Grant Zeng's  Instablog

NWBO Reports First Quarter of 2013 Financials

On May 16, Northwest Biotherapeutics filed its 10-Q for the first quarter of 2013.

There was no revenue for the first quarter of 2013.

Research and development expense was $11.6 million for the three months ended March 31, 2013 compared to $3.6 million for the three months ended March 31, 2012. The increase was primarily attributable to the DCVax-Direct manufacturing and product development work, and the preparation costs for the launch of two clinical trial programs, in the US and UK, as well as expansion of the ongoing Phase III trial in the US, and increased manufacturing of DCVax®-L for the Phase III trial.

General and administrative expense included $1 million of cash expenses, and $1.5 million of non-cash charges (i.e. amortization of previously issued stock based compensation and restricted stock and warrants issued for services), for a combined total of $2.5 million for the three months ended March 31, 2013 compared to $2.2 million for the three months ended March 31, 2012. The slight increase in general and administrative expenses from the prior period is as a result of $0.9 million related to the issuance of restricted stock and warrants for public relations and investor relation services, offset by a $0.4 million decrease in stock based compensation expense.

Net loss was $ 14.4 million or $0.54 per share for the three months ended March 31, 2013 compared to a net loss of $10.2 million or $0.51 per share for the three months ended March 31, 2012.

At March 31, 2013, cash and cash equivalents totaled $0.4 million.

In April 2013, the Company entered into an agreement with one healthcare-dedicated institutional investor for a registered direct placement of $10.0 million of common stock at the closing market price of $3.90 per share. The number of shares of common stock issued was 2,564,103. The Company issued to the investor warrants exercisable for 1,025,641 shares of common stock. The Company also issued to the placement agent warrants exercisable for 128,205 shares of common stock. Net proceeds to the Company amounted to $9.2 million after deducting deal related costs. The warrants have an exercise price of $4.29 per share and are exercisable beginning six months after closing, with a term of five years.

Phase III DCVax-L For Brain Cancer Is Going Well

This Phase III trial of DCVax-L is for newly diagnosed Glioblastoma multiforme (GBM), the most common and most lethal form of brain cancer. The trial is well under way in the US, with 46 active sites at present, and is expected to enroll an aggregate total of 312 patients in the US and Europe.

On May 16, 2013, NWBO announced that Phase III clinical trial with DCVax®-L for brain cancer has been initiated at King's College Hospital in the UK. This is one of the first late-stage clinical trials in Europe with active immune therapies. Three other sites in the UK are also preparing to open.

NWBO has also been working on preparations for the clinical trial in Germany. On July 25, 2012, NWBO announced that manufacturing certification has been received from the German regulatory authorities for the clinical trial in Germany, which is the first step towards implementation of the Phase III trial in Germany. NBWO submitted the application to the German regulatory authority (the Paul Ehrlich Institute, or PEI) for approval of the Phase III trial. As of March 31, 2013, 24 clinical centers are in varying stages of preparations as trial sites in Germany. Also, in October, 2012, ten major hospital centers across Germany, including the key opinion leaders in brain cancer, all applied to the German healthcare system for reimbursement of DCVax-L for brain cancer. In addition, medical centers in other European countries have requested to be added to the trial.

Results Expected in 2013 for DCVax®-Direct Phase I/II Trial For Solid Tumors

In parallel with these developments in the Phase III DCVax-L brain cancer program, NWBO has been making arrangements to launch its DCVax-Direct program.

In November, 2012, NWBO entered into a Letter of Intent for a collaboration with Sarah Cannon Research Institute, which specializes in oncology and has a network of more than 700 physicians in the US and UK who see more than 75,000 new cancer patients per year.

The trial is expected to be launched in the second quarter 2013. Target patients for inclusion in the trial include patients with melanoma, pancreatic cancer, liver cancer and liver metastases from colon or other cancers. As is standard with this type of trial, the DCVax-Direct trial will not be blinded, and the results will be visible as the trial proceeds over the course of 2013.

The primary objectives of this two-part trial are to evaluate safety, dose levels and efficacy. The Part 1 stage of the trial involves dose escalation and confirmation. The Part 2 stage of the trial will focus on efficacy. The primary measure of efficacy will be regression (i.e., shrinkage or elimination) of the inoperable tumors.

