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Expert Financial Analysis and Reporting

Northwest Biotherapeutics: Right to Try Law Potentially Could Lead to Meaningful Revenues Prior to Formal Approval of DCVax-L (NWBO, Buy, $0.30)

Investment Perspective

Last week, a manuscript was published in a peer reviewed journal that dealt with blinded results of the phase 3 trial of DCVax-L that is investigating its use in newly diagnosed glioblastoma multiforme, the most deadly form of brain cancer. . The article was co-authored by 69 leading oncologists who participated in the trial and who obviously endorse the conclusions of the manuscript. While ultimate conclusions must await unblinding of the trial, the 69 authors agreed that patients are living meaningful longer than would be expected. Their analysis of the blinded data strongly supports the hypothesis that the striking increase in survival of all patients in the trial is almost certainly attributable to patients who were given DCVax-L plus standard of care (SOC) living much longer than those given just SOC. See my reportBlinded Data from Phase 3 Trial Strongly Suggests that DCVax-L is a Major Advance in the Treatment of Newly Diagnosed Glioblastoma Multiforme”. The distinguished lead European and US investigators in the trial have both suggested that DCVax-L is potentially a major advance. See my report  “Two Lead Investigators on DCVax-L Phase 3 Trial Believe That It Could be a Major Therapeutic Advance in Treating Glioblastoma Multiforme.”  Barring some miraculous " never before seen" improvement in outcomes for SOC, the probability of clinically meaningful therapeutic benefit for DCVax-L when the trial is unblinded is extremely high; the question is how much.

This data is so stunning that I think that if the exact same data had been announced by Bristol-Myers that its stock would have bounced 20% from $52 to $60 adding $17 billion of market value. As another example, there are probably 50 or more emerging biotechnology companies targeting cancer and I am not aware of any that have shown such stunning phase 3 data. Even so, many of these trade at market valuations of $500 million or $1 billion and perhaps more. If one of them had reported such data there would almost certainly have been a dramatic increase in stock price. Let me give you a hypothetical example to illustrate what I think would have happened. Let’s imagine that a Company is selling at $10 per share that results in a $500 million market value. I think that this news would very likely have resulted in a spike in the stock price to $20 or $30 which is $1.0 to $1.5 billion market capitalization.

NWBO increased in share price from $0.25 to $0.30 on the DCVax-L news bringing it to valuation of $240 million if we assume that every possible share equivalent outstanding is ultimately converted into common shares. On the basis of fully diluted shares of 381 million as reported in the last 10-Q, the market valuation “leapt” from $95 to $116 million.How do you explain this? I unequivocally believe that NWBO has been the subject of a massive stock manipulation scheme aimed not just at driving down the stock price, but at bankrupting the Company. This has been done through a collusion of hedge funds and market makers (including some of the most prominent Wall Street firms). They have used bloggers to create an incredibly negative image of the Company. One of these bloggers boasted that “we are going to make this management, the company and its technology so toxic that no one will touch it”. They have been enormously successful.

Some of these bloggers have said that my charge of stock manipulation is delusional, but not so Jim Cramer. He was a hedge fund manage, the founder of and is now a commentator on CNBC. He constantly brags about his long standing and deep connections to the hedge fund community. In this video,


Cramer boasts about his stock manipulation prowess, explains how he did it and urges other hedge fund managers to manipulate stocks because it is lucrative and fun. Hard to believe isn’t it, but these are his own words.

Stock manipulation is not a new thing. Its roots can be traced to the emergence of aggressive hedge funds in the 1970s. There is an extensive, illuminating and extremely well researched article describing how hedge funds manipulated the stock of Dendreon. This is on a web site called Deep Capture that was an efffort by Patrick Byrne; he is the founder of which was attacked by the hedge fund manipulation scheme. He describes in alarming detail the tactics used by the hedge funds to go after Dendreon. The aforementioned Jim Cramer is prominently featured. As I read through Mr. Byrne’s description of the tactics employed against Dendreon, it is seems to me that the attack on Northwest in comparison was stock manipulation on steroids. The emergence of dark pools and high frequency trading and their domination of stock trading has taken the art of stock manipulation to much greater levels than that used against Dendreon.

This background is necessary to understand as it has put the company into distressed situation so that the dramatic data from the phase 3 trial has had little effect. Here is my view of the current perception of the stock.

  • NWBO has been reduced to a penny stock so that most stock brokers cannot buy it for their customers
  • Penny stocks are frequently associated with distressed companies or management stock manipulations
  • The Company has been so often attacked by savage blogging attacks alleging management corruption, falsifying or withholding data and many other criminal acts that most investor’s beeves this is true. As Herman Goebbels said “A lie told once is just a lie, but a lie told a thousand times becomes the truth:
  • The Company obviously needs additional financing and this is hanging over the stock.
  • It could be some time before the phase 3 trial is unblinded. Conceivably we might not see phase 3 results for some time.
  • The illegal naked shorting attack continues unabated. The shorts are at great risk as they have shorted, both legal and naked, tens and hundreds of millions of shares. They are redoubling their efforts

With all of these weighty issues overhanging the stock, even investors who are convinced that there is a high probability of success for DCVax-L in the phase 3 trial are choosing to sit on the sidelines. With the data that NWBO has there is virtually no chance of bankruptcy as there was before the manuscript. However, investors are concerned that there is no important new data on the horizon and NWBO might be forced into more financings. Routinely, the hedge funds short into these offerings causing the deal to be done at a deep discount. So all of this results in even people who believe in DCVax-L to remain on the sidelines.

