Expert Financial Analysis and Reporting

Introduction

Results for the phase 3 trial of DCVax-L in the treatment of newly diagnosed glioblastoma multiforme (ndGBM) should be released in late June or early July. In anticipation, I wanted to reiterate why I believe there is a reasonable possibility for a successful outcome. If so, this would constitute a major advance in the treatment of ndGBM and potentially many other solid tumors. This note briefly reiterates points made in more extensive reports in the past. I would urge you to follow links to those reports for more detailed data and discussions.

DCVax-L Targets an Enormous Market Opportunity

There is an urgent medical need for improving the treatment of newly diagnosed glioblastoma multiforme (ndGBM), the most aggressive type of brain cancer. The prognosis is extremely poor as about 50% of patients who receive the current standard of care (SOC) die within 18 months of being diagnosed and only 5% survive for five years. The annual incidence of ndGBM in the US is about 15,000 patients per year. Based on comparing prices for other oncology drugs approved for the treatment of aggressive cancers, a drug providing a meaningful increase in survival in ndGBM could be priced in excess of $250,000 per course of treatment. For example, the CAR-T drugs Kymriah and Yescarta that treat certain refractory/ relapsed leukemias and lymphomas have a net price of about $325,000 per treatment. This suggests a US addressable market of around $3.8 billion for a product that would meaningfully improve ndGBM outcomes when added to SOC. The European addressable market would be roughly the same size or $3.8 billion and the remainder of the world about $1.8 billion. It is a giant commercial opportunity for DCVax-L if it is approved.

Release of Critical Phase 3 Results is Probably Five to Seven Weeks Away

Northwest provided guidance at its annual meeting on April 18, 2020 that it anticipates release of the eagerly awaited results of the phase 3 trial of DCVax-L for treating ndGBM in late June or early July. In general, when a company has completed an analysis of an important trial, it makes a perfunctory statement that the trial did or did not meet the endpoint of the trial as determined by a pre-defined statistical analysis. There may be a few additional comments, but by and large the really detailed data is left for a later presentation at a major medical conference or publication in a major medical journal. Moreover, it is likely the case that statisticians have only had time to analyze the data most pertinent to the primary endpoint and there is considerable analysis left to do. Northwest has signaled that its data release could provide much more meaningful detail than we are accustomed to.

What to Look for When Results Are Reported

The DCVax-L trial is a highly unusual because of how long it has gone on. The first patient was enrolled over 12 years ago and the last patient five years ago. Because of this, the data will be more informative than for almost all other cancer drug trials I am aware of. Here is why.  The gold standard endpoint of most cancer trials is median overall survival (mOS), i.e. the point in time that 50% of patients have died. While this is a universally accepted endpoint for regulators, it has shortcomings. Ideally, we would like to know the survival outcome for every patient enrolled in the trial as compared to the current SOC. With an analysis based on mOS, we lack important insight into length of survival for a meaningful number of patients. However, requiring drug developers to generate such data would unacceptably extend the time and cost of doing the trial and stifle innovation.

The 12 year span of the DCVax-L trial stemmed from a number of  unfortunate events that prolonged the trial, strained financial resources and resulted in great financial losses for shareholders. However, this long saga is now over and there is a very positive upside in that this trial will provide much more valuable insight into duration of patient survival than is possible for trials using just mOS as an endpoint. Based on extensive data from other trials, it is generally accepted that for ndGBM patients treated with SOC, 50% of patients die within 18 months of diagnosis and percentage of patients who survive at two, three and five years is 30%, 15% and 5%. We can match every single patient in the trial to these benchmarks.