This endpoint of tumor regression is a particularly important one clinically: once tumors are established, if they cannot be surgically removed, it is very difficult to stop their growth and their spread. This endpoint is also important from a regulatory standpoint: it is the endpoint used most frequently for FDA-granted accelerated approval. Further, this endpoint is a rapid one: typically, if tumor regression is going to occur, it is anticipated to be seen within a few months after treatment - far sooner than other clinical trial endpoints such as progression free survival (PFS) or overall survival (OS).

Colon cancer is the second leading cause of cancer deaths (after lung cancer), exceeding even deaths from breast cancer or prostate cancers. DCVax®-Direct offers an important potential new treatment option for colon cancer patients whose cancer has spread and is no longer operable. DCVax®-Direct is specifically designed to treat inoperable cancers in various tissues through direct injection into the tumors. It can be injected into any number of tumors, and virtually any location in the body (with imaging guidance for interior tissues).

Through over 10 years of research and development, NWBO has developed a unique DCVax-Direct technology with potential for any solid tumors. DCVax-Direct uses the DCVax platform to activate DCs in a manner suitable for direct injection into solid tumors. DCVax-Direct is designed to treat cancer patients whose tumor tissue is not available as their tumors are considered to be inoperable. The patient's dendritic cells are activated, but without addition of cancer antigens. The cells adhere to the plastic culture surface, which results in activation.

In multiple pre-clinical studies of various cancers in animals, direct injection of DCVax-Direct into some of the tumors in each animal resulted in complete clearance of all tumors in 80% to 100% of all of the animals in the various studies - both the tumors that were injected and the tumors that were not injected, indicating a systemic immune response. Further, the tumors were cleared relatively rapidly: within weeks after the DCVax-Direct injections. Equally as important, sixty days after the tumors were cleared from the animals in these pre-clinical studies, the animals were re-injected with the same tumor cells that readily established tumors at the outset of the studies. This time, tumors failed to establish, indicating immune memory.

Current treatments for solid tumors typically involve cytotoxic therapy aimed at killing tumor cells. Such treatments include radiation therapy, chemotherapy, or other cell killing treatments such as cryotherapy. These treatments can still be used along with DCVax-Direct as they can potentially prepare the tumor tissue for the injection of DCVax-Direct. The ability to still use conventional cytotoxic agents along with

DCVax-Direct will enable DCVax-Direct to be adopted in the market without requiring any change of existing clinical practice if so desired.

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

Immunovaccine Reports Financial Results for First Quarter of 2013

On May 16, 2013, Immunovaccine Inc. (IMV) announced its financial and operational results for the quarter ended March 31, 2013.

There was no revenue for the first quarter of Q1 2013 ended March 31, 2013.

Total R&D expenses for the first quarter of 2013 were $839,000, less government loans and assistance of $41,000 and investment tax credits of $70,000. This represented a $181,000 increase of net R&D expenses over the three months ended March 31, 2012.

G&A expenses were $614,000 for 1Q13 compared to $567,000 for the three months ended March 31, 2012, an overall increase of $47,000. Total business development expenses of $221,000 in Q1 Fiscal 2013 represented a decrease of $24,000 compared to the three months ended March 31, 2012.

Net loss for 1Q13 was $1.6 million, increased from a loss of $1.4 million during the quarter ended March 31, 2012. This relates mainly to a $308,000 decrease in government loans and assistance.

At March 31, 2013, Immunovaccine had cash and cash equivalents of $2.5 million and working capital of $2.1 million as compared to $2.0 million in cash and $2.1 million in working capital at December 31, 2012.

As of March 31, 2013, the number of issued and outstanding common shares was 68,412,996. On March 31, 2013, the number of stock options outstanding was 5,229,650 and the number of outstanding warrants was 3,732,550.

While we think the financial results releasing is a non-event for Immunovaccine, we are glad to see that Immunovaccine is making progress in its clinical programs.

Balance Sheet Boosted By New Financing

On March 5, 2013, Immunovaccine closed a private placement of its securities, raising gross proceeds of $1,603,880. Under terms of the financing, a total of 4,860,244 common shares were sold at a price of $0.33 per share.

