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I find it difficult to believe that "Big Money" would spend that much time (and money) on such a small trade when there is no "Negative" catalyst in the near term horizon.
I mean, look at the market cap & price of NWBO. Look at the # of Open Put Contracts across the option markets. There is just not that much volume.
For a smaller fund, lets say in the realm of $100s MM, I find it difficult to believe these funds would spend hours and days + thousands of precious dollars on such a short play.
Maybe I am wrong, but for me the cost of time + money and the huge upside risk from upcoming German Pricing Negotiation Finalization + DCVax-Direct results does not justify a short term bet to pocket a 30% gain.
There are FAR better shorts plays out there that have the potential for significantly larger price movements then NWBO.
The DCVax-Direct trial is unblinded, but patient status has not been disclosed by either NWBO or MD Anderson. Thus, any purchases made by management would qualify under the "Insider Trading" as they are well aware of the current success rate of DCVax-Direct.
In addition, they are in pricing negotiations with the Germany Sickness Fund. That is also non-public information.
Your previous comment clearly implies that this stock is a POS because NWBO management is not buying. Yet you seem to understand that buying during this time period would pose significant legal and regulatory risks. So not sure what your point is.
Sorry, running around so have been reading a stuff on a one off basis and might have written confusing responses.
But I do concur with Austin if Cognate has been making $$$ enough to cover Linda's initial investment then I would be blown away. I just didn't think it was possible considering the fact that she invested $30 MM so far. I will have to double check the number but that is what I recall.
I didn't think I was making false statements. What I said is factual. If NWBO fails all the shares that Cognate owns and Toucan owns are worthless.
I did not speculate on whether or not Cognate and Toucan will survive as businesses. That I agree with you, without Cognate's P&L, we have no way of knowing if they have been operating at a profit or operating at a loss.
All I am implying with my post is that if NWBO fails, Linda's personal net worth will drop substantially due not only to the her stake in worthless NWBO shares, but also from the lower value of Cognate and Toucan.
I think it is all in NWBO.
My understanding of LP's personal stake in NWBO is that it is extremely substantial. In addition, Toucan and Cognate also have substantial equity stakes in NWBO and those stakes continue to grow.
If NWBO fails, all the shares that Cognate holds would be worthless. All the shares that Toucan holds would be worthless. All the shares LP holds would be worthless.
I am somewhat relieved, because LP should know that everything is riding on NWBO's success. If it fails, her other 2 companies which are also heavily invested would also fail.
Hmm ... interesting. No matter where I look through NWBO's 10-K, it doesn't look like they purchased the facility even though Linda implied it.
It looks like Toucan bought the facility and it is now owned (or leased) to Cognate.
I guess our only part of relief is that Linda controls all 3 organizations, Toucan, Cognate, and NWBO.
I know they own the factory, the land was more of an assumption. Maybe, it was incorrect to assume they owned the land.
http://www.biomedreports.com/2010061644357/rumors-and-myths-northwest-biotherapeutics.html
In this interview, Linda said NWBO was able to purchase the bankrupt Cell Genesys's brand new facility for "Pennies on the dollar".
Lets go back to the Apple example for a bit. Part of the reason why Apple was so brutally successful compared to their peers was their willingness to invest in their suppliers and provide capital for technology upgrades.
A number of Apple's suppliers received cash and other funding to purchase new or upgrade current equipment. Apple maintained ownership of all the equipment so the depreciation cost never hit their partner's P&L. As Apple owned the equipment, Apple was able to receive a far lower price for the services compared to it's peers. This was simply because their partners did not have to cover the high initial fixed costs. Thus, products and services were priced purely on marginal cost + margin.
NWBO investing in Cognate is similar to Apple's strategy in its early days before the iPhone took off. NWBO has ownership of the factory and land so that Cognate would have a clean balance sheet.
In the current stage of business, NWBO needs to focus on their product. Establishing a long term partner that can help them improve their product and operations is far more beneficial then looking for a partner that will produce DCVax-L & Direct for 10% cheaper costs.
I believe in order to drive long term success (assuming minimal capital constraints), a company must have a solid operational foundation, a highly desirable product, and a well thought-out long term strategy. After all of that, it is just a matter of time. NWBO has 2 of the 3, it just now needs to make it's product great.
