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• DCVax Direct was used in a patient with stage 4 pancreatic cancer whose chemotherapy was stopped.
• The patient, a Nat Geo employee, is stable at 18 months post diagnosis and gives his very positive view of the efficacy of DCVax Direct.
• Clinical studies show that 50% of such stage 4 pancreatic patients die within six months and 77% within one year. Perhaps as few as 2-3% survive 18 months.
• M.D. Anderson doctors appeared in this segment. This prestigious institution is running the trial and is clearly supportive of DCVax Direct and NWBO.
• This is just one patient, but it must be viewed alongside the recent impressive signal of efficacy seen in a sarcoma, another highly aggressive tumor.
• The DCVax Direct trial is in its early days for reporting data and these two cases may yet prove to be outliers, but they are very encouraging.

Investment Perspective

The National Geographic channel ran a show called Stand Up to Cancer that aired on Friday, September 4. On that show there was a two minute segment on a patient who was diagnosed with stage 4 pancreatic cancer. The patient, Allan Butler, is an employee of Nat Geo and this is how the story found its way into the segment. Northwest Biotherapeutics (NWBO) was not involved in any way in the selection of Mr. Butler’s experience to be included in this program.

An important point of this segment is that it prominently shows and names the physician treating the patient, Dr. Ravi Murthy, and also shows and names the lead investigator for the phase 1 study of DCVax Direct, Dr. Vivek Subbiah. Both are physicians with M.D. Anderson. This is extremely important from an investment standpoint. The bears on NWBO argued that the previous release of positive data on a sarcoma patient and 20 other patients involved in this trial was unethical and exploited cancer patients. They had further suggested that the release of this data created a rift between Northwest and M.D. Anderson.

There is nothing unethical about releasing data like this in an unblinded trial; the information is in the public domain. It is not at all uncommon, particularly when the treatment involved is novel agent like DCVax Direct in a medical condition that has no effective therapy. The involvement of the two M.D. Anderson doctors clearly shows that they and M.D. Anderson do not believe that this reporting on this pancreatic cancer patient nor the previous sarcoma patient was unethical in any way or exploiting cancer patients. Their involvement says just the opposite that it is important information to put in the public domain. Later in this report, I will discuss in more detail how these bear arguments were put forward and the enormously negative effect they have had on the stock. This is a severe blow to the bear case.

Treatment Options for Stage 4 Pancreatic Cancer Are Extremely Ineffective

Before hearing from Mr. Butler and putting his experience in perspective, I think it is important to understand something about stage 4 pancreatic cancer and the lack of effective therapy. There are currently two unsatisfactory treatment options, palliative therapy and chemotherapy. Surgical resection is almost never an option.

If possible, in treating any type of cancer the desired first step is to surgically remove (resect) as much of the tumor as possible in order to rid the body of as many cancer cells as possible. This is harder do with pancreatic cancer because the pancreas is deep within the abdominal cavity and unlike breast cancer or colon cancer there is no ways to periodically check and to catch the cancer at an early stage. By the time the cancer produces symptoms that lead to the diagnosis; it has often advanced to the stage 4 or final metastatic stage of the disease and is inoperable. Also the anatomical position of the pancreas makes it difficult to operate without damaging surrounding vital organs.

Palliative therapy involves pain-relieving procedures and supportive care. The primary and most widely used chemotherapy agents are gemcitabine (Gemzar) and erlotinib (Erbitux). Other drugs like oxaliplatin, irinotecan, leucovorin, and fluorouracil (5-FU) are sometimes used. These chemotherapy regimens have low objective response rates and produce little increase in median overall survival. Hence, clinical trials with new and unapproved drugs, like DCVax Direct, are also considered to be appropriate treatment in stage 4 pancreatic cancer. In some patients, drugs like 5-FU and gemcitabine have been shown to be useful as palliative agents even if they have no effect on the underlying disease.

The pivotal trial of gemcitabine that led to its approval compared gemcitabine to 5-FU in stage 4 pancreatic cancer. The one year survival rate for gemcitabine was 18% versus 2% for 5-FU. A subsequent trial compared gemcitabine alone versus gemcitabine and erlotinib. The median overall survival for gemcitabine was 5.9 months versus 6.2 months for gemcitabine plus erlotinib. The one year survival rate for gemcitabine was 17% (in line with the earlier study) and was 23% for patients receiving erlotinib combined with gemcitabine. There have been numerous other combination regimens that have been tried but none have produced meaningful increases in median overall survival with acceptable side effects.