Net proceeds from the financing will be used to fund preclinical research and development efforts in the areas of infectious diseases, including respiratory syncytial virus (RSV), malaria and anthrax. These ongoing efforts will support Immunovaccine's Phase I clinical trials for these infectious diseases programs. The proceeds will also support preparatory work to advance IMV's clinical stage oncology program, DPX-Survivac, into Phase II development, as well as ongoing efforts to establish alliances, collaborations and strategic transactions with parties including government entities, academic medical centers and other companies in order to secure additional financing to advance its current clinical programs and to expand its pipeline of strategic assets.

As of March 31, 2013, IMV had cash and cash equivalents of $2.5 million. Immunovaccine will continue to use a combination of strategic partnerships, non-dilutive financing and equity to support its development programs and in turn drive value creation.

Positive Results Reported for DPX-Survivac in Phase I Ovarian Cancer Study

On January 7, 2013, Immunovaccine Inc. (TSX-V: IMV) reported positive results from a Phase I clinical study of the Company's cancer vaccine, DPX-Survivac, for the treatment of ovarian cancer.

As a reminder, Immunovaccine initiated a Phase I clinical trial of DPX-Survivac and vaccinated the first patient in December 2011. The Phase I clinical trial is being conducted in eight clinical sites in the US and Canada. The Phase I is an open label clinical trial designed to evaluate sequentially the safety of two DPX-Survivac dosing regimens (0.5 ml and 0.1 ml) in approximately 15 patients. The goal of the Phase I clinical trial is to establish the safety and immune activity of DPX-Survivac in patients with advanced ovarian cancer.

Under the study protocol, these patients each received a total of three DPX-Survivac vaccinations three weeks apart with a total of 18 ovarian cancer patients completing all three vaccinations. A lead-in cohort of three patients received DPX-Survivac alone to confirm the safety of the vaccine as a monotherapy. Two additional cohorts of six patients each received a low dose or a high dose of DPX-Survivac in combination with a low dose of cyclophosphamide. The trial's primary objective was to evaluate the safety of the vaccine and in combination with cyclophosphamide. A secondary endpoint was the evaluation of the immune response produced by the vaccine therapy.

IMV intends to use DPX-Survivac alone or in combination with low dose oral cyclophosphamide as a first line maintenance therapy following standard surgery/ radiation/ chemotherapy. The therapeutic cancer vaccine is intended to stimulate an immune response to attack the circulating cancer cells that remain in a patient's body after surgery and radiation/chemotherapy. This treatment approach has the potential to combat micro-metastases and keep the cancer in remission and prevent metastasis.

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On October 9, 2012, IMV announced positive interim results from this Phase I clinical trial.

Current analysis, which now includes all patients enrolled in the study, confirmed previously reported results and uncovered new findings which are highlighted as follows:

• All patients receiving the DPX-Survivac combination therapy who were evaluable by tetramer staining (n=10) produced survivin-specific CD8 T cells following one or two vaccinations. Importantly the CD8 responses were maintained with booster vaccinations. The activation and maintenance of these specific immune cells is of particular interest in immunotherapy since CD8 T cells are implicated in identifying cancer cells, infiltrating tumors and killing cancer targets.
• All patients receiving the DPX-Survivac combination therapy (n=12) demonstrated antigen specific immune responses as measured by at least one of the study's three immune monitoring assays (ELISpot, tetramer analysis and multiparametric intracellular cell staining). In 11 of 12 patients, the immune responses were confirmed by two assays (five patients) or three assays (six patients) performed. These immune responses were established with one or two vaccinations and further increased or maintained with follow-up booster vaccinations.
• Analysis of immune responses by ELISpot showed that a cohort of patients receiving the higher dose of the vaccine therapy produced an average stimulation factor of greater than 600 times (600x) over baseline following their third vaccination. For one of these patients, the stimulation factor reached greater than 1,200 times (1,200x) over baseline. These immune responses are in agreement with the previously reported average increase of 350 times (350x) over baseline for these same patients following their second vaccination.
• DPX-Survivac was deemed well tolerated with no significant systemic adverse events reported in any patients recruited in this study. Reported adverse events were restricted to injection site reactions, which were experienced by the majority of patients after repeated vaccinations. Those patients presenting the strongest immune responses were more likely to exhibit more pronounced injection site reactions. There were no dose limiting toxicities experienced during the trial and no patient withdrew consent due to adverse events.

The Phase I study is part of a Phase I/II trial cleared by the U.S. FDA and Health Canada. The Phase II portion of the trial will be a randomized, double-blinded, placebo-controlled study with a vaccine dose selected based on the Phase I results. The Phase II trial will assess the clinical benefit of DPX-Survivac in patients with advanced ovarian cancer.

