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  • Behind The Promotion Of Northwest Bio [View article]

    Richard Pearson has chosen to portray himself as a hard hitting analyst who, and I quote, “conducts very deep research”. He has written on 34 companies on Seeking Alpha, all of which were sell recommendation. Recently, he has portrayed himself as a biotechnology vigilante going after investor relations firms and analysts whom he accuses of promoting stocks. Because of his aggressive style and his propensity for attacking the motivations of others, I have taken a long hard look at Richard Pearson’s record.

    I started with looking at all of his articles to see how they had performed and came across a blog called Buzz Feed News which tracks the biggest winners and losers in activist short selling. They looked at the five best and the five worst records. Pearson had the third worst record as his picks are up 22% since the time of recommendation (sell recommendations are supposed to go down). He is third on their list of the five worst performers in this group. They comment “Pearson’s focus on medical and biotechnology companies have gotten him in trouble on the short side. Out of 37 activist shorts he’s announced, four have seen triple-digit growth since his announcement.” The link is as follows:

    http://bzfd.it/1ohPj4w

    I have done my own analysis of his picks and came up with similar performance numbers. So he has done poorly with his picks. During my work I came across one very interesting recommendation of Pearson’s. This was on Code Smart (OTCPK:ITEN). He recommended buying the stock on The Street.com on October 18, 2013 at a price of $2.760. The stock currently trades at $0.045. That is not a typo.

    This unusually sharp drop in stock price in a relatively short period of time prompted me to look into Code Smart in more detail and I found some very disturbing information that linked Code Smart to a pump and dump scheme. I think it is important to anyone evaluating Pearson to be aware of Code Smart. The comments that follow are all direct quotes from the Brooklyn U.S. Attorney and Pearson’s article. I have made no editorial comments.

    Brooklyn U.S. Attorney is Investigating Code Smart Scheme
    On July 17, 2014 it was announced that seven men had been arrested in connection with a scheme to manipulate the price of CodeSmart in a pump and dump scheme. The ringleader of the scheme was Abraxis Discala of the hedge fund Omni View. According to Brooklyn U.S. Attorney Loretta E. Lynch, “They took companies with essentially no assets or activity and deceived the market into believing they were worth hundreds of millions of dollars through a dizzying round of insider and unauthorized trades. When the defendants stopped their criminal game of musical shares it was the unsuspecting investors who were left holding the bag.”

    Authorities have alleged that during the time period of October 2012 to July 2014, the defendants and others agreed to defraud investors and potential investors in connection with four public companies: CodeSmart Holdings, Cubed, Inc., StarStream and The Staffing Group, Ltd. Investigators further alleged that the defendants, “used false and misleading news releases, false and misleading SEC filings, concealed their own ownership interests in the companies, engineered price movements and trading volume in the stocks, and made unauthorized purchases of stock in accounts of unwitting investors.” The link to the complete allegation is

    They took companies with essentially no assets or activity and deceived the market into believing they were worth hundreds of millions of dollars through a dizzying round of insider and unauthorized trades. When the defendants stopped their criminal game of musical shares it was the unsuspecting investors who were left holding the bag.”

    Authorities have alleged that during the time period of October 2012 to July 2014, (Pearson wrote his article on October 18, 2013) the defendants and others agreed to defraud investors and potential investors in connection with four public companies: CodeSmart Holdings, Cubed, Inc., StarStream and The Staffing Group, Ltd. Investigators further alleged that the defendants, “used false and misleading news releases, false and misleading SEC filings, concealed their own ownership interests in the companies, engineered price movements and trading volume in the stocks, and made unauthorized purchases of stock in accounts of unwitting investors.” The link to the complete allegation is

    http://1.usa.gov/1sAdD9a

    The link to CNBC’s coverage of the story is as follows:

    http://cnb.cx/1ohPj4y

    Pearson Recommended Buying Code Smart on October 13, 2013

    Pearson wrote an article on October 18, 2013 recommending the stock. The Brooklyn Attorney General said that the pump and dump scheme on Code Smart lasted from the time it came public in May 2013 through July 2014. Here are some direct quotes from his buy recommendation. In this article he predicted that CodeSmart’s stock price would increase from $2.76 to a minimum of $6.00 in a matter of months. Longer term, he saw the potential for a $20 stock price. It currently trades at $0.0045 and is on the verge of bankruptcy. Here are some direct quotes from the article.

    “CodeSmart went public in May of 2013 ...... and is well-positioned to take advantage of this multi-billion dollar health care opportunity. “

    “Conservative projections would call for around $10 million to $20 million of net income on more than $50 million in revenue in 2014. ......These revenue and net income numbers are likely conservative. “

    “----within a few weeks, Code Smart will immediately go from being a zero-revenue company to a company that likely has up to $5 million in revenue.”