Allan Butler’s Experience with DCVax Direct

I thought about how to convey to readers Mr. Butler’s story. I thought about picking out excerpts, but as I listened to him I concluded that only his own words could really tell the story so here is a verbatim transcript of what he said.

“My name is Allan Butler and I work at National Geographic. About 18 months ago, I was diagnosed with stage 4 pancreatic cancer. They told me it was technically incurable and I found out subsequently that only a small percentage of people make it through the first year.

At the moment of my diagnosis there was just this surreal moment. Standard treatment is chemotherapy. Chemotherapy is really useful but there is only so much of it that the doctors are willing to give before it starts taking a toll so that after four months the doctors told me that they had to cut me off. Obviously at that point I wanted to know what is next. I’m a fighter. This thing is still inside me. So I found out about this trial that was getting ready to start at M.D. Anderson in Houston Cancer Center. (The DCVAX Direct trial started in June 2013.)

It was a totally new approach attacking cancer that instead of throwing chemicals into your body sort of takes this opposite approach and tries to harness or turbocharge the immune system. It is called DCVax (Direct) and it was something that sounded just really attractive to me. Just the idea that my own body could become its own cancer fighting machine was something I could really get behind. Here I am 18 months later and I am not going to give up.

What I would say to people who get a diagnosis of an advanced form of cancer is don’t ever give up hope. There are medical trials going on right now like the one I am in that are making massive advances every day in the treatment of cancer. Surround yourself with friends and family so that you are not fighting this alone. Get involved in a trial that will not only give you benefit of the latest treatment but help advance medical science in general.”

The Butler video can be accessed at this link.

Mr. Butler’s stabile disease at 18 months post diagnosis is highly unusual. As I previously pointed out about 50% of patients treated with chemotherapy are dead at six months after diagnosis and 77% are dead at one year. I do not have data for 18 months, but key opinion leaders have suggested that it is 2% to 4%. We cannot clearly state that Mr. Butler’s extremely favorable outcome is the result of DCVax Direct. He could just be a remarkably lucky outlier, but the results are extremely impressive and are consistent with what we have seen with immunotherapy in other aggressive cancers.

Further Important Investment Implications of the National Geographic Segment

Having followed the development of cancer drugs for nearly 35 years, I am very cognizant of the danger and limitations of relying on the anecdotal stories of just two patients and incomplete, early results on about 20 others. However, the results are so striking that it does constitute an important signal that cannot be ignored even though we clearly need more data before we start drawing conclusions that DCVax Direct is an important new treatment option for some inoperable cancers.

The very encouraging experiences with the pancreatic cancer and sarcoma patients are further supported by data on other patients presented in a May 15th press release from Northwest Biotherapeutics which reported positive results from the DCVax Direct trial. This was then followed by a more important release on June 11^th which discussed results of the first 20 patients treated in this 60 patient DCVax Direct trial; all patients in this study have some type of inoperable solid tumor. I would suggest that you read that press release for details but it reported that 9 out of 9 patients who have received 4 of the 6 planned injections of DCVax Direct were showing tumor cell death, tumor shrinkage, substantial immune cell accumulation in their tumors and/or stabilization (i.e., stopping the progression) of their advanced cancer.

Clearly, the appearance of the M.D. Anderson doctors on a nationally aired television show can only be taken as their having strong support for the drug and Northwest. Also, the argument that talking about patient results before an unblinded trial is completed somehow exploits cancer patients can be quickly dismissed. Mr. Butler points out the importance of releasing information like this and clearly feels he was not exploited. He is extremely positive about giving patients like him, who have exhausted treatment options, the opportunity to find out about new therapies.

The bears have argued that the interim data that was published in the May 15^th and June 11^th press releases was unethical on Northwest’s part and was exploiting cancer patients. They also maintained wrongly that because Northwest had released the data, it had created a rift between M.D. Anderson and Northwest. A key point of this article is to show that this is also false. These major pillars of the bear case are now shown to be false.

I believe that there is enough evidence at this point to suggest that DCVax Direct has clinical and biological activity. I do not want anyone to come away with the conclusion that I am saying that the drug has been shown to be effective in some cancers. It is still early. However, there are good reasons to hope that DCVax Direct could be an important addition to the cancer treatment armamentarium.