We are encouraged by the positive data from this Phase I study. The positive data continue to demonstrate that IMV's technology can speed up immune responses and make them stronger and longer lasting, for a wide range of vaccines. We have seen positive results from IMV's candidates whether in cancer immunotherapy or in protection against infectious disease.

The fact that DPX-Survivac can generate and maintain this response is strong evidence to support continued advancement of this candidate.

Phase II Trial of DPX-Survivac is on Schedule

Based on existing clinical data, Immunovaccine has already received clearance from U.S. FDA and Health Canada for the initiation of a Phase II trial of DPX-Survivac immediately following the completion of the ongoing Phase I study.

The Phase II trial will be a randomized, double-blinded, placebo-controlled study with a single vaccine dose selected based on the Phase I results. The Phase II trial will assess the clinical benefit of DPX-Survivac in patients with advanced ovarian cancer.

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Update On Other Clinical Programs

• Signed an investigator-initiated study agreement for a Phase I/II trial of DPX-0907 in breast and ovarian cancer. The trial will be conducted at the Busto Arsizio Hospital in Italy with Marco Bregni, M.D., head of the hospital's Oncology Unit, serving as the study's principal investigator. Immunovaccine expects the Phase I/II study to be initiated during the fourth quarter of 2013. The study agreement provides critical non-dilutive funding for Immunovaccine's ongoing advancement of its clinical stage DPX-0907 cancer vaccine program.
• Reported positive preclinical data for DepoVax™-formulated anthrax vaccines developed in collaboration with the National Institutes of Health (NIH). Study findings suggested that the DepoVax™-based vaccines provided a more rapid and long lasting immune response as compared to the licensed anthrax vaccine BioThrax™. This immunogenicity study is part of an ongoing bio-defense research program being conducted in partnership with NIH.
• Received up to $407,700 in Industrial Research Assistance Program (IRAP) funding to support the development of a respiratory syncytial virus (RSV) vaccine formulated with DepoVax™. RSV is a common lung disease in children, the elderly and patients with a compromised immune system. The funding will be used to advance Immunovaccine's RSV program, including the formulation of RSV antigens in the Company's patented DepoVax™ vaccine-adjuvanting technology. The funding will help IMV prepare for the first human trial of its DepoVax™ platform technology in infectious diseases.

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

In the past one and a half months, share price of Atossa Genetics (ATOS) retreated dramatically from $12.37 on March 19 to current $5 per share on May 9, 2013.

The major reason for the retreat in our view is that investors are concerned about the end of lock up period which ended on May 7, 2013 related to its recent IPO.

We think the retreat is not warranted and provides a good entry opportunity for both new and existing investors. The fundamentals of Atossa remain strong and there is lots of room for price appreciation in the next 12 months when the Company rolls out its two approved diagnostics nationally and launches two new products in 2013.

Atossa Currently Offers Two Diagnostic Tests

The ForeCYTE Breast Health Test

In December 2011, Atossa began limited marketing of the ForeCYTE Test to physicians, primarily obstetric-gynecologists, as well as breast health and mammography clinics, for use in conjunction with other health screening examinations, including annual physical examinations and regularly scheduled cervical Pap smears and mammograms. Atossa, together with Clarity Women's Health, formally launched the ForeCYTE Test nationally on January 14, 2013.

The ForeCYTE Test uses the company's patented MASCT System medical device for the collection, shipment and clinical laboratory analysis of nipple aspirate fluid (NAF). The NAF specimen is collected by a physician and returned to Atossa's CLIA-certified laboratory for analysis. The NAF is analyzed by microscopy for cytological abnormalities and by a patent-pending IHC staining technique for five biomarkers of hyperplasia and a sample integrity marker.

The results of the ForeCYTE Test provide personalized information about the 10-year and lifetime risk of breast cancer for women between ages 18 and 65.

The ForeCYTE Test provides Atossa with two revenue sources:

• Revenue from the sale of the MASCT System device and patient kits to physicians, breast health clinics, and mammography clinics;

• Service revenue from the preparation and interpretation of the NAF samples sent to the company's laboratory for analysis.