    “While the previous 10 Q (2Q, 2013) indicates no revenue, the recent letter to shareholders and string of partner announcements indicate that substantial revenue will be announced in the next 10Q, which will be out in a couple of weeks.”

    “....... At a minimum, we should expect to see the stock hit $6 per share or more once the 10 Q (3Q, 2013) reveals these results.

    There were 14 million shares at the time Pearson wrote his article. Based on the stock price of $2.76, the market capitalization was $40 million. Pearson disclosed in his article on The Street.com that he was long ITEN.OB. He was an independent contributor, separate from The Street’s regular news coverage.

    The Street.com has removed the article from its website. However, I found a link to another blog that has the entire Pearson buy recommendation.

    http://bit.ly/1perHjm

    He has not written an article on CodeSmart subsequent to his buy recommendation.

    Questions for Richard Pearson
    I would like to ask Richard Pearson some questions that perhaps he can answer. How did you come across CodeSmart? This was a tiny microcap company in an industry that is not well followed or understood. It came public stealthily in a reverse merger in May 2013. It was totally off the radar screen of investors.

    How did you learn about the company? What was so compelling about it? How could your analysis have been so wrong? How could you have predicted a minimum stock price of $6 in a matter of weeks or months? Why have you not followed up with another article to acknowledge and explain this disastrous recommendation?
    Aug 22 09:25 AM | 5 Likes Like |Link to Comment
  • Northwest Bio: The Data Monitoring Committee Addresses The Status Of The DCVax-L Trial [View article]
    PFS is extremely important in the case of GBM. This is a rapidly growing cancer that is confined to the skull. As it grows, it affects surrounding brain tissues leading to seizures and other severe side effects. It can actually push brain tissue into the brain stem. Preventing the progression of the disease can have an extremely positive effect on quality of life and hence a clinically meaningful benefit. I think that PFS is a solid endpoint in GBM. This is much less the case in some slower growing cancers such as early stage prostate or breast.

    While the shorts argue that this is a poorly designed trial, this is not the case. It is stratified for methylation status and there are statistical methodologies to determine the effect of risk factors such as age, degree of surgical resection, perfomance status and now the effect of white blood cell count at enrollment. This is the most important trial since Stupp in advanceing the understanding of GBM. I think that we will learn an enormous amount about sub-groups even if DCVax-L fails to reach its PFS endpoint for whatever reason.

    Let's hypothesize and that's all this is, an hypothesis, that the PFS endpont of 4.0 months is reached but OS is not statistically significant. Remember that patients on control are switched to DCVax-L if they progress so that this makes the OS comparison much more difficult. However, let's say that we see a strong trend in OS or statistical significance in one or more sub-groups. It makes it an easier decision for the FDA to approve DCVax-L.
    Aug 17 11:17 AM | 3 Likes Like |Link to Comment
  • Northwest Bio: The Data Monitoring Committee Addresses The Status Of The DCVax-L Trial [View article]
    You are correct on Avastin; physicians don't want to put their patients on the drug. However, my comment was on Merck's and Bristol-Myers check point inhibitors, not Avastin. I was concerned that they would begin trials and attract most GBM patients making it difficult for ICT-107 to enroll patients in a new phase 3 trial. However, on its last conference call IMUC said that the checkpoint inhibitors are associated with troublesome CNS inflammation and that this would be a major deterrent to their use in a CNS tumor like GBM. I can't add anything beyond this at the present.
    Aug 15 07:54 AM | 1 Like Like |Link to Comment
  • Northwest Bio: The Data Monitoring Committee Addresses The Status Of The DCVax-L Trial [View article]
    You are right on Avastin; physicans don't like the drug. My concern was not with Avastin. I was concerned that Merck and Bristol-Myers would begin trials with their checkpoint inhibitors and this would make it f difficult to for ICT-107 to enroll patients. However, on the last conference call, IMUC went into great detail on this issue and maintained that concern about the propensity of checkpoint inhibitors to cause CNS inflammation, they may not be used in a CNS tumor like GBM. That is all I know.
    Aug 15 07:49 AM | 2 Likes Like |Link to Comment
  • Northwest Bio: The Data Monitoring Committee Addresses The Status Of The DCVax-L Trial [View article]
    I have a hard time understandng what you are saying in light of what the chairman of the DMC said.

