Expert Financial Analysis and Reporting

Overview

Linda Powers spoke at the Biotech Showcase Conference in San Francisco on January 12, 2015. My Buy recommendation on Northwest Biotherapeutics is well documented and well known. The purpose of this note is not to document the reasons for my positive recommendation. It is intended as a brief summary of the notes that I took.

DCVax Direct Update

The different types of solid tumors treated in the phase 1/2 trial were detailed. There were 40 patients enrolled in the first phase of the trial of whom there were  8 sarcoma patients, 7 pancreatic, 7 colorectal, 6 melanoma, 4 lung and 8 other patients including breast and ovarian. The DCVax Direct trial started enrollment in June 2013 and completed enrollment in July 2014. The last of 40 patients should complete the scheduled six injections by March 2015.

The primary outcome measure of this trial is safety which is determined by the number of patients with adverse events over a six month time frame. The secondary endpoint is the number of patients whose tumors respond over an 18 month time frame as measured by both biopsy and imaging. Other secondary outcome measures are overall survival and progression free survival over 24 months.

Because this is an open label study the results are known as they occur. M.D. Anderson and the Company have previously commented on three patients who have shown tumor response and in this presentation two other patients were highlighted. The best known outcome is that of a man named Alan Butler who suffered from stage 4 pancreatic cancer and independently came forward with his story. He was the first patient treated in the trial and has staged a remarkable recovery. He had exhausted all treatment options and was headed for hospice. Following DCVax Direct treatment, he is now 18 months past the beginning of his treatment. A metastases in his abdomen shrank to the point that it was recently surgically removed. He appears to be leading a normal life. Check this link for more detail.

M.D. Anderson doctors have previously reported on a sarcoma patient and an ovarian cancer patient who responded to therapy. See this link. At this presentation, the Company highlighted a new sarcoma patient and a new lung cancer patient for the first time that I have seen. The lung cancer patient was stage 4 and had a tumor the size of a grapefruit in her lungs. The tumor shrank after treatment improving quality of life and she was reported to have resumed swimming. The sarcoma patient showed a response to treatment as measured by both imaging and biopsy.

I have not heard any individual data on the other 35 patients, although the Company has previously reported that there were a number of tumor responses in patients other than the five I have cited. We could hear more individual anecdotal reports over the next few months and perhaps have some level of data on all 40 patients by 3Q, 2015. Ultimate survival and progression free survival data will probably take longer. However, I think that based on the data that we have seen there is now clear evidence that DCVax Direct does have a meaningful biological effect on at least four types of intractable, inoperable solid tumors. We don’t at this time have good information on duration of effect other than the Alan Butler pancreatic cancer patient, where the results were striking. This type of data should come this year as well as results in the remaining 35 patients.

The Company will start two phase 2 trials of DCVax Direct in two different tumor types in 1H, 2015. They haven’t disclosed what the tumor types will be, but I would judge that sarcoma will be one. The other will likely be pancreatic or colorectal. It was mentioned that these trials could conclude at about the same time as the DCVax-L trial in newly diagnosed glioblastoma which I take to be 1Q or 2Q, 2016. In the phase 1 trial, just one tumor site was injected at a time. In the phase 2 trials, multiple tumor types will be injected at the same time and perhaps at closer intervals of treatment. One would think that this would enhance efficacy but this has to be shown in clinical trials.

Perhaps the most remarkable thing about DCVax Direct is the safety profile. The Company says that the only consistent side effect is a fever that lasts for two days and in which body temperature increases by 2 degrees Fahrenheit. Contrast this with the much ballyhooed CAR-T products of Juno Therapeutics and Kite Pharmaceuticals in which many patients are hospitalized to care for side effects of the treatment. Also, the checkpoint modulators Bristol-Myers Squibb’s Yervoy and Opdivo and Merck’s Keytruda, have shown 30% to 40% incidence of grade 3/4 serious side effects with their usage.

DCVax-L Update

No direct statement on completion of the phase 3 trial of DCVax-L trial was given, but based on remarks made that it will be at about the same time as the phase 2 trials of DCVax Direct; I would judge that it will be 1Q or 2Q, 2016. The first interim analysis for efficacy will occur in 2015. There already has been an interim safety analysis. My best judgment is that the Data Monitoring Committee will recommend that the trial continue with no comment on efficacy results. Safety is not an issue.

In Germany, ten hospitals have applied for reimbursement following approval of DCVax-L under the hospital exemption early access program. The reimbursement process has taken somewhat longer than expected, but we should see some revenues from Germany in 1H, 2015. More details on the early access program in the UK should also be forthcoming. I expect revenues from the UK in 2015.

The Company has previously reported on 55 patients who were excluded from the phase 3 trial because their tumors has grown or progressed before treatment could be started. There are two types of patients who might fall in this category. These are true rapid progressors who have a median overall survival expectation of 7 to 10 months. However, it may also include pseudoprogressors who initially show an enlargement in tumor size, but ultimately go on to realize a favorable outcome. I have seen small studies that show that median overall survival for pseudoprogressors is anywhere from 18 months to 24 months. This compares to about 16 months for current standard of care suggesting that these patients have a better outcome

These 55 patients had already had their vaccine prepared and they were treated on a compassionate use basis. The median overall survival in these 55 patients was 18 to 19 months. I have had a quandary in interpreting these results because the Company has given no information on the breakdown between rapid and pseudo progressors. If all of the patients were rapid progressors, median overall survival would have improved from 7 to 10 months to 18 to 19 months which would have been very impressive. However, if all of the patients were pseudo progressors; we might have expected the 18 to 19 months survival without DCVax-L.

Until we see the breakdown of rapid progressors versus pseudoprogressors, we can’t determine the actual improvement resulting from DCVax-L in these patients. The Company has been reluctant to release this breakdown as there can be some uncertainty as to which group patients fall into; this takes some time to resolve. The Company indicated that there is ongoing follow-up on these patients and perhaps we will hear more definitive data in 2015. The Company has consistently referred to the data as encouraging and I suspect that most of these 55 patients were rapid progressors. I am anxious to find the breakdown. This could be an important catalyst in 2015.

Potential Clinical Trials of DCVax Direct and DCVax-L with Checkpoint Modulators, BMY’s Opdivo and MRK’s Keytruda

Ms. Powers spent a fair amount of the presentation talking about the potential synergy between DCVax Direct and DCVax-L with the checkpoint modulators, BMY’s Opdivo and Yervoy and MRK’s Keytruda. The checkpoint modulators activate T-cells that have been highjacked by cancer cell signals so that they do not recognize the tumor. They restore the ability of T-cells to respond to the tumor.

In clinical trials, only 30% to 40% of patients given checkpoint modulators respond to the drugs. It is beleived that this is because they lack sufficient numbers of T-cells to be activated. The role of cancer vaccines is to increase the number of active T-cells. If so, there should be synergy between the two different types of drugs.

Ms. Powers hinted that we could see an announcement of plans to try these vaccines in combination with the checkpoint modulators. She seemed to indicate that this would be forthcoming in a number of months. I would note that BMY and MRK are forming collaborations to test their products with a very wide range of drugs. Until I see more details, I am reluctant to conjecture on the importance of these potential trials.