The last enrolled patient in the trial started treatment nearly five years ago. With SOC, we would expect that this patient had 1 chance in 20 of being alive at five years and for all other participants the chances are much less. This means that we can get an extremely good insight into whether patients survive longer with DCVax-L treatment than with SOC. This provides much more valuable information than can be obtained by judging results based on mOS. In particular, it will allow researchers to determine if there is a survival tail. The hallmark of immunotherapy drugs like DCVax-L is that a small but meaningful percentage of the patient population experiences lengthy survival not seen with chemotherapy. For example, Opdivo and Keytruda have shown that in advanced cases of non-small cell lung cancer and melanoma that somewhat under 15% of patient achieve impressive long term survival. This finding has been instrumental in their achieving tens of billions of sales. There will be ample data to determine if DCVax-L has a meaningful survival tail.

As I mentioned earlier, Northwest has signaled that it will release more detailed data than just whether the trial was statistically significant on the co-primary endpoints of mOS and mPFS. I would expect that a major focus will be on describing the survival tail, if any, and the percentage of patients alive at various time points. In the release of blinded data from the phase 3 trial, there was a great deal of data released on sub-groups and I would expect significant analysis of sub-groups as defined by MGMT methylation status, IDH mutation factor, degree of surgical resection, age and perhaps other factors which are known to be key determinants of survival in ndGBM. The statistical analysis will also have to interpret the effect of the crossover design of the trial that allowed SOC patients to be given DCVax-L if their cancer progressed.

You may be asking why Northwest would want to release more in-depth results than is customary. You have to understand that NWBO’s stock has been and remains the subject of enormous stock manipulation by short sellers I have labelled the wolfpack. Over the last few years, they have spun every piece of information about DCVax-L in a negative way to facilitate their manipulation strategy. You may want to refer to the series of articles that I wrote on illegal naked shorting that were published in the March to July 2019 time frame to understand their tactics. Just enter illegal naked shorting in the search space on SmithOnStocks.com. Releasing only mOS results would allow the wolfpack to conjure up a negative spin even in the event that the results are positive. To the maximum extent possible, management wants to limit the ability of the wolfpack to do this, if the trial is successful.

What Results Might Regulators Require to Approve DCVax-L for ndGBM

Let’s first look at patient outcomes with the current standard of care (SOC). Upon diagnosis, physicians almost immediately schedule surgery to remove as much of the tumor as possible. This is followed by SOC which is a course of radiation and the chemotherapy drug temozolomide. Temozolomide was approved by the FDA in March 2005 on the basis that it increased median overall survival (mOS) by 2.5 months over the then standard of care that was radiation. Since then, despite numerous efforts by drug developers, no new drugs have been successful in clinical trials.

In June 2019, the FDA approved the medical device Optune for use in ndGBM after treatment with SOC. In a phase 3 trial, Optune improved mOS by about 24.4 months  from the time of surgery which compared to 19.5 months for SOC or an improvement of 4.9 months. Based on the temozolomide and Optune approvals, I hypothesize that if the DCVax-L data indicates a 2.5 to 4.9 month improvement in mOS over SOC that it should be approved and viewed by the medical community as a major treatment advance. Previously released blinded data strongly suggests that DCVax-L will provide this magnitude of benefit.

You may be asking which is better, Optune or DCVax-L and how might they compete. I think that both Optune and potentially DCVax-L are  significant advances. Because they have very different mechanisms of action, I hypothesize that there would be synergy from combining the two therapies. In any event, there is ample opportunity for both to become blockbuster drugs; it is not an either or situation. For more detailed information on Optune see my January 2020 report Novocure: First Report on this Dynamic Growth Stock with Important Similarities to Northwest Biotherapeutics .

Comparing Blinded Results from DCVax-L Phase 3 Trial to Results Seen with SOC in Randomized Phase 3 Trials Involving Other Drugs Suggests Meaningful Improvement in mOS

On January 16, 2020 I wrote a report titled “Why I Believe there is a High Probability for Approval of DCVax-L”.  The phase 3 trial of DCVax-L has obviously not been unblinded, but the company has released blinded data that was very encouraging and showed that the mOS for all 331 patients was about 23.1 months from time of surgery. There were about 232 patients who initially received DCVax-L added to SOC. Of the roughly 99 patients who were initially given just SOC, around 69 were given DCVax-L when their cancer progressed. Only 30 or so patients received just SOC. We do not know mOS for the 232, 69 and 30 patient groups individually. We only know that the mOS for these 331 patients was 23.1 months.

