with malice. He first claimed that the trial failed some eight years ago, long before the data was unblinded. He has accused management of manipulating data in the phase 3 trial, securities fraud and running a Ponzi scheme siphoning money from the company, and more.)

 

Patients administered the Northwest Bio treatment, called DCVax, went a median 6.2 months without their brain tumors returning compared to a median of 7.6 months for patients offered a placebo.

(SmithOnStocks comment: Progression free survival was not the endpoint. The endpoint was median overall survival as previously described. In point of fact, PFS is not even a secondary endpoint.)

 

Overall, patients treated with DCVax had a 10% higher risk of tumor progression compared to placebo — an  outcome that is the antithesis of what’s required from any effective cancer treatment.

(SmithOnStocks comment: This is meaningless).

 

DCVax is a cancer vaccine, meaning it’s designed to stimulate the body’s own immune system to find and kill cancer cells. Some immunotherapies have been shown to prolong survival despite minimal effect on tumor shrinkage. That wasn’t the case with DCVax. The Northwest Bio study was also designed to measure and compare the overall survival of DCVax and placebo patients, but the company chose not to disclose those survival data on Tuesday — for reasons that are now clear.

(SmithOnStocks comment; The presentation clearly noted that the trial reached the primary endpoint of median overall survival in newly diagnosed glioblastoma multiforme with a stunning p value of <0.002. It also reached the secondary endpoint of median overall survival in recurrent glioblastoma multiforme with a p-value of <0.001. Feuerstein omits any mention of this and actually claims that survival data was not presented.)

 

The Phase 3 study enrolled 331 patients with newly diagnosed glioblastoma, an aggressive form of brain cancer. DCVax was administered to 232 patients; 99 patients received a placebo. The final data were presented at a cancer immunotherapy meeting sponsored by the New York Academy of Sciences.

(SmithOnStocks.com  This is the only thing in the article that was correct.)

 

Nineteen months have passed since Northwest Bio announced that the DCVax study had reached “data lock” — a standard step in the closure of a clinical trial that ordinarily leads quickly to data analysis and the announcement of the study outcome. “We are excited to be so close to the finish line now, after such a long road,” said Linda Powers, Northwest Bio’s CEO, in an Oct. 5, 2020, press release.

 

Instead of acknowledging the futility of its brain tumor treatment, Northwest Bio used the long interregnum to concoct a false, alternative reality in which the study was successful and DCVax extended the lives of patients.

(SmithOnStocks.com  Over 40 clinicians who participated in the trial had to sign affidavits in which they attested to the integrity of the results. Hence, F-stein is alleging corruption and illegality on the part of all physician participants as well as Northwest.)

 

To do this, the company discarded the overall survival data from the 99 patients randomized to treatment with a placebo. Those original, prespecified data were thrown out, and replaced on a post-hoc basis with survival data collected from 1,366 patients who participated in five entirely separate and previously completed clinical trials.

(SmithOnStocks comment: The 99 patients randomized to placebo were not thrown away. Those who progressed were categorized as having recurrent GBM. After progression, they were crossed over to DCVax-L and they formed the basis for an analysis of median overall survival in recurrent glioblastoma multiforme. The p value for this group was stunning at <0.001. This is the first clinical trial that has shown efficacy in recurrent GBM)

 

When the 233 patients treated with DCVax were compared to the 1,366 patients taken from “external controls,” Northwest Bio said it found a 20% relative reduction in the risk of death. At the median, the DCVax patients lived for 19.3 months compared to 16.5 months for the make-believe group of control patients.

(SmithOnStocks comment: Feuerstein mocks the use of external controls. However, key employees in the oncology section of the FDA recently published an article in which they stated that in some cases, it is appropriate to use external controls as a control arm. See my article Northwest Biotherapeutics: FDA Statement Regarding Use of External Controls in Clinical Trials is a Huge Positive at this link. Northwest was very careful to present results for their external controls in accordance to suggestions made by this FDA officials.)

 

When you throw a dart against a wall first, and then paint a bullseye, it’s really easy to declare a win. It’s not, of course. It’s cheating. And that’s what Northwest Bio did with the analysis of its DCVax study.

(SmithOnStocks comment: Again, over 40 clinical trial investigators involved in the trial attested to the accuracy of the results. Feuerstein with his strong political science background maintains they are all wrong. He is delusional.)

 

Northwest Bio shares plunged 70% on Tuesday once the DCVax presentation concluded. After a brief rise to around $2 per share in the run-up to Tuesday’s event, the stock is now trading again well below a buck.

(SmithOnStocks comment: The only negative printed news on May 10 was the article by Feuerstein which was fed to news outlets and Wall Street trading desks. Feuerstein is taking credit and bragging about how he was able to crush the stock price)

 

No one was fooled.

(SmithOnStocks comment: No one is fooled by Adam Feuerstein.)