Is this situation as hopeless as it sounds, maybe not? The passage last week of the Right to Try act introduces a major new factor into the NWBO investment thesis as it is perfectly tailored for DCVax-L. It could give rise to significant revenues in the not too distant future, perhaps later this year. There are 11,000 newly diagnosed glioblastoma patients each year in the US and a comparable number abroad. Based on historical results with standard of care, 50% of these patients will die in 15 to 17 months according to the manuscript. Would you want DCVax-L if you were one of these patients? Also, we know from the manuscript that the 69 oncologists who participated in the phase 3 trial believe that DCVax-L is a major advance and presumably will want to offer it to some patients.

So how do we put this in perspective for NWBO? Later in this report, I go into more detail on how I estimate that treating just 100 patients worldwide could give rise to a revenue stream of $25 million with resultant gross profits of $21 million. I’ll leave you to judge how many patients might seek DCVax-L under Right to Try. My fervent hope and best judgment is that substantial enrollment under Right to Try could very positively flip flop the investment view on NWBO so that its market value reflects the promise and value of DCVax-L. Of course, the one thing we can be sure of is that the stock manipulators will double down on their short attack as they probably are at risk for hundreds of millions or billions of dollars.


Thoughts on How Patients and Doctors May Look at Using DCVax-L Following Passage of Right to Try

President Trump just signed the Right to Try bill into law. DCVax-L and DCVax-Direct are in position to be major beneficiaries of this law which could lead to meaningful revenue contributions for NWBO beginning in late 2018 or early 2019. The intent of the law is to give patients faced with a life threatening disease the right to try experimental drugs even if there is just limited data from phase 1 trials. Very importantly, DCVax-L has very promising phase 3 data. There are a number of issues being raised against this bill, but most arise from economic concerns from the current big biopharma companies and payors. Who other than the hedge funds shorting NWBO could argue against allowing these patients access to DCVax-L with its promising data?

I have put together the a hypothetical dialogue between an oncologist and a newly diagnosed glioblastoma multiforme patient to illustrate how I think doctors and patients will evaluate the decision to use DCVax-L Let’s imagine that Larry Patient is consulting with an oncologist. Because of severe headaches; his primary care physicians became concerned about a possible tumor and referred Larry to Dr. Oncologist The oncologist promptly ordered imaging scans. Here is how the conversations might go.

Dr. Oncologist: Larry, the news from the scans is disturbing. It shows a tumor mass in your brain that could very well be glioblastoma. We want to confirm this with a biopsy.

At the next consultation:

Dr. Oncologist: Larry, our worst fears are confirmed; it is a glioblastoma.

Mr. Patient: What do you recommend?

Dr. Oncologist: I think that we should as quickly as possible schedule surgery to remove as much as possible of the tumor mass. We can schedule it next week.

Mr. Patient: Is there anything after surgery?

Dr. Oncologist: The standard of care is that following surgery, you should receive radiation and the chemotherapy drug temozolomide.

Mr. Patient: What are my chances with surgery, radiation and chemotherapy?

Dr. Oncologist: Based on clinical trials and clinical experience, you have a 50% chance of surviving 15 to 17 months, a 30% chance of surviving two years and a 15% chance of surviving three years.

Mr. Patient: I thought that was what you would say as I have spent the last week doing research on the internet. In doing so, I came across several news reports on a promising new drug called DCVax-L. I am also aware that the new Right to Try law could give me access to this drug. Am I a candidate for this? What do you know about the drug?

Dr. Oncologist: You are certainly a candidate for this under the Right to Try law. DCVax-L is still in clinical development, but here is what I know. The drug is in a late stage, phase 3 trial involving 331 patients, two thirds of whom received DCVax-L plus standard of care and one third received standard of care. The trial remains blinded so that we don’t know the actual effects of DCVax-L. A recently published manuscript was co-authored by 69 prominent oncologists who participated in the trial. The manuscript states that the unblinded data suggests that patients are living much longer. It suggests that 30% and possibly more of patients in the trial have survived for three years while the expectation would be that 15% would survive. The lead European and US investigators on the trial have said that this could be a potential breakthrough for glioblastoma.

Mr. Patient: That sound extremely promising but what is the downside? Am I going to have endure horrible side effects that affect my life? Since I may only have a few months to live I want to live them in as much dignity and comfort as possible. I don’t want to spend long periods in the hospital receiving treatment and then going home and vomiting for a couple of days or even returning to the hospital to receive treatment as can be the case with chemotherapy and most other cancer treatments.