Thanks Flipper, I am guessing the same thing
Evaluate, thanks a bundle for posting all of this research.
What I find the most fascinating from reading through some of these articles is that most of the research talks about matching a pre-determined antigen with DC to create vaccines.
One of the articles touches slightly upon in-vitro DC but using pep-tides. I am guessing no one has ever tried to directly inject partially mature DC cells into a growing cancer
Different Partial Maturation of Dendritic Cells ...
Has anyone look further into this. Linda mentioned it twice in her most recent webcast. She mentioned that partially mature dendritic cells are very time sensitive. She again mentions that there should be differences in overall effectiveness of the dendritic cells based on the # of hours of maturity.
In addition, for the Phase I DCVax-Direct, Linda mentioned that different levels of partial maturation of dendritic cells were also tested on patients.
What does everyone think about this? I am very surprised as this is the first time I have heard about different levels of partially matured dendritic cells being tested on patients.
It makes me wonder what % of the patients will respond the best if this the case.
Sorry ... I was busy and didn't see that you've already sent it out. Good Luck to the letter Please ignore my response. Thanks for the effort.
Hi Highwayman4life
Your content below is excellent, but I think the flow can be improved.
I think you should move the last section from the bottom of the letter to the top. I read maybe 3-5 sentences of the letter and then automatically transitioned to skimming. It was not clear to me (within 2 mins) what you were requesting or what Dr. Segiel should take from this letter and what he should do next.
Your content below is great, but I think it would be much more effective if these new advancements were positioned as
"How patients are able to MORE EASILY gain access to DCVax-L" vs back in November 2013. This includes the German Hospital Exemption, the 10 Hospitals, and the UK National Initiatives + the FDA compassionate use approval.
In addition, we should de-emphasizes anything that relates to "Pumping" of the stock or new business developments. If new developments can't be positioned as helping more patients faster, then I don't think it should be mentioned.
I don't believe Media doesn't cares about the fact that NWBO is the 1st biotech to obtain HE. But media would DROOL AND SCRAMBLE after a story where a cancer patient got rejected by the FDA but got treatment through HE.
These are just my 2 cents ...
Thanks for doing this.
Is it possible certain medical institutions in Germany have already started treating patients who qualify under the sickness fund with DCVax-L?
DCVax-L has been approved by both PEI & InEK to be used as an acceptable form of treatment for all types of GBMs. Thus, I believe the general consensus across the board is that pricing is the only major obstacle remaining prior to the start of sales in Germany.
I cannot see how Doctors could turn patients away from an approved treatment just because the Sickness Fund is still negotiating pricing with NWBO. Rather, wouldn’t hospitals treat the patients and submit claims that would be processed after negotiations are completed? Once all claims have been processed, each Hospitals would send a bulk payment to NWBO for all services rendered.
If pricing negotiations finished in September and we assume it takes 45 days to process and pay out a claim for a Hospital, followed by standard payment terms (90 Days) to NWBO, then cash would be received by NWBO in the beginning of 2015.
These are just some thoughts from my side.
Hi Staccani,
This is good information and appreciate you sharing what you found through your own due diligence.
But before jumping to conclusion, you should take a look at some of examples throughout history of how industry were caught flat footed.
- Apple was ridiculed for the first phone that uses a touch screen, even though touch screen technology has been around since the 1970s.
- Tesla was shorted by almost every hedge fund because they though Electric Cars would never catch on. GM built and marketed an electric car in the 1990s.
- Immunotherapy has been around since the 1790s but didn't catch on until 2 years ago with BMY.
History is filled with examples indicating that it takes time to get things right. The company that spends that time "Perfecting" the product will win. Attributing the failure of a few to the failure of an entire technology is something people will always do.
History shows that this is not always the case, and history also shows that these are sometime the BEST BETS anyone can make in the market.
Hi Reefrad, would the trial design be determined by the type of cancer DCVax-Direct ultimately is selected to target? For cancers types that have almost no real options remaining, such as Stage 4 Pancreatic Cancer, what would DCVax-Direct be compared against?
I just cannot wrap my head around how a double blind clinical trial can be designed when it is comparing a treatment designed to "cure" or pro-long life against palliative care. Or is there something else that needs to be taken into consideration?
