Why You Should Be Interested In Northwest Biotherapeutics And ImmunoCellular Therapeutics

Includes: IMUC, NWBO
by: Smith On Stocks

Dendritic Cell-Based Cancer Vaccines Could Be A Major Advance

In October 2011, Dr. Ralph Steinman was posthumously awarded one-half of the Nobel Prize in Physiology or Medicine for his discoveries of the dendritic cell and its role in adaptive immunity. His discoveries have made possible the development of therapeutic cancer vaccines that are produced by removing living cells (monocytes) that are precursors to dendritic cells, loading them with cancer antigens that stimulate the immune system to fight cancer and then re-injecting them into the body, a process called autologous immunotherapy.

There is a great unmet medical need for better ways to treat cancer. Chemotherapies that are the cornerstones of cancer therapy are essentially poisons dosed at low levels to destroy rapidly dividing cells like cancer. At the same time, they also kill normal rapidly dividing cells in the body and this gives rise to devastating, life-threatening side effects. With a few exceptions, they offer modest survival benefits at the price of a severe impact on quality of life. More recently, monoclonal antibody and targeted therapy technologies have gained widespread usage in treating cancer. However, they also offer only modest improvement in outcomes, with a few notable exceptions like Glivec for chronic myelogenous leukemia, and they come with side effects.

To achieve a major advance in treating cancer, dramatically different approaches are needed. Why not look at what nature has created? All of us develop precancerous cells in our life, but the immune system is able to eradicate them or wall them off before they become full blown, uncontrollable cancers raging widely in the body. The dendritic cell is a powerful and central player in activating the immune system to attack cancerous cells. The goal of dendritic cell-based cancer vaccines (and cancer vaccines based on different approaches) is to boost and restore the inherent effectiveness of the immune system.

Autologous, dendritic cell-based cancer vaccines are based on elegant biology. They hold the promise of being that sought-after advance in cancer treatment and, if so, they could become one of the most innovative new biotechnology drug categories over the next decade.

I have written extensively about Dendreon (NASDAQ:DNDN), which introduced Provenge for treating prostate cancer in 2010; it is the first dendritic cell-based cancer vaccine and indeed the first-ever cancer vaccine of any type to be approved for medical use in the U.S. This article is intended to give investors a rudimentary understanding of the role of the dendritic cell that will hopefully help in following the dialogue about and developments with Provenge, other dendritic cell-based cancer vaccines and other types of cancer vaccines.

This article also provides a brief introduction to two small companies, Northwest Biotherapeutics (NASDAQ:NWBO) and ImmunoCellular Therapeutics (NYSEMKT:IMUC). Both are in the late stages of developing dendritic cell-based cancer vaccines for glioblastoma, the most severe type of primary brain cancer. Along with Dendreon, they are currently at the forefront of this technology.

Investment Perspective On Dendritic Cell-Based Cancer Vaccines

Even though it is potentially a paradigm shifting drug, Provenge has been received cautiously by the pharmaceutical, medical and investment establishments. All three disciplines are debating whether Provenge is an important therapeutic advance or just an over-hyped biotechnology dream. I believe this is in large part due to its being so different from current cancer drugs.

Provenge's effects on cancer are very different from chemotherapy. Oncologists have been trained to judge the effectiveness of chemotherapy by how much the tumor shrinks and how long it takes the tumor to start to grow again. In prostate cancer, decreases in PSA are also closely monitored to determine effectiveness. Provenge in its clinical trials often didn't shrink tumors, didn't reduce PSA, and indeed some tumors continued to grow after treatment. Judged by the standards that have long been used by physicians to gauge the effectiveness of chemotherapy in prostate cancer, Provenge doesn't work.

Clinical trials, however, have demonstrated a clinically meaningful improvement in median overall survival for Provenge of 4.1 months, with enormous safety advantages over chemotherapy. This was achieved even though the design of the trial allowed control patients to cross over to Provenge when their cancer progressed. This may have understated the survival benefits of Provenge as it was being compared to the control group in which some patients were also on Provenge. Despite these pronounced positive attributes, Provenge's role in treating metastatic prostate cancer is a subject of hot debate, and there is considerable skepticism and uncertainty about its role in prostate cancer.

With living-cell therapies like dendritic cell-based cancer vaccines, the manufacturing process largely determines the ultimate characteristics of the product. The processes used to grow the cells and alter them can lead to end products that may have the same general approach and therapeutic goal, but whose efficacy can be quite different. An important point to understand is that Provenge is a first-generation product and, as would be expected with a pioneering process, its manufacturing process is crude and inefficient. While Provenge is an effective product, future dendritic cell-based vaccines using improved manufacturing techniques may be much more effective, both against prostate and other cancers.

DCVax-L And ICT-107 Are Second-Generation Dendritic Cell Cancer Vaccines

In the course of doing research on Provenge, I came across two small publicly traded companies developing dendritic cell-based vaccines: Northwest Biotherapeutics' DCVax-L and ImmunoCellular Therapeutics' ICT-107. These vaccines address glioblastoma multiforme, or GBM, the deadliest form of primary brain cancer. (Provenge is approved for prostate cancer.) In my judgment, the manufacturing technologies used by these companies to develop their vaccines are significantly more advanced than that used by Dendreon to produce Provenge and hold the promise of being more potent, albeit the cancers being targeted are different.