 

Jim Cramer Gives Us an Insight into the Heads of the Hedge Fund Managers

Cramer of CNBC is well known for his show Mad Money and CNBC has spent millions positioning him as a nearly infallible stock guru. With the staggering CNBC platform behind him, Cramer has created a brand that he is a friend of the small investor who can help them navigate through bull and bear markets. However, it hasn’t always been the case. Before joining CNBC, he was a no holds barred hedge fund manager who would proudly rip your face off to make money. In 2006, he inexplicably gave a lengthy in-depth interview that described how he routinely manipulated stock prices to his advantage and urged other fund managers to do the same. Here is  a link to that strange Cramer stock manipulation conversation.

While this interview was done over 15 years ago, it clearly describes key elements of how stocks were manipulated at the time. Over the subsequent 15 years, the scheme has become much more sophisticated and powerful. This is because the development of DTCC, which controls all trading and clearing of stocks, has made the practice of illegal naked shorting much, much easier. This coupled with high frequency computer trading and dark pools makes short selling attacks on stocks much more powerful. See my series on illegal naked shorting if you want to spend a couple of hours to understand this.

Let’s now turn to the techniques used by hedge funds to spread misinformation. I have been positive on DCVax-L and the technology used to develop it for several years. Hedge funds have attacked me, sometimes savagely, scoffing at my belief that there is a wolfpack manipulating stock prices. They portray me a biased stock pumper. Clearly, I have a bias toward my viewpoint so is there some third party who can validate my beliefs? Yes, there is. That person is Jim Cramer. Side note: Cramer hired Adam Feuerstein in about 2006 to cover biotechnology for TheStreet.com. He is Cramer’s protégé. Adam and Cramer worked side by side for many years and each has expressed high regard for the other. The Feuerstein apple did not fall far from the Cramer tree?

In this interview, Cramer explained how he manipulated stocks when he was a hedge fund manager, bragged about how good he was at it and urged other hedge fund managers to follow his lead. I urge you to listen to the entire podcast, but here are some shocking comments from that podcast with  Cramer’s exact words in quotation marks. He uses Research in Motion to illustrate his points; remember this was 15 years ago. You can substitute Northwest Biotherapeutics for Research in Motion. Cramer says:

“A lot of times when I was short at my hedge fund, and I was positioned short, meaning I needed it down, I would create a level of activity beforehand that could drive the futures. It doesn’t take much money. Of if I were long and I would want to make things a little bit rosy, I would go in and take a bunch of stocks and make sure they are higher–maybe commit $5 million in capital and I could affect it. Now, you need maybe $10 million in capital to knock the stuff down. But it’s a fun game. And it’s a lucrative game.”

“If you are short on RIM, “you can’t let it lift.”  { Substitute Northwest Biotherapeutics for RIM] When you get a Research in Motion, it’s really important to use a lot of your firepower to knock that down. Manipulation by buying and selling stocks–that’s legal. Then if you need help, you engage in some illegality or fomenting. You can’t foment. That’s a violation. You can’t create yourself an impression that a stock is down. But you do it anyway because the SEC doesn’t understand it.  That’s the only sense that I would say that it is illegal. But a hedge fund that is not up a lot really has to do a lot to save itself. This is blatantly illegal. But when you have six days and your company may be in doubt because you are down, I think it is really important to foment.”

“Get people talking about it as if something is wrong with RIM. Then you would call the (Wall Street) Journal and talk the bozo reporter on Research in Motion and you would feed him that Palm has got a killer it is going to give. These are the things that you must do on a day like today. And if you are not doing it, maybe you shouldn’t be in the game. Remember, you can’t take any chances with the truth.”

“What’s important when you are in that hedge fund mode is to not doing anything that is remotely truthful, because the truth is so against your view–it is important to create a new truth to develop a fiction. You can’t take any chances.”

The interviewer then turned the conversation to talk about the fundamentals of the stocks in question, but Cramer brushed him off.

“The mechanics are much more important than the fundamentals. Who cares about the fundamentals? Research in Motion just blew out the quarter. Look what people can do. That’s a fabulous thing. The great thing about the market is that it has nothing to do with the actual stocks. Maybe two weeks from now the buyers will come to their senses and realize that everything they heard was a lie. But then again, Fannie Mae lied about their earnings for $6 billion. So, it’s just fiction and fiction and fiction. It’s important for people to realize that the way that the market really works is to have that nexus of–hit the brokerage houses with a series of orders that can push it down, leak it to the press, and get it on CNBC–that’s also very important. And then you’ll have a vicious cycle down. It’s a pretty good game. It can be played for a percent or two.”

Tagged as Adam Feuerstein May 10 report on Northwest Biotherapeutics, DCVax-L Phase 3 results in glioblastoma, New York Academy of Science report on phase 3 trial of DCVax-L in glioblastoma, Northwest Biotherapeutics Inc. + Categorized as Company Reports, LinkedIn