Long Or Short: Cancer Cures

Includes: DNDN, NWBO
by: Ryan Pawell


Autologous immune cells for curative cancer therapies.

Dendritic cells initially proven to be safe and effective.

Dominant market player will need autologous immune cells that are safe, effective and affordable.

Recently, Forbes ran an article titled "Is This How We'll Cure Cancer?" and discussed the potential benefits of chimeric antigen receptor T lymphocytes (CARTs) or white blood cells that are engineered to hunt down and attack cancer.

These engineered white blood cells are exciting - clinical trials demonstrate these cells "[make] blood cancers seem to disappear and then stay vanished".

Companies large and small are placing bets on this potential cancer cure and the value of these deals range from millions to billions of dollars. Juno Therapeutics recently raised an unprecedented nine-figure Series A and claims "CARTS… eradicate treatment-resistant cancers in patients with a large tumor burden"

CARTS are enjoying a healthy amount of attention and funding, however, the use of engineered immune cells for cancer therapeutics is far from the bleeding edge. Dendreon (NASDAQ:DNDN), a company spun out of Stanford Medical School in 1992, demonstrated engineered dendritic cells (DC) are both safe and effective for treating metastatic prostate cancer, receiving FDA approval in 2010. Some believe DNDN is a flop as their current model is struggling to turn a profit.

Most of these exciting therapies use autologous cells or cells from your own body and require a centralized manufacturing plant with an eight-figure price tag. For autologous cell therapies, the centralized manufacturing requires one's own cells to be extracted at a local hospital or blood bank then shipped to the manufacturing plant for engineering, and shipped back for infusion. Logistics is a major bottleneck for this centralized manufacturing model.

Ask any biologist, working with live cells is not easy and live cells require constant feeding in a controlled environment if you cannot freeze them. Live cells require a precisely controlled sterile environment with respect to temperature, pH, osmotic pressure, O2, CO2 - it ain't easy to keep cells alive in a lab, let alone during transportation. Additionally, live cells must be surrounded by the appropriate hormones and nutrients, which are consumed quite quickly.

For DNDN, logistics looks to be their most daunting challenge. DNDN maintains a logistics command center for coordinating each personalized therapeutic across the United States and the complexity of this system significantly adds to the cost of goods sold.

The key technical advantage for CARTs is cryopreservation or freezing, CARTs can be frozen down and shipped in vials immersed in liquid nitrogen increasing the shelf-life of the cells. DNDN's DCs could not be frozen and may require complex environmental controls described above if short shipping times are not available - transporting biologics in a timely manner is quite expensive. For this reason, CARTs look to be a safe, effective and economically viable choice.

Another dendritic cell initiative is Northwest Biotherapuetics (NASDAQ:NWBO). NWBO maintains a healthy clinical pipeline with therapeutics for brain cancer, metastatic ovarian cancer, colon cancer metastases and prostate cancer. An NWBO patient received their therapy nearly a decade ago and is still kicking, whereas the average patient in a DNDN clinical trial lived 4.1 months longer when compared a placebo patient.

NWBO looks to be taking a more holistic approach with their therapeutic. The NWBO cells are engineered to identify a range of biomarkers, if the cancer adapts it can still be recognized by the DCs. For some reason, NWBO does not disclose this on their "DCVax ® Technology" webpage nor is this key technical advantage disclosed on their Wikipedia page, but NWBO can freeze their dendritic cells.

From a biological perspective, dendritic cells are the ideal choice. These cells could be likened to a parent cell that can teach its kids to attack cancer in the body where the kids are T-cells.

On balance, these promising cancer cures come in two platforms (1) engineered T-cells and (2) engineered dendritic cells. Both look to be fairly effective in eradicating previously untreatable cancers. However, NWBO's use of the ideal biological platform and their ability to freeze these cells positions them to dominate the market in the long term.

I believe the winner of this race will be autologous engineered dendritic cell therapies manufactured in a safe, effective and affordable manner.

DNDN demonstrated Provenge, a DC-based therapy, is safe and effective for the treatment of metastatic or advanced prostate cancer. According to Yahoo! Finance, DNDN's operations resulted in negative net income of about $300 - $400 million for 2011 - 2013. This is about 22 years after launch and some attribute these losses to live cell logistics.

NWBO has been around for quite some time too, with the IPO occurring in late 2001. And, according to Yahoo! Finance, NWBO enjoyed negative net income of $30 - $70 million for 2011 - 2013. NWBO's therapeutic looks to be safe and effective just like DNDN's and Steven Giardion did a great job addressing recent negative publicity. NWBO worked out a way to freeze DCVax - a key competitive advantage over DNDN. A physician just needs to warm up a few drops of DCVax and inject the patient intradermally.

Going long on DNDN might mean you think it can turn itself around, going short on NWBO might mean you do not think its therapeutic will be safe and effective. Going long on NWBO after regulatory approval means you might think NWBO's therapeutics are going to be safe, effective and economically viable.

A final note, both DNDN and NWBO employ complex laboratory processes in their manufacturing facilities. If economic viability is simply not in the cards with current processes, both DNDN and NWBO will need to look to alternative technologies to reduce the cost of goods sold. That technology exists. It is just a matter of implementation.

Disclosure: The author is long NWBO. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.