Adam Feuerstein is the Architect of the Bear Case

Adam Feuerstein of The Street.com is a fierce antagonist of NWBO and his articles have been fulcrums for aggressive short selling and the basis for publication of bearish reports by others. He is on record as saying that DCVax-L and DCVax Direct are no better than placebos. He frequently has stated that the management of Northwest Biotherapeutics is nothing but stock promoters for a worthless technology.

Feuerstein has no doubt that he is absolutely right and says that he feels compelled to “protect” individual investors by coming out with a negative article on virtually every press release issued by Northwest Biotherapeutics. Since the beginning of March, he has written 19 negative blogs on NWBO. His favored journalistic technique is to construct a strawman hypothesis of own making with no acknowledgment of any arguments that would counter balance his and he inevitably paints Northwest in the most unfavorable light possible.

True to style, Feuerstein came out with a negative blog on Northwest immediately after the May 15th press release that gave the first look at data from the DCVax Direct trial. On the same May 15^th data Feuerstein wrote this article.

“Northwest Bio Exploits Cancer Patient to Promote Stock Ahead of ASCO '14

It's been five months (!!) since Northwest Biotherapeutics (NWBO) told investors that independent monitors were conducting an interim efficacy analysis of the phase III study of DC-Vax in patients with newly diagnosed glioblastoma multiforme (GBM.) Northwest Bio promised results in February but failed to deliver. It's now May, and still silence. (SmithOnStocks Comment: This has been another strawman argument of Feuerstein beyond the issues he raised on DCVax Direct. He alleges that NWBO withheld data on the interim efficacy analysis in the phase 3 DCVax-L phase 3 trial. However, this also has been shown to be a false statement. The head of the data monitoring committee for the DCVax-L trial has subsequently said that the interim efficacy analysis has not yet been conducted and rebuked Feuerstein’s comments that NWBO had seen the interim efficacy analysis and hid the data from the public.)

But Northwest Bio wants to change the subject, hence this morning's press release about a patient "case study" involving use of DC-Vax Direct, the second cancer vaccine in the company's pipeline. Northwest Bio is seeking to capitalize on investors' interest in the upcoming American Society of Clinical Oncology (ASCO) annual meeting, even though the company has no real clinical data to present because the tiny study of DC-Vax Direct is still in its early stages. No worries. Instead of clinical data, Northwest Bio chooses to issue an exploitative story about a cancer patient.

The specific case study announced today involves a sarcoma patient with a large tumor mass and multiple inoperable metastatic tumors in the lung.  This patient received the first 3 DCVax-Direct injections through the course of a month, starting in February.  He received a fourth injection in early April and then was scanned for results in early May.  At that time, this patient's MRI scan showed extensive necrosis and partial collapse of the injected large tumor mass, and a CT scan showed some early indication of shrinkage of one of the non-injected metastasized tumors.  These results suggest both local and systemic effects of the DCVax-Direct treatment, as were seen in the pre-clinical studies.

And Northwest Bio promises to issue more "case study" reports on DC-Vax Direct ahead of the ASCO annual meeting. Good to know, guys. Thanks. John Carroll, editor at Fierce Biotech, summed up the situation well this morning:

John Carroll @JohnCFierce tweeted as follows: “Touting "case studies" about cancer drugs is grossly unethical. Pandering to a market of dying patients. The stuff of snake oil sales. I'm shocked that when you plunge a giant needle four times into a tumor mass, then take a scan of that tumor mass, you find damage. Who could have guessed? For Northwest Bio, this is what passes for science. For everyone else, it's just stock promotion targeting the desperate and gullible.” (SmithOnStocks comment: Many investors have credited Feuerstein with this seemingly off the wall suggestion. However, it appears that Carroll is the actual author. Feuerstein simply endorsed it.)”

It took Feuerstein a little longer to counter the June 11th press release with a blog although he did ridicule it with several tweets. However, he came out on June 19th with what he thought was the coup de grace. He published an interview with Dr. Aman Buzbar of M.D. Anderson. Feuerstein reported that in this interview Dr. Buzbar agreed with Feuerstein that the release of data was unethical. It should be noted that Dr. Buzbar had nothing to do with the DCVax Direct trial and knew nothing of the drug. Some, including me, would argue that it was unethical for Dr. Buzbar to speak with Feuerstein on a trial on which he was not involved and had no understanding of either the trial design or DCVax Direct.