    “As the Company has stated clearly and specifically in its public announcements, the DMC has not conducted any efficacy analyses and the DMC has not provided any access for the Company to any clinical trial data. The DMC adheres to established clinical trial monitoring procedures and does not release any data while the trial is ongoing. This is an important issue, and it is surprising and troubling to see inaccurate claims being made by commentators who seem to lack a fundamental understanding of clinical trial monitoring. I have been on the DMCs for more than 60 clinical trials, and I have never experienced this type of attack.”
    Aug 14 07:19 PM | 3 Likes Like |Link to Comment
  • Northwest Bio: The Data Monitoring Committee Addresses The Status Of The DCVax-L Trial [View article]
    The 55 raid progressors who did not qualify for the phase 3 trial were treated under compassionate use. NWBO picked up the cost. I don't think even AF can put a negative spin on this.
    Aug 14 02:21 PM | 4 Likes Like |Link to Comment
  • Northwest Bio - You Can See This Data, But Not That Data [View article]
    For your information, the timing of an interim analysis is based on items written into the protocol, which in the case of the phase 3 trial of DCVax-L is a proscribed number of events, either death or disease progression. When the DMC is made aware by the CRO that this number of events has occurred, they conduct an interim analysis. NWBO has absolutely nothing to do with the timing of or performance or the analysis. They have absolutely no ability to control the timing or as you say push it back. You are badly mistaken on this issue.
    Aug 14 12:40 PM | 4 Likes Like |Link to Comment
  • Behind The Promotion Of Northwest Bio [View article]
    I was amazed to hear P-man say that NWBO had seen clinical results from the phase 3 trial. He should know that this would unblind the trial and as a result, it could not be used for registration purposes. Virtually everyone knows that companies are blinded to clinical results until the completion of the trial. I am extremely surprised that he didn't understand that.
    Aug 14 12:10 PM | 5 Likes Like |Link to Comment
  • Northwest Bio: The Data Monitoring Committee Addresses The Status Of The DCVax-L Trial [View article]
    Good point as usual.

    As an aside, Agenus is conducting a trial of Prophage in recurrent GBM. They are comparing Avastin plus Prophage to Avastin alone. They have stated in their conference calls that they are having trouble enrolling this trial because oncologists don't want to put their patients on Avastin.
    Aug 14 12:04 PM | Likes Like |Link to Comment
  • Northwest Bio: The Data Monitoring Committee Addresses The Status Of The DCVax-L Trial [View article]
    Your point on PFS versus OS is well taken in the case of GBM. This is a rapidly growing tumor that is confined to the cranium. When it starts to grow it disrupts surrounding areas of the brain causing seizures and a whole host of side effects. It can ultimately push the brain into the brain stem. In GBM, progression free survival is an extremely meaningful clinical endpoint. Also, meta studies have shown that there is a very strong correlation between PFS improvement and OS improvement in GBM. This is well understood.
    Aug 14 12:00 PM | 2 Likes Like |Link to Comment
  • Northwest Bio - You Can See This Data, But Not That Data [View article]
    You are like talking to a mule. Here is what the chairman of the DMC said.

    "As the Company has stated clearly and specifically in its public announcements, the DMC has not conducted any efficacy analyses and the DMC has not provided any access for the Company to any clinical trial data. The DMC adheres to established clinical trial monitoring procedures and does not release any data while the trial is ongoing. This is an important issue, and it is surprising and troubling to see inaccurate claims being made by commentators who seem to lack a fundamental understanding of clinical trial monitoring. I have been on the DMCs for more than 60 clinical trials, and I have never experienced this type of attack."
    Aug 14 11:04 AM | 6 Likes Like |Link to Comment
  • Northwest Bio - You Can See This Data, But Not That Data [View article]
    The change in statistical analysis in regard to white blood cell count relates to the finding since the trial began that white blood cell count at baseline can significantly affect overall survival. The original statistical plan already controlled for other factors which are known to have a significant effect on survival such as age, degree of surgical resection and performance status. Studies performed since the DCVax-L trial was started now suggest that white blood cell count at the time of enrollment also has a significant effect on overall survival.

    Remember that DCVax-L is started after radiation therapy has been completed. The new discovery was that as many as 40% of GBM patients suffered severely depressed white blood cell counts following radiation. This was comparable to the level at which AIDs patients are given prophylactic antibiotic treatments. These white blood cell counts usually do not recover over time and can have a significant effect on survival. These finding were published in articles in 2011 and 2014. See Grossman et al., 2011: Clin Cancer Res 17(16):5473-80 and Ellsworth et al. 2014: Oncoimmunology 3(1):e27357. Epub 2014 Jan 3.

    Controlling for risk factors at the time that the results are being analyzed is different from stratification of patients that occurs as the trial is being enrolled. For example, the DCVax-L trial is being stratified for MGMT methylation status. This means that at time of enrollment methylated MGMT status will be proportionally the same in each arm. Stratification carries with it problems. If you begin to stratify for too many variables, the enrollment criteria can become so complex that it makes enrollment difficult. It also causes statisticians to become concerned that it is not a truly randomized trial.