Dr. Oncologist: There is good news on this front. The treatment involves a number of intradermal injections spaced over several months. The data on side effects is extremely encouraging. There were well over 2,000 administrations of DCVax-L in the trial. It showed an excellent safety profile as only 7 patients (2.1%) in the trial reported grade 3 or 4 adverse events. There were 3 cases of cerebral edema, 2 seizures, I nausea and 1 lymph gland infection. It is important to understand that GBM is a rapidly growing tumor in the confined space of a skull. As it expands, it begins to infringe on normal brain tissue so that 5 cases of cerebral edema and seizures might be attributable to the cancer. Non serious side effects that probably were attributable to DCVax-L were injection site reactions, fatigue, low grade fever and night chills. The authors of the manuscript said that the rate of serious adverse events of DCVax-L plus SOC was comparable to SOC alone. DCVax-L looks to be a cancer drug with placebo like side effects.

Mr. Patient: This sounds like a “no brainer”. Who wouldn’t want to give this a shot?

Dr. Oncologist: I totally agree.

Mr. Patient: Will my insurance cover this?

Dr. Oncologist: I have gone through the payment issue with two other patients and some of my colleagues have done the same. The insurance companies are fighting tooth and nail against this and are putting up all kinds of delays and hurdles. This could have an impact on their bottom lines. You may have to pay for this out of pocket?

Mr. Patient: But won’t President Trump step in and force the insurance companies to pay based on the Right to Try law?

Dr. Oncologist: I hope so, but the insurance companies will delay this as long as possible. They would like to delay reimbursement until early next year when they can include estimates of the new costs not only for DCVax-L but a number of other drugs for different indications in their budgets.

Mr. Patient: So if I can’t pay for this myself, I am screwed.

Dr. Oncologist: I hope not.



My Suggestion on How Northwest Might Handle Pricing of DCVax-L

I have asked NWBO about pricing and they quite predictably haven’t given any details but they did made an interesting comment. They said that they thought that the $325,000 price tag for just a single injection of the new CAR-T drug Yescarta is excessive, especially given that it may at best be medically important in 30% or less of patients. I take this as meaning that they might price at a lower level even though the market could probably bear $325,000.I have also asked about how many patients they think might want to use DCVax-L under Right to Try. Again, no comment.

From this scanty amount of information, I have come up with an idea for pricing. Management has neither endorsed nor refuted my assumptions. Actually, they haven’t yet heard them. Remember that DCVax-L in the phase 3 clinical trial was given as intradermal injections at days 0, 10, 20, and at weeks 8, 16, 32, 48, 72, 96 and 120. Here is my suggestion. How about pricing the first three or so injections at about $40,000 which is maybe $5,000 over the cost of manufacturing. Then each of the subsequent seven injections would be priced at $30,000. If at some point, the treatment is judged to be ineffective, it could be halted and no further costs incurred. In terms of economics for NWBO the Yescarta model of “all up front” would be the best. However, for the patient and payor, I think that there would be great enthusiasm for my model.

My best guess is that there will be substantial demand on a right to try basis even if patients have to pay out of pocket. And indeed, under my model the demand could be quite large. The issues that NWBO would face would be how quickly Cognate could gear up manufacturing. Also, the savage stock manipulation scheme launched against NWBO has left them in a very weak financial position. Because, it would have to pay the upfront cost of production before realizing any revenues, this is a serious problem that could limit the ability to build enough production to meet demand.

Let’s look at the economics for NWBO of treating one patient using my model. NWBO would have to incur $35,000 of manufacturing costs and would receive $40,000 for the first three injections resulting in $5,000 of gross profits. Each of the subsequent injections would give rise to $30,000 of revenues and $30,000 of gross profits. This could result in a revenue stream of $250,000 and gross profits of $210,000 over time. Treating 100 patients could give rise to a maximum revenue stream of $25 million and maximum gross profits of $21 million. Because some patients might drop out before completing treatment the actual revenues and gross profits would likely be less.


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  1. SlashRothstein says:

    Hi Larry – A couple of questions I came up with over the weekend, welcome your thoughts:

    I’ve followed other prospective/blinded trials where crossover was permitted. We know the SOC pts were able to move to DCVAX-L if they experienced progression. If a pt, originally in the treatment arm had progression, could they have crossed over to the SOC/placebo arm or did they just keep them on DC-VAX?

    Please correct me if I’m wrong: The MOS data in this paper does not include the 100 or so pts who were still alive at the time of the data collection. The 100 patients in this group had been alive a minimum of 18 months or so?

    Any updates or additional thoughts on PFS?

    Thanks, SR



    Today’s price action right on the heels of this report, and heavily to the downside on several big blocks, strongly suggests that the manipulators not only pay attention to your reports, but also when you stir up their nest as you did in the article, they seek to slap you around a little bit with some extra manipulation…as if to show you who’s really in control here. I actually believe that’s what is happening here today, but that does not alter the undeniably favorable prospects for DCVax-L.

    Thank you for standing your ground!


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