Seeking Alpha
Biotech, long only, healthcare, small-cap
Profile| Send Message|
( followers)  

Editors' Note: This article discusses micro-cap stocks. Please be aware of the risks associated with these stocks.

In my last article on Northwest Biotherapeutics (NASDAQ:NWBO) I wrote an analysis on the company's Phase III immunotherapy treatment for Glioblastoma, as well as the company's Phase I/II therapy for the treatment of all solid tumors. In the article I compared Northwest Bio's Glioblastoma therapy to those of its competitors and laid out the reasons why Northwest Bio's results were superior to the rest. While I made this case through a comparison of results for progression free survival, overall survival, patient applicability and number of patients per trial, what I neglected to discuss are the underlying biological mechanisms which I see as making the DCVax platform foundationally different from its competitors. In this article I will discuss underlying aspects of the DCVax platform's immunomodulatory effects, foundational composition and multi-cellular influence to make a case as to why I believe the DCVax platform could be a major breakthrough in the field of Oncology.

DCVax & ICT-107

While many investors seem to be under the impression that Northwest Bio's DCVax platform and ImmunoCellular's (NYSEMKT:IMUC) ICT-107 vaccine are the same in nature because they're both called "immunotherapies", this assumption could not be further from the truth. In fact, the two therapies are so different in nature that I do not look at one vaccine's clinical trial outcome as having a significant effect on the other. In terms of ImmunoCellular's ICT-107 vaccine, a patient's dendritic cells are exposed to 6 Glioblastoma associated antigens which are made synthetically. This word synthetic is the first key differentiator of these two therapies. Chemicals which are synthetic in nature (whether they are acrylic paints, or in ICT-107's case, synthetic antigens) are by definition non-biologic, chemical imitations of real biological chemicals. Synthetic antigens are artificial replications which are created by automated machines typically involving computer algorithms. In using a synthetic antigen as a key component in one's vaccine, a company is making the dangerous assumption that the immune system is too stupid to tell the difference between a real threat and a fake threat. There is absolutely no reason to be assured that products of a synthetic nature can be effectively identified and responded to by the immune system. This is problem one.

Mechanism of Action

Having identified the first foundational flaw with comparing DCVax and ICT-107 with one another, the second factor on hand is that of mechanism of action. By discussing mechanism of action, I am referring to the underlying factors inducing the stimulation and guidance of a cancer patient's immune system towards the systemic problem at hand, i.e. cancer. While ImmunoCellular's ICT-107 therapy was expected to work by exposing a patient's dendritic cells to six synthetic antigens, Northwest Bio's DCVax exposes a patient's dendritic cells not only to hundreds of real antigens, but these antigens are also from the patients actual tumor. If you were sending a police dog out into the woods to hunt down a fugitive, would you want to give the dog the scent of the actual fugitive before releasing him, or the smell of a machine made synthetic clone? I think the answer is obvious. By exposing the patient's dendritic cells to the full set of biomarker targets on the patients tumor, the chances of success are evermore greater for detection and these biomarkers are in turn the real thing. Likewise, exposing the patients own tumor biomarkers to their immune cells may eliminate problems of patient to patient variation.

DCVax-Direct

Unlike any of its immunotherapy competitors, Northwest Bio is currently in clinical trials with the leading cancer hospital in the world, MD Anderson, to test its DCVax-Direct therapy for use on all solid tumors. This therapy is not just intended for non-operable tumors, but for all types of solid tumors in any tissue of the body whether operable or inoperable, for any type of cancer. Likewise, the company does not have to screen for patient, or tumor characteristics for this therapy to be applicable, enabling it to treat the entire market if approved. Unlike Northwest Bio's potential competitors, the company has been the only one given permission to begin an immunotherapy trial like this by the FDA and if data is positive and compelling, it could potentially receive accelerated approval. Data should be rolling out on this trial within the next 1-2 months based on the company's projections, however the final results of the trial are not expected until the first quarter of 2015. In various animal studies using DCVax-Direct 80%-100% of tumors showed complete regression. When animals were re-injected with the cancer after recovery the tumors failed to regrow which indicates an immune memory response.

Compassionate Use Program

Something that has received almost no coverage is that Northwest Bio will soon be approaching the possibility for compassionate use approval in the EU for its DCVax-L Glioblastoma therapy. After preparing for over a year the company submitted its application to the EU medical governing body in September of last year. Since this trial is currently underway in the UK and Germany, investors should pay attention to the significant impact it would have if prior to the company's completing its phase III clinical trial, a compassionate use program is approved for roll out. Considering that in October of this year the German Hospital system already applied to the government for re-imbursement of DCVax while the therapy is still in its clinical trial stage, I think there is a significant possibility that with good interim results the therapy could be approved for use early. Keep in mind however that nothing is guaranteed and it should not be expected.

