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Expert Financial Analysis and Reporting

Northwest Biotherapeutics: Comments on FDA Guidance for Use of Contemporaneous External Controls; Importance for DCVax-L

The FDA just issued new guidance on the use of contemporaneous external controls in clinical trials. Hedge funds who are massively short Northwest Biotherapeutics stock have falsely argued that the FDA cannot and will not accept contemporaneous external controls as used in the phase 3 DCVax-L clinical trial in glioblastoma. It is their fervent hope that the FDA will reject the BLA of DCVax-L when it is submitted because of its use of contemporaneous external controls. This would be an incredible windfall for the short sellers and market makers who have viciously attacked and manipulated this stock over the last ten years. By some estimates, they may have created one to two billion counterfeit shares through illegal naked shorting. On the other hand, the approval of DCVax-L could potentially create billions of dollars in losses for the hedgies.

The FDA believes and the guidance states that contemporaneous external controls are appropriate if the natural history of a disease is well known which is certainly the case with glioblastoma. This recent FDA guidance provides more clarity. Contemporaneous external trial after contemporaneous external trial in GBM has shown consistent (overlapping) mortality curves and outcomes with the standard of care arm, which is exactly what the FDA is looking for. Moreover, if you have listened to talks by Dr. Liau, you have to be impressed by how thoughtful NWBO was in selecting contemporaneous external  controls and testing and confirming the statistical analysis in ways that the FDA will want to see.

I would note that the approval of drugs based on contemporaneous external controls is not new for the FDA. It is almost always the case that drugs targeted at orphan diseases use contemporaneous external controls so that many, many drugs have been approved that used contemporaneous external controls. Note that GBM is an orphan disease.

For example, CAR-T drugs are dramatically improving survival in certain aggressive cancers. All were approved on the basis of phase 2 trials with no control group and relied on contemporaneous external controls. These drugs are targeted at cancers that as judged by survival rates are comparably aggressive to GBM. Moreover, they were approved on the basis of response rates with no data on durability, let alone survival. The FDA was swayed by anecdotal reports of dramatic survival benefits which has post approval, proven to be the case. In the case of DCVax-L, the phase 3 trial has already shown a dramatic increase in survival as compared to contemporaneous external controls.

If the FDA judges that the contemporaneous  external controls used by Northwest are in line with its guidance, the approval of DCVax-L based on clinical data is a slam dunk. The phase 3 trial had dramatically positive p values on its primary endpoints of median overall survival. However, as important for the commercial approval of a drug is the approval of the manufacturing process that will be employed for commercial use. We are awaiting word from the MHRA, the UK equivalent to the FDA, that they have approved the manufacturing process used for DCVax-L for commercial use. They have already approved the process for compassionate use. This augurs well for commercial approval, but does not guarantee it.  The FDA works closely with MHRA and would almost certainly accept their approval of the manufacturing process in their deliberations on a DCVax-L BLA.

A very important thing to keep in mind in judging what the FDA will do with DCVax-L relates to its benefit to risk profile. The CAR-T drugs were approved because the FDA believed that they had a dramatic effect on survival. However, this came at the expense of life threatening side effects. DCVax-L in its phase 3 was shown to have a dramatic effect on survival, but with a benign side effect profile. Its side effects generally can be treated with Benadryl and Tylenol. The impressive benefit to risk profile for DCVax-L is almost never, if ever, seen with oncology drugs. This is a huge plus.

Against incredible odds, Northwest under the courageous leadership of Linda Powers appears to be poised to gain regulatory approval for DCVax-L. As a guess, I would say that DCVax-L could be approved in 2023 in the UK and Canada and in 2024 in the US and EU. The Cohen Milstein lawsuit against market makers, if allowed to go to discovery, could reveal a stock manipulation scheme of massive proportion. This has caused enormous damage to Northwest and its shareholders and probably delayed the development of the drug. If this goes to jury trial, the market makers will have no chance of winning in my opinion.

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