In Phase I trials, when added to standard of care both DCVax-L and ICT-107 produced impressive signals of efficacy in comparison to the current standard of care (which is surgical resection followed by a combination of radiotherapy and the chemotherapy drug temozolomide). I have compared the median progression free survival, median overall survival, and three-year survival for the Phase I trials of DCVax-L and ICT-107 along with the pivotal Phase III trial that established radiotherapy and temozolomide as standard of care in the following table:

Treatment of Newly Diagnosed Glioblastoma Patients
Standard of care* DC-Vax-L** ICT-107**
Newly diagnosed glioblastoma patients 287 20 16
Median progression free survival (months) 6.9 24.0 16.9
Median overall survival (months) 14.6 36.0 38.4
Three year survival 16% 55% 55%
* NEJM, March 15, 2005 Radiotherapy plus Concomitant and Adjuvant Temozolomide for Glioblastoma
** Company presentations**

At face value these results are striking, suggesting that 55 out of every 100 patients treated with DCVax-L and ICT-107 added to standard of care are alive after three years vs. only 16 out of every 100 treated with just standard of care. It is also extremely interesting that two rather different products produced remarkably comparable results, and for me that provides meaningful validation of the power of the dendritic cell approach.

Seasoned biotechnology investors will quickly point out the inherent flaws of the comparisons in the preceding table. The Phase I trials of DCVax-L and ICT-107 enrolled a small number of patients in non-randomized trials performed at one clinical site. Such trials are subject to investigator bias, albeit inadvertent, as investigators have a tendency to select for younger, healthier patients. They are reluctant to enroll older, sicker patients with poor prognosis who might die regardless of treatment. No one wants to see a new drug be judged ineffective because it is given to patients for whom there is very little hope for survival. In Phase II and III clinical trials, however, such patients do find their way in. There is an axiom in cancer drug development that Phase III results are never as good as Phase II results and Phase II results are never as good as Phase I results. Comparing results from different trials is also viewed suspiciously because protocols and the characteristics of the patient populations can vary widely, especially when comparing small Phase I to large Phase III trials.

Skeptics would also point out the large number of companies that have sought to develop cancer vaccines and experienced stunning failures. CancerVax, Genitope, Favrille and Cell Genesys were all exciting companies that showed striking Phase I results with their cancer vaccines (none of which were dendritic cell-based vaccines), but each failed to duplicate the promising early results in later trials. Investors suffered large losses and there is not surprisingly a lot of skepticism on Wall Street about cancer vaccine companies.

Adding to investor caution is that these two companies are bulletin board companies, which are little followed by Wall Street. They are small, virtual and underfunded companies that outsource most of their clinical development and manufacturing. Northwest Biotherapeutics has only eight full-time employees and ImmunoCellular Therapeutics has just four. They have been strapped for cash and have had to raise new capital at modest valuations, leading to significant dilution of existing shareholders.

I acknowledge and share all of these concerns, but I think that it is difficult to ignore the compelling survival data shown in these Phase I trials. Investors get excited about Phase I results for chemotherapy, monoclonal antibodies, and new targeted therapies if they show meaningful tumor size shrinkage in Phase I trials in 30% to 50% of patients without any evidence of a survival benefit. Viewed against this backdrop, the Phase I results showing huge survival benefits for DCVax-L and ICT-107 are stunning.

I am extremely interested in Northwest Biotherapeutics and ImmunoCellular Therapeutics as I see dendritic cell-based vaccines as potentially a major breakthrough in treating cancer and these companies have products in advanced stages of development. Whatever reservations one may have in regard to Phase I results, they can only be viewed as encouraging for both companies. There could also be important, product defining Phase IIb results for both companies in late 2013 or 2014. Although these companies are being ignored by most of Wall Street, the history of biotechnology is replete with examples of small companies that were ignored or written off and then surprised investors with successful development of their products. Dendreon is an example, as are Amgen (NASDAQ:AMGN) and Genentech in their early years.

People who have followed my work are familiar with my research approach to new companies. I am very much attracted to companies with intriguing new products. When I find such companies, I rarely start with a buy opinion. I find that understanding a company takes a long time. My usual mode of operation is to issue an introductory report like this one and then follow with other reports. This approach lends itself to analysis of Northwest Biotherapeutics and ImmunoCellular Therapeutics as we are still a year or more away from clinical data in their defining Phase IIb trials. I have previously written an article on ImmunoCellular and I am in the process of writing one on Northwest Biotherapeutics. If you are as interested in this product space as I am, I would urge you watch for what I anticipate to be a series of future articles about these companies, dendritic cell-based vaccine technology, and possibly new entrants that emerge in cancer vaccine development.

Further Reading

I have written a more extensive report on this subject on my website. It goes into the biology underlying dendritic cell-based cancer vaccines and how they are made. Please take a look at it if you are interested in this amount of detail.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

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