Financing

Being that Northwest Biotherapeutics recently engaged in a secondary offering and raised over $50M over the course of this year, the company's financial position is stronger than it has ever been in the past. The current cash position will be more than sufficient enough for the company to pass numerous key upcoming milestones which could have a significant effect on the company's share price. Likewise, the company's CEO Linda Powers reported at the Oppenheimer Healthcare Conference this past week that the company is currently in several negotiations regarding partnering its DCVax Phase III Prostate Cancer clinical trial. If the company is successful at partnering this trial then shareholders could potentially never be at risk of a dilution ever again. However in turn, if upcoming near-term milestones within the next two months are positive, any potential further dilution would likely be minimal due to share price appreciation. Ms. Powers has stated publicly that the company is completely in line with shareholders in terms of wanting to avoid dilution, as most of the company's management have significant investments in company stock.

Risks

While I see a large upside potential for Northwest Biotherapeutics if its DCVax platform shows significant efficacy, investing in the stock certainly comes with serious risks. The biggest risk on hand for investors in the company is the possibility that the DCVax platform fails to show significant benefits in clinical trials. If this turns out to be the case in any or all of the company's 5 clinical trials, the share price could suffer immensely. Further risk involved in investing in Northwest Biotherapeutics is the possibility of future dilution. If the company fails to partner its Phase III Prostate Cancer trial, Phase II Ovarian Cancer trial or Phase I/II Colon Cancer trial, it will likely have to complete a secondary offering. Depending on upcoming data milestones achieved over the next 1-3 months, a dilution could range in extremity from having a minimal effect on shareholders to having a significant effect on shareholders. If the company does not partner any of its trials, but data released over the next 3 months is positive, I see a dilution not having a serious impact on the share price. A final risk to be discussed regarding Northwest Biotherapeutics is the risk of competition. While I currently see Northwest Biotherapeutics as being the sector leader by a major headway, if a competitor proves to have a superior product in the future, then market share could be at risk of being taken by a competitor assuming that DCVax is approved.

Trial Differentiators

Although ImmunoCellular's recent Phase II trial for Glioblastoma failed to meet its primary endpoint in overall survival, the difference for DCVax's Phase III trial (aside from the therapy being entirely different foundationally and biologically), is that the primary endpoint is not overall survival as the ICT-107 trial was, but rather is, progression free survival. In my last article I showed a comparison of progression free survival data from the Glioblastoma immunotherapies of Celldex (NASDAQ:CLDX), Agenus (NASDAQ:AGEN), ImmunoCellular and Northwest Bio. The therapy which showed the greatest progression free survival of the whole group by a significant advantage was Northwest Biotherapeutics. Below is a re-cap of all the GBM immunotherapy PFS data thus far.

Glioblastoma Candidates

Company:Progression Free Survival:
NWBO26.4 Months
IMUC16.9 Months
AGEN17.8 Months
CLDX12.3 Months
Standard of Care6 Months
Complete Resection-

As one can see in the graph, Northwest Biotherapeutics showed a 26.4 month progression free survival benefit in Glioblastoma patients which was 9.5 months greater than the next best progression free survival results from ImmunoCellular's ICT-107. Considering that Northwest Biotherapeutics Phase III trial's primary endpoint for approval is progression free survival, this is a very significant advantage that the company has in terms of probability for success. In order for the company to meet its Phase III primary endpoint it will only need to show a 6-month extension of progression free survival, which is only 1/3 (33.3%) of the progression free survival the therapy produced in the Phase I trial. Likewise, when designing the Phase III trial the company put into place what are known as, "sub-group analyses". The way that the sub-group analyses work is that if the DCVax-L therapy does not meet its PFS primary endpoint, or the trials secondary endpoint of overall survival, the company may still get approval solely for the subgroups in which the therapy did meet its endpoints. Subgroup analyses are permitted if they are pre-designed into the clinical trial ahead of time which Northwest Biotherapeutics has done. While I still think that DCVax-L stands a great chance of meeting its primary endpoint, it is nice to know that if it doesn't it could still receive approval for the sub-groups which benefited. Of particular interest in ImmunoCellular's press release last week was that although the ICT-107 therapy failed to meet its primary endpoint, results did show a statistically significant increase in progression free survival. If ImmunoCellular had made progression free survival its primary endpoint as Northwest Biotherapeutics has, perhaps it would not have failed to meet its primary endpoint.

Conclusion

With several major catalysts coming up in the near term for Northwest Biotherapeutics, I expect the company's share price to move up considerably into the DCVax-Direct data and DCVax-L interim analysis. The company states it is currently in negotiations for partnering its Phase III Prostate Cancer trials which could also be a significant milestone for the company if finalized. DCVax-L if approved has already received orphan designations in the US and EU, which will provide the company significant market exclusivity advantages for a sector in which it is already showing best in class Glioblastoma data thus far. While there's no telling what the interim data safety monitoring board analysis will bring in the next 6-8 weeks, I am optimistic the therapy continues to show a good safety profile. The real question is, what will the efficacy profile look like this early and how would it affect the trial if positive.

Source: Why Northwest Biotherapeutics Is Different