Thanks for posting the video Rkmatters! Very much appreciated
Hi LongUSA,
I am on the same page regarding the fact that reimbursement negotiations will have to be finalized prior to any significant revenue from Germany. My main thought was around why there have been no "one-off" revenues since the announcement of the Hospital Exemption status.
Considering the aggressive nature of GBM and the fact that Hospital Exemption covered all types of GBM, I am a little surprised to see no revenues for this most recent quarter.
But your point about US compassionate use and how the treatment has been provided for no charge has changed my thought process. It looks like if there were patients treated under the Hospital Exemption program, these patients were treated without charge also.
I have been focused on this area for a while because the Hospital Exemption program is so NEW. It makes me consider these other variables regarding the future short term success of DCVax-L under hospital exemption:
- The short life span of the program makes me wonder how many doctors and hospitals are actively aware of this program and the ability to access clinical treatments still in trial.
- Next, if the program is so new, how many doctors will actually recommend the treatments under this program
- What kind of information infrastructure is currently available to the doctors so that they can learn more about the program and treatment considering the fact that NWBO is not allowed to do any kind of marketing what so ever.
Thanks for clearing up all my other misconceptions Long
Ah thanks LongUSA for those points. I completely forgot about their current partner in Germany when writing my previous post.
I wonder when sales will begin to show now that there is both a German production site and at least one institution verified to have the staff to administer DCVax-L (Based on Clinical Trial Data).
Some additional details regarding Manufacturing in Europe as posted in their most recent 10-Q:
5. Cash in Custody Account
During the six months ended June 30, 2014, the Company continued its efforts to obtain large new manufacturing capacity for its DCVax products in Europe. This capacity will be developed and managed by Cognate BioServices pursuant to the Manufacturing Expansion Services Agreement entered into by the Company and Cognate in January, 2014. Under that Agreement, the Company is responsible for the costs of developing and maintaining manufacturing facilities or capacity that is dedicated exclusively to production of NWBT’s DCVax products.
The Company found a suitable site and facility in Europe. Negotiations with the Seller for purchase of the property and facility continued for months. At the Seller’s direction, the purchase terms and transaction documents were expected to be finalized by June 30, 2014. On June 25, 2014, in preparation for the anticipated completion of the transaction, and due to the uncertain timing of international wires, the Company wired to the law firm handling the transaction $3.4 million for the payment at closing. The law firm held the $3.4 million in its client account. On June 30, 2014, in anticipation of a closing occurring that evening, the law firm sent $2.6 million to the Seller’s law firm to hold in trust, pending the closing of the purchase transaction. However, the transaction terms and documents were not finalized by June 30, 2014, and the Seller was not prepared to proceed with the transaction at that time. The funds continued to be kept in the two law firms’ trust accounts ($2.6 million in the Seller’s law firm and $0.8 million in the Purchaser’s law firm), and the Company was free to decide not to proceed and take the funds back. As of August 14, 2014, deal terms to the Company have not been finalized.
DCVax-L products that are to be covered by the Hospital Exemption in Germany must be manufactured in Germany, but can be administered to patients from anywhere. As in the Company’s clinical trial, DCVax-L will be administered under the Hospital Exemption as an adjuvant treatment after surgical removal of the tumor and radiation/chemotherapy where applicable. The Company will provide annual data reports to the German regulatory authority during the five-year term of the Hospital Exemption.
Wondering if Germany Hospital Exemption would play a role. I doubt it as this kind of information should've been included in the past press releases. Assuming this is just research down an empty hole with regards to the expansion, but none-the-less just to check off the box.
I spent some time digging to see if there were additional requirements behind the German Hospital Exemption that has not yet been shared or understood.
Translated Copy of the German Law Authorizing Hospital Exemption
The exact section pertaining to what is important for NWBO is on Page 25.
After spending some time reading and researching, I am still at somewhat of a loss. Wondering if someone would be able to help me with some of my own thoughts about the expansion below:
- Ensure the # of German patients are properly enrolled in the actual Phase III prior to signing up patients under the Hospital Exemption program.
- Fulfill other aspects of the German Drug Law that relates to Hospital Exemption no one is aware of.
As our message board is pretty aware of the devastating effects of cancer, just wanted to share this little boy's story