    As I understand it, mathematical corrections can be made after the trial has been concluded to adjust for imbalances providing they are proscribed in the statistical plan. This was being done for age, degree of surgical resection and performance status under the original plan and now has been expanded to include white blood cell count at baseline. MGMT stratification was included in both the original and now the new statistical plan. I know that you are going to ask me how this mathematical correction to data is made at the time of analysis. At this point in time, I can’t tell you how it is done. Statisticians tell me that this approach and stratification are both acceptable ways of dealing with risk variables. Again, I am not competent to explain why.

    This depressed white blood cell variable can have an important effect on median overall survival and can make a difference in median overall survival of 6 months. Let me put this in perspective. The standard of care in glioblastoma is surgical resection followed by a regimen of radiation and maintenance therapy of temozolomide. This was first defined in the Stupp trial whose results were published in the March 10, 2005 issue of the New England Journal of Medicine. The data from that trial showed that median overall survival for surgery followed by radiation and temozolomide was 14.6 months. In addition, this study showed that temozolomide when added to surgical resection plus radiation increased overall survival by 2.5 months. The depressed white blood cell count could have a greater effect on OS (negative 6.0 months) in an affected patient than temozolomide (positive 2.5 months). This does de-risk the trial significantly in the event that there was an imbalance on white blood cell counts in the control and drug arm.
    Aug 14 11:01 AM | 7 Likes Like |Link to Comment
  • Northwest Bio: The Data Monitoring Committee Addresses The Status Of The DCVax-L Trial [View article]
    What I think you are saying is that my analysis is misleading because the improvement in median overall survival is more likely 9.0 to 12.0 months for these 55 patients when you compare to historical results in a recurrent GBM population. You are saying that this makes more sense than to compare it to historical results of a newly diagnosed GBM population as I did which shows a 2.8 months increase in median OS. You are saying that the latter assumption is very conservative and unrealistic and that the true benefit of DCVax-L is likely to be something like 9.0 to 12.0 months and much better than 2.8 months. I agree.
    Aug 14 10:52 AM | 2 Likes Like |Link to Comment
  • Northwest Bio: The Data Monitoring Committee Addresses The Status Of The DCVax-L Trial [View article]
    Steve. I totally understand that the Avastin trial was in newly diagnosed GBM. The 55 patients were also newly diagnosed GBM patients who were considered for randomization in the phase 3 DCVax-L trial. However, their disease progressed before they were randomized. The vaccine was prepared in anticipation that they would be randomized. When this did not occur, they given the vaccine on a compassionate use basis. My hypothesis is that these were sicker patients than those in the Avastin SOC group and would be expected to fare worse on the vaccine. However, their median OS was better than median OS for the Avastin SOC group. This seems encouraging, but obviously is just my hypothesis.
    Aug 14 10:33 AM | 2 Likes Like |Link to Comment
  • Northwest Bio - You Can See This Data, But Not That Data [View article]
    Feuerstein and his gang, of whm this author seems to be one, try to create new realities. Here are quotes from what AF said in his latest blog.

    He says:

    “I long believed Northwest Biotherapeutics (NWBO_) buried the interim efficacy analysis of its DC-Vax brain tumor clinical study in a deep hole, never to be seen again.”

    “It seems obvious that DC-Vax came up futile in the interim efficacy analysis of the phase III study data conducted in December 2013, leaving almost no chance the experimental cancer vaccine would delay tumor progression or prolong survival.”

    “Absent any hope of rescuing DC-Vax from failure with the brain tumor study designed as is, Northwest Bio announced a radical — and seemingly desperate — re-working of the study.”

    “Northwest Bio can argue all it wants to the contrary, but the need to dramatically boost the statistical power of a study years after it begins shows that there is no efficacy signal with DC-Vax at all. Northwest Bio is flailing, but then, anyone who bothered to dig deep into the prior DC-Vax studies knows the cancer vaccine is nothing more than a placebo.”

    “With Northwest Bio, logic often takes a back seat to stock promotion. Monday’s announcements were no different.”

    Now contrast this with what the chairman of the DMC said.

    "As the Company has stated clearly and specifically in its public announcements, the DMC has not conducted any efficacy analyses and the DMC has not provided any access for the Company to any clinical trial data. The DMC adheres to established clinical trial monitoring procedures and does not release any data while the trial is ongoing. This is an important issue, and it is surprising and troubling to see inaccurate claims being made by commentators who seem to lack a fundamental understanding of clinical trial monitoring. I have been on the DMCs for more than 60 clinical trials, and I have never experienced this type of attack."

    Believe it or not, AF did not understand that companies are blinded to data in ongoing phase 3 trials. Now having been shown to be abjectly wrong by statements of the chairman of the DMC, he doesn't correct his serious errors. He just moves on to something else.
    Aug 14 09:48 AM | 7 Likes Like |Link to Comment
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