The June 19^th blog read was as follows:

Prestigious Cancer Hospital Rebukes Northwest Bio for 'Inappropriate' Data Disclosure

“The prestigious MD Anderson Cancer Center issued a stern rebuke to Northwest Biotherapeutics (NWBO_) for making promotional, unjustified claims about results from an ongoing clinical trial of an experimental cancer vaccine known as DCVax-Direct.

I have read the information that the company has put in the public domain. It is extremely unusual and inappropriate," said Dr. Aman Buzbar, vice president of clinical research at MD Anderson, a unit of the University of Texas system. Buzbar, an oncologist by training, spoke by phone about Northwest Bio on Wednesday.

MD Anderson is running the DCVax-Direct phase I/II clinical trial with funding from Northwest Bio, which makes the hospital's criticism of the company's tactics even more significant.

Northwest Bio has issued five press releases and held a conference call in the past month to disclose preliminary and unconfirmed results from individual cancer patients who have had single, inoperable tumors injected repeatedly with DCVax-Direct. Some of the injected tumors have reportedly shrunk, while others have no evidence of live cancer cells present, Northwest Bio claims. [None of the treated tumors have responded to DCVax-Direct using standard definitions used in clinical trials.]

But Buzbar said investigators at MD Anderson and the two other hospitals conducting the DCVAX-Direct study have not reviewed or analyzed data at all because patients are still being enrolled and treated. The statements being made by Northwest Bio about DCVax-Direct are derived from patient case report forms, which the hospitals are obliged to send to the company because it sponsored the study.

If you flip the coin and the trial results were negative, do you think the company would be disclosing this type of information? No, the company is trying to create tremendous hype about its product, which is very concerning to me as an academic oncologist," said Buzbar.

A patient or an investor may read these press releases and see a rosy picture, which may not be so rosy when the entire dataset is analyzed," he added.

DCVax-Direct is a so-called personalized cancer vaccine consisting of dendritic cells harvested from a patient's white blood cells? The harvested dendritic cells are then re-injected directly into the tumor, where they are supposed to prime the patient's immune system to identify and kill cancer cells.

The weakness of this approach is that there have been many studies in which tumors are injected locally -- the injections could consist of anything -- and you see tumor regression because of necrosis caused by inflammation," said Buzbar. "But it is a tremendous leap to say that this is a real response, which is why what the company is saying is so inappropriate."

Does MD Anderson plan to file a formal complaint against Northwest Bio, or ask the company to stop making claims about the DCVax-Direct study?

Buzbar: "That is a very good question, but I don't know because I've never come across a company that has done something like this before."

A firestorm erupted with Dr. Buzbar’ s unfortunate comments and he came under fierce attack. M.D. Anderson felt compelled to issue a press release defending one of their own. Feuerstein offered this as evidence that M.D. Anderson supported his view that the release of the data was unethical and exploiting cancer patients. He stated in another blog that M.D. Anderson had rebuked NWBO. This was extremely damaging to the stock.

The Buzbar statement was presented as evidence that M.D. Anderson was rebuking Northwest for its actions and Feuerstein used this “proof “ that he concocted as evidence to support that the data presented on DCVax Direct was meaningless, that Northwest was acting unethically in releasing the data before the end of the phase 3 trial and that Northwest was exploiting cancer patients.

The support of the M.D. Anderson doctors and their appearance in the film segment on National Geographic clearly shows that Feuerstein is wrong in charging that the data presented on DCVax Direct was meaningless, that Northwest was acting unethically in releasing the data before the end of the unblinded trial and that Northwest was exploiting cancer patients. That is, unless he believes that there is collusion between M.D. Anderson, Northwest and Allan Butler to defraud short sellers.

Effect of Feuerstein Articles Was Very Damaging to the Stock

The May 15^th press release from Northwest was followed by an increase in the price of NWBO stock from the $5.20 range to around $6.00. The Feuerstein article really didn’t have much of an effect on the stock price at the time, but it did plant the false idea in investors’ minds that the Company’s actions in releasing interim data from the DCVax Direct trial was unethical and exploited cancer patients which proved important later.

