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Expert Financial Analysis and Reporting

Northwest Biotherapeutics: Phase 2 Trial in Colorectal Cancer with Liver Metastases Announced (NWBO, Buy, $0.55)

NWBO is preparing for the start of a phase 2 trial combining DCVax-L with Merck’s Keytruda in late stage colorectal cancer with liver metastases. This note is just my first impression of the announcement and I need to do much more work on the design of the trial and timelines, but I wanted to give my initial (shallow) view on what this means to the clinical development for DCVax-L and the implications for the stock price of NWBO.

The trial is being led by the University Medical Center (UMC) of the Johannes Gutenberg University Mainz in Germany which is a leading center in Germany comparable to a center like M.D. Anderson in the US.  It is an investigator-initiated trial led by the University of Mainz which reduces the cost to NWBO. Merck will supply Keytruda needed for the trial. My guess is that the cost to NWBO will be in the $5 to $7 million range. All three organizations participated in the design of the trial. Johannes Gutenberg University Mainz is a leading Center of Excellence for colorectal cancer, and especially liver metastases of colorectal cancer and the trial will enroll patients with colorectal cancer that has metastasized to the liver. Altogether there will be 10 hospital participating in the trial.

The reasoning behind the trial is that DCVax-L is a potent stimulator of T-cells. However, colorectal cancer may produce PD-L1 ligands that inactivate the newly produced T-cells. If this hypothesis is correct, there is great synergy for the combination with Keytruda. I don’t have information on timelines for completion of the trial as of this writing, but I will write more as I gather more information. My guess is that it could take 18 to 24 months to complete, but this is just a guess.

This is very important from a stock standpoint. Those of you who have followed NWBO realize that there has been a vicious assault on the Company led by Adam F-strein at The and hedge funds writing articles using pseudonyms on Seeking Alpha. F-stein has written 38 negative blogs on NWBO over the last two years. One of their central attack lines is that there is no credible third party validation of DCVax-L. They maintain that DCVax-L has no therapeutic effect and F-stein has said that it is no more effective than grapefruit juice although he did not detail the scientific basis of his analysis. I think this view is discredited with this important validation from Johannes Gutenberg and Merck. However, I would be amazed if F-stein does not put a negative spin on this.

There is an enormous amount of stock manipulation by the wolfpack of shortsellers in regard to NWBO. One of their key strategies is to use heavy negative shorting to try to offset positive news. They will almost certainly work in concert to try to hold the stock price down or make it close lower today. Their intent is to make it appear that this is not positive news. Unfortunately, this is the world we live in.

This announcement certainly builds credibility that the technology that created DCVax-L has therapeutic promise. I hope that it removes the strident effort of F-stein and colleagues to totally discredit the technology. I would also note that the checkpoint inhibitors Keytruda and Opdivo have been approved on the basis of endpoints like objective responses in open label phase 2 trial. It is within the realm of possibility that this trial could be the basis of approval in Europe and the US if objective response rates or progression free survival are encouraging. I need to do more work on this.

The attacks by F-stein et al have had a devastating (and unwarranted) effect on the stock price and NWBO forcing the Company to finance operations in dribs and drabs and at a depressed valuation; it has been running on fumes. This announcement should increase access to capital. I also think that this de-risks the stock if the phase 3 trial of DCVax-L does not meet its endpoint; results should be released in the next few months. Detractors have suggested that if the trial fails, NWBO will go bankrupt. I am not implying that the trial will fail, but we have to recognize that sometimes trials fail even if the drug is effective owing to the design or conduct of the trial. I would point out the recent failure of Opdivo in first line lung cancer as an example. So, if the phase 3 trial were to fail, there remains an intriguing clinical path forward for DCVax-L; it is not the end of the Company.

I do not think that this will be the last announcement on clinical trials and other issues coming from NWBO. There are likely to be other trials announced with both DCVax-L and DCVax- Direct. I had thought that such announcements would have been made earlier this year. I am not sure what the cause of the delay was, but it appears to have been resolved. I recognize that NWBO faces challenges in financing these trials, but I continue to feel that this technology has comparable potential to the CAR-T technology that has driven Kite and Juno to multi-billion valuations. The fully diluted market value if NWBO is about $90 million.

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  1. As usual, this was a fair and encouraging analysis of the NWBO immunotherapy drug. Congratulations on keeping all of us apprised of this new collaboration.

  2. Hi Larry,

    Thanks for the ‘first thoughts’ article on this news.

    You write:
    “So, if the phase 3 trial were to fail, there remains an intriguing clinical path forward for DCVax-L; it is not the end of the Company.”

    Now, if the Ph III were to succeed, this new Ph II trial would take on a different dimension. DCVax-L would be validated for GBM. And the combo-therapy may show positive effect on another type of cancer, increasing the applicability of DCVax-L, hopes for cancer patients at large, and the market value for purely DCVax-L, not even counting DCVax-Direct.

    The Mainz announcement is here:

    It indicates a possible extension to other countries, which I read as European in this context:
    “The trial will be conducted at about 10 sites in Germany, and UMC Mainz, Germany, will be the Sponsor. The study may also be expanded to other countries”

    Furthermore, the Fraunhofer involvement bodes well:
    “Close cooperation exists with Cognate BioServices and the Fraunhofer Institute for Cell Therapy and Immunology (IZI) Leipzig, Germany.”
    given the H.E. application and the very likely possibility of their access to the current DCVax-L data.

    Long NWBO,
    Kind regards

  3. “This announcement should increase access to capital.” Agree, though where will NWBO get the money to finance their operations? That is really the $$$ question. NWBO needs money, and a lot of it, to continue their operations and fund their trials. The speculative value of this company was devastated by the wolfpack, no doubt. What remains troubling is the silence that still surrounds why the FDA stopped the trial enrolment. Confidence and trust must be restored in NWBO management or they’ll remain on what appears to be a very slippery and shrinking slope.

  4. JUNO – your prior “avoid” recommendation is well noted. They just reported today two more trial patients dying. Is KITE a similar ticking time bomb?

  5. I wish you would explain to me and anyone else who subscribes to your reporting service, why do not pick up the phone and talk to Les like so many other bloggers do. I know he does talk to people, without giving any propritory information away, but maybe he could expand on some of your questions and you could report back on that. At least you could report on why you do not talk to him or Linda Powers. I know you do talk to other companies and their exectutives. thank you. hope you had a happy Thanksgiving and I look forward to the next chapter in the NWBio saga. cheers

  6. I am not sure why you think I do not talk to NWBO. I speak with them frequently.


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