In order to assess what kind of mOS result might be expected from current SOC, I have looked at five other randomized trials involving other drugs being tested in ndGBM. These trials randomized 1,236 patients to SOC. The mOS for SOC was consistent across the five trials ranging from 19.5 months to 20.3 months after surgery. When compared to the blinded data from the DCVax-L trial, this suggests  a potential improvement of 2.8 to 3.6 month improvement in mOS. Remember that temozolomide was approved on the basis of a 2.5 month improvement in mOS. It seems reasonable to hypothesize that when the DCVax-L trial is unblinded, the DCVax-L plus SOC group of 232 patients will show mOS meaningfully above 23.1 months and an improvement in mOS meaningfully greater than 2.8 to 3.6 months.

Comparing Blinded Results from DCVax-L Phase 3 Trial to Phase 3 Results That Led to Optune’s Approval Suggests Comparable or Better Improvement in mOS

In that same report, I also compared the blinded results for the 331 patients to the outcome in the Optune phase 3 trial that led to its approval. In its phase 3 trial, Optune added to standard of care (SOC) improved median overall survival (mOS) to 24.4 months versus 19.5 months for SOC treated patients. With the usual caveat about comparing data from separate clinical trials, the blinded data mOS of 23.1 months compares very favorably to the 24.4 months reported for Optune in its phase 3 trial. As before, I would hypothesize that the roughly 232 patients treated with DCVax-L plus SOC would have an mOS meaningfully greater than 23.1 months and probably better than the mOS that led to the approval of Optune.

The percentage of patients surviving at two and three years for Optune added to SOC was significantly better than SOC alone. Importantly, the blinded results from the phase 3 trial of DCVax-L were slightly better than those for Optune. Blinded DCVax-L data showed that 46% of patients were alive at two years and 28% at three years, which compares to 43% and 26% for Optune. Again, I would suggest that the survival percentages for the 232 patients who received DCVax-L added to SOC at these time periods should be better than the blinded data.

My important conclusion is that the improvement in mOS over SOC for DCVax-L added to SOC will be as good or better than what was seen for Optune added to SOC in its phase 3 trial. I draw the same conclusion for percentage of patients surviving at two and three years. If so, the FDA should move expeditiously to approve the product.

What I Worry About

My analysis leads me to conclude that DCVax-L will show an improvement in mOS in ndGBM of 2.5 months or more relative to SOC and this will result in approval by regulatory agencies throughout the world. However, when it comes to drug trials, nothing is for sure and it sometimes seems if anything can go wrong, it will. So, what do I worry about?

• There may be millions of data points that are part of the collective analysis of the trial. Given the long time frame over which this trial extended, there might be troublesome missing data.
• In the same vein, a meaningful number of patients might have been lost to follow-up.
• Results for the blinded data might have been driven by one sub-group. For example, DCVax-L might have been very effective in MGMT methylation patients and not effective in non-methylated patients. How would regulators handle this?
• Because of the cross over design of the trial, only around 30 patients received just SOC in the trial and about 69 who started on SOC were switched to DCVax-L when their cancer progressed. This presents a lot of complexities in determining the effect of DCVax-L in comparison to SOC.
• If the previous point proves troublesome, regulatory authorities may be forced to consider the effects of DCVax-L plus SOC versus historical SOC data from other trials. They generally don’t like to do this.
• Regulatory approval is not just based on clinical trial results. A BLA filing must also demonstrate that the manufacturing process can reliably produce a drug to tight specifications in patient after patient. The autologous cell treatment process used to produce DCVax-L from cells taken from the patient is not well established and there could be issues.
• Because Northwest is such a small and unknown entity, the regulatory agencies may be more cautious and demanding than with a larger company.
• Many other things. Drug development is not for sissies