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Summary

  • Northwest Bio has a history of showing data too soon.
  • Now it's refusing to release data when it's appropriate to show it.
  • Failing to release data now means that DC-Vax likely failed and the company is struggling to find something positive by adding "enhancements" to its studies.
  • Now is the perfect timing to short NWBO, as all but the most die hard longs must be getting skeptical.
  • The company is likely broke right now, and needs to do another equity raise.

Northwest Biotherapeutics (NASDAQ:NWBO) is in the process of a Phase III trial with DCVax, its brain cancer drug. It started the trial in December 2006, and expected it to be finished in September 2014. Not anymore. The company released a PR on Monday that the trial won't be finished until at least the end of 2015. The company said that it won't be able to release ANY trial info because it's blinded. However, the company already received interim data from its Phase III trial that it still has not revealed to the public.

Northwest Bio Showed Some Data Too Soon

NWBO has been eager to show as much good news to the public as possible about DCVax. So much so, that it got a scolding from a clinical researcher that it's even paying!

On June 19th, Adam Feuerstein of thestreet.com released an article interviewing the vice president of clinical research at MD Andersen, Dr. Aman Buzdar, who said that NWBO is releasing positive data from its trials very prematurely. The fact that NWBO is paying MD Andersen to conduct these studies on DCVax, adds even more validity to Dr. Buzdar's comments because his job depends on receiving income from biotechs like NWBO. From the article, this is what Dr. Buzdar said:

I have read the information that the company has put in the public domain. It is extremely unusual and inappropriate.

If you flip the coin and the trial results were negative, do you think the company would be disclosing this type of information? No, the company is trying to create tremendous hype about its product, which is very concerning to me as an academic oncologist.

A patient or an investor may read these press releases and see a rosy picture, which may not be so rosy when the entire dataset is analyzed.

Northwest Bio Isn't Showing Other Data When It Should

It has been nine months since NWBO first announced its interim analysis of DCVax Phase III trial. The company said:

NWBO announced today that the number of events required to trigger the first interim analysis of its Phase III clinical trial in patients with Glioblastoma multiforme (GBM) brain cancer has been reached, and the analysis process is under way which will culminate in the independent Data Monitoring Committee's assessment.

The DMC then reviews and evaluates the data and reaches an assessment, which it delivers to the Company. Due to the work involved in auditing and preparing the data, and conducting the review, it is anticipated that the DMC may complete its evaluation and recommendation approximately six to eight weeks from now.

Since NWBO said it only takes six to eight weeks to receive the data, and it has now been nine months, it's safe to say at this point that the company has decided that it won't release that information. Since NWBO is so eager to release positive info about its studies, we can logically conclude that the interim analysis was bad news for DCVax.

Why won't Linda Powers, CEO of NWBO, release this interim analysis? On March 28, Powers submitted a rebuttal to Adam Feuerstein about his criticisms of the company. But she ignored his inquiry about not releasing the interim analysis data. Why is this? Is the company trying to sweep this lingering question under the rug?

More Delays

Since the company likely knows that DCVax is a failure, it is pushing out the study even longer, with all kinds of new data to look for. The company is in "data mining mode" looking for any possible use for DCVax, even though it's likely just a placebo.

From the latest PR:

Taking into account the time required for these approvals and implementation steps, and the 36-patient increase in the trial, as well as the gradual ramp-up of the trial in Europe, the Company currently anticipates that enrollment will be completed in approximately Q3 of next year, and the primary endpoint of the trial will be reached about 3-5 months after full enrollment or by around year-end next year.

So now shareholders need to wait until the end of 2015 to finish the trial, and 2016 to see the results. That is, if NWBO doesn't delay things further with "more enhancements" of the trial and more patients. The original Phase III trial only was supposed to have 110 events.

However, as long as shareholders are buying the stock, the company can increase the amount of events to 300 or even 500 before revealing any results. Why not push the trial out to 2020? Because once the data is shown, it's game over. By prolonging the trial and not showing the data, the company can keep the machine going and maintain its multi-hundred million dollar market cap.

The Beginning Of The End For Northwest Bio

Some people have thought for a long time that NWBO is a "bio-turd", but were holding off from shorting to wait for the moment for the inevitable decline. I myself have been holding off on getting involved. I believe that decline has just started, and now is the time to take action, so I took my short position.

At the moment, even long term holders of NWBO must be starting to realize NWBO is a sham. If they really cared about the drug results, they would demand to see the interim data from the company. Brain tumor trials are very expensive. NWBO's current balance sheet can't handle the cost of adding 36 more patients to the trial, with monitoring also of their immune system and adding an additional 148 "events".

Upcoming Equity Raise

NWBO will have to do another equity raise very soon. For the quarter ended March 2014, it had $12M in cash, and raised $15M in April, so that totals $27M. The company burns $10M-$20M per quarter, so at this point, it could be flat broke or barely have enough funds for one more quarter. And at this point it will have to continue to raise money all the way through 2015.

The company had a $46M loss for the quarter ended March 2014, and its debt ballooned to $43M from $20M in the previous quarter.

Disclosure: The author is short 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.

Source: Northwest Bio - You Can See This Data, But Not That Data