7. Northwest Biotherapeutics

Nasdaq
In 2016, the company came off the Nasdaq after not complying with some of its rules.

The trials and tribulations of Northwest Bio involve allegations of subterfuge, the FBI, a star investor and some heavy questioning about its strange financial relationship with its contract manufacturer Cognate—not to mention confusion and delay over its cancer vaccine, delisting from the Nasdaq and penny stocks. You wouldn’t be surprised if this was made into a film.

Working backward, at the end of last year, the company came off the Nasdaq (after not complying with some of its rules) and started trading on the OTCQB marketplace, although at around 40 cents a share at the start of 2017.

This came after it announced via an SEC form that a shareholder had asked the biotech: Where’s the phase 3 data for your leading cancer vax candidate DCVax? A key question, given that the first version of this test was submitted to ClinicalTrials.gov all the way back in 2002.

It should have been released in November 2016, but the biotech gave a rather odd and unfulfilling reply that it had some of the data but not all from this test before it shut down for the Christmas holidays.

There was also mention of a “major case of the flu” hitting “key management” figures for weeks, which also prompted a lack of action. It said data should be out “soon.”

There is a history here as to why many raised their eyebrows at this weak explanation. The biotech is working on a therapeutic cancer vaccine for glioblastoma, a particularly aggressive form of brain cancer with a high mortality rate, and a disease that can go after younger patients.

There are, however, few efficacious treatments for the condition, and there is a long history of failed cancer vaccines in the pipeline, which makes its approach very risky. How is the med doing in testing? Well, Northwest has made that as vague as possible.

In its last major update in February of this year, the biotech said a trial hold from the FDA that dogged the study for months had been lifted, and as of the end of 2016, more than 300 patients were in the trial. The test is still blinded to the biotech, but it said it had been looking at the numbers of “events” (i.e., tumor recurrences or deaths) “necessary for the trial endpoints.”

The company added: “When sufficient 'events' have accumulated, the external parties managing the trial will then begin the process of moving toward 'data lock' and then analysis of the data, which are typically each multimonth processes, particularly for large international trials.” These PFS events are primarily tumor progression (i.e., recurrence), although they can also be patient deaths which occur without prior evidence of tumor recurrence. OS events, meanwhile, are patient deaths.

In its February update, however, it said the “trial has accumulated a sufficient number of events toward the progression-free survival endpoint, but not yet for the overall survival endpoint. The PFS events have surpassed the 248-event threshold, but the OS events have not yet reached the 233-event threshold.” 

It said given the pace of OS events during the last six to eight months, “the company's current anticipation is that it will be several months until the trial reaches 233 OS events.” As such, it is unclear when Northwest Bio will present data from the trial.

Delays and a lack of clarity abound for investors who just want to know: Does this drug work? Detailed answers seem to be forever just on the horizon.

And it’s not just on the data side that questions have been asked. The biotech also proved to be yet another 2016 misstep for the fund manager Neil Woodford, after he invested around $95 million into the company.

A few years back, allegations of financial impropriety began to surface, and Woodford (rather belatedly) attempted to run an investigation led by independent ex-FBI agent Elliott Leary.

This was swiftly rejected by the biotech’s board in December 2015, denting Woodford’s reputation, which got worse months later after the phase 3 failure for Circassia.

Northwest did say that it would launch an investigation into the allegations (more on those below) and appointed Charles Price, another former FBI special agent, to help carry out the investigation. It said however that it wanted Price to “establish whether the allegations are a deliberate attempt to manipulate its stock price,” rather than look deeply into its own financial history.

There is some murky history here, and a number of analysts and reporters have for some time been very vocal about the connections between Hanover, Maryland-based Cognate and the biotech.

Cognate, a cell-based specialist manufacturer, is the CMO for DCVax, but is also a part of (and created by) the venture group Toucan Capital Fund III, an entity controlled by NW Bio’s CEO and president Linda Powers (who serves on the CMO’s board and is managing director of Fund III) and her husband.

According to a report published in 2015 by analysts at Phase Five Research (a company that held a short position on NW Bio), since 2004 around $310 million in cash, shares, warrants, options and other benefits had been transferred from Northwest to the Toucan Group.

Phase Five also said in its report that it believed Powers “used $30 million of NWBO’s cash for the actual benefit of Cognate, acquiring a huge production site in England, that according to our analysis of the evidence will most probably be used by Cognate rather than NWBO.” Powers has vehemently denied the report’s allegations, but this has not relieved pressure on the company.

What investors want in a company are simple: a strong, capable management, a good pipeline, clarity and trust—and it is really this last element that binds all others together. When trust is lost or shaken, as it has been in Northwest, all credibility goes out the window, as well as share price.

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7. Northwest Biotherapeutics