The June 11^th press release from Northwest understandable caused considerable excitement among investors. This is a common occurrence for biotechnology companies who release important new information. The stocks are volatile and tend to react strongly on the upside to positive news. It was not unusual that the stock of NWBO traded strongly on the news. The stock closed at $5.70 on June 10^th and reached nearly $9.00 by the close of June 18^th. Then on June 19^th before the opening Feuerstein published his Buzbar blog and the stock reacted sharply. It closed on June 19^th at $7.18.

Since then, the stock has drifted steadily lower to the current price of $5.90. This appears to be the result of the Feuerstein blogs and a number of bearish articles that extensively rely on Feuerstein’s allegations. In addition, a number of law firms have filed securities fraud suits against Northwest citing Feuerstein’s allegations as their evidence. Collectively, these have had the effect of turning the release of the encouraging data on DCVax Direct into a negative for the stock.

Law Firms Announce Investigations of Northwest for Stock Fraud Based on the Feuerstein Article

The Feuerstein article was published at 8;46 AM on the morning of June 19^th. At 11:16 AM on June 19^th  (the same morning) there was an announcement by the law firm Pomerantz LLP that it was investigating claims on behalf of investors of Northwest Biotherapeutics, Inc. It alleged that Northwest Biotherapeutics and certain of its officers and/or directors have violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934.

It cited as evidence that on June 19, 2014, a report published by the website TheStreet.com stated that, "The prestigious MD Anderson Cancer Center issued a stern rebuke to Northwest Biotherapeutics (NWBO) for making promotional, unjustified claims about results from an ongoing clinical trial of an experimental cancer vaccine known as DCVax-Direct."  MD Anderson Cancer Center is running the DCVax-Direct clinical trial with funding from Northwest Biotherapeutics. On this news, shares of Northwest Biotherapeutics fell $0.87 per share to $8.04, or more than 10.37%, in intraday trading on June 19, 2014.

Does anyone else find it curious that this investigation was announced just three hours after the Feuerstein blog was published? Pomerantz was joined in the next several days by five other law firms making the same allegation. It would be interesting to know how Pomerantz learned of the Feuerstein blog and acted so quickly to try to exploit it for their business purposes.

There has been no announcement of an actual law suit being filed. I believe that this signals that the law firms were unable to attract enough clients to go forward on an economic basis for them. I note that short sellers can not join in this suit.

Bearish Articles on NWBO

Whatever you may think of the objectivity of Feuerstein, there is no denying that he has clout and impact and draws a lot of emulators. This has inspired five bearish articles published on Seeking Alpha in the last two months. These were:

• Behind the Promotion of Northwest Biotherapeutics by Richard Pearson, July 7, 2014
• You Can This Data but Not That Data by Adam Gefvert, August 13, 2014
• Placing Northwest Biotherapeutics in the Figure-4 Deadfall Fall by Scrying Biotech, June 28, 2014
• Northwest Bio the Curious Relationship with Cognate Bioservices by Biotech Hawk, July 17, 2014
• Northwest Biotherapeutics Gets Called Out-Should Investors Worry by Trevor Lowenthal, June 23, 2014.

There was also a Barron’s article called Northwest Bio: Biotech Accused in Stock-Pump Scheme: A Seeking Alpha article alleges Northwest Bio pays for favorable press. But the CEO denies it. This was published on July 14, 2014. This was of course based on the Pearson article.

Each of these articles used allegations raised by Feuerstein that are now clearly to be seen as false. In one or more of the articles, the charge was echoed that Northwest had hidden interim efficacy data in the phase 3 DCVax-L phase 3 trial. However, the head of the Data Monitoring Committee sharply rebuked Feuerstein. He pointed out that the efficacy analysis had not been done and in no event would Northwest learn of results of an interim efficacy analysis unless the DMC recommended that the trial be stopped for futility or reaching the primary endpoint of the trial. Feuerstein did not acknowledge this rebuke or withdraw the charge. He just went silent.

These articles also fed off the idea that releasing the interim data on the DCVax Direct trial is somehow unethical and exploits cancer patients and that there was a rift between Northwest and M.D. Anderson. The central point of this article was to show that these allegations are also false.

I would suggest that the Pearson article Behind the Promotion of Northwest Biotherapeutics is exactly 180 degrees incorrect. The better title would be “The Stock Manipulation of Northwest Biotherapeutics by Short Sellers.”

Tagged as Adam Feuerstein, dcvax direct, DCVax-L, Northwest Biotherapeutics Inc., NWBO, Stock manipulation + Categorized as Company Reports