The ArgusCYTE Breast Health Test

The ArgusCYTE Breast Health Test, launched in December 2011, provides information to help inform breast cancer treatment options and to help monitor potential recurrence. It involves collecting a blood specimen from a patient using the company's patented, FDA 510(k)-Exempt blood collection tube and submitting it to its CLIA-certified laboratory.

The ArgusCYTE Breast Health Test tells physicians two important things:

• If circulating breast cancer tumor cells are present;
• And if they are present, what type of cells they are.

This tells the physician what type of treatment to give to kill the circulating tumor cells and hopefully prevent metastatic recurrence.

To our best knowledge, the ArgusCYTE Test is the only CLIA-certified test for circulating breast tumor cells. The ArgusCYTE test identifies mRNA expression levels for estrogen receptors (ER), progesterone receptors (PR), and HER-2 antigen in a single blood draw. This will help guide treatment selection. The test can identify circulating tumor cells immediately after a woman begins breast cancer therapy or at the time of diagnosis or biopsy so that she and her healthcare provider can make better-informed decisions about effective treatment options.

Atossa Plans to Launch Two New Products in 2013

In addition to ForeCYTE and ArgusCYTE which are already on the market, Atossa plans to offer two additional tests in 2013.

The FullCYTE Breast Health Test

The FullCYTE Breast Health Test, which is currently in development, and will be launched in mid-2013, is designed to assess the individual breast ducts for pre-cancerous changes in women previously identified to be at high risk for breast cancer.

The FullCYTE Test first collect ductal lavage samples from each of the five to seven individual breast milk ducts using the company's patented and FDA-cleared Mammary Ductal Microcatheter System and then analyze the samples by the same molecular and cellular biomarkers used in the ForeCYTE test.

The FullCYTE test enables physicians to ascertain which individual duct contains pre-malignant or malignant changes. Therefore, the test allows the physician to better target treatment to the specific duct with the pre-malignant changes or malignant changes. This will avoid side effects associated with systemic treatment. Traditional biopsies, involving invasive procedures in which tissue is removed surgically, typically cut across the natural anatomy of the breast ductal system, making subsequent intraductal treatment difficult or, in certain cases, impossible.

The NextCYTE Breast Cancer Test

The NextCYTE Breast Cancer Test, which is in the pre-validation phase and will be launched in 2013, is designed to profile breast cancer specimens for prediction of treatment outcomes and distant recurrence in women newly diagnosed with breast cancer.

The test uses surgical biopsy specimens that have been routinely processed into formalin-fixed, paraffin embedded tissue blocks to extract RNA and analyze the whole-genome mRNA (transcriptome) expression profiles of the extracted RNA to predict breast cancer 10-year survival.

The NextCYTE Breast Cancer Test uses advanced genome sequencing techniques to quantify and analyze the entire tumor genetic transcriptome, which represents all genes that are being actively expressed within the tumor. Atossa's scientists made inventions regarding this technology and have filed a PCT patent application related to the NextCYTE test to the use of full transcriptome analysis of 22,000 human genes in predicting breast cancer recurrence.

Physicians will be able to use the information provided by the NextCYTE test to better customize treatment options for women, based on the genetic composition of the individual tumor.

Revenue will Accelerate and Valuation is Attractive

We estimate revenue will accelerate in the coming years thanks to its focused marketing strategy and continued new products/services offering. The Company also expanded its reimbursement network recently with FedMed, Inc. as well as with MultiPlan, Inc.

We see total revenue growing at an impressive 83% compound annual growth rate (CAGR) from fiscal 2013 to 2018 according to our financial model. We model that the company will break even in 2014, and become profitable in fiscal 2015 with earnings per share (EPS) of $0.05 based on total revenue of $15.5 million. We forecast EPS will grow to $1.08 per share based on revenue of $66.5 million in fiscal 2018. This is impressive considering the relatively short history of the operations and the small size of the company.

Based on Atossa's strong fundamentals, we think the valuation is attractive at this point. Currently, Atossa shares are trading at about $5.00 per share which values the company at $65 million in terms of market cap based on 13 million shares outstanding. We think Atossa shares should trade at 35 x P/E multiple which is similar to the biotech industry average P/E ratio. If we use this P/E multiple, coupled with our estimated EPS of $1.08 in 2018, discounted at 20% for five years, we come up with a price target of $15.00 per share.

We think downside risk for Atossa is relatively low while upside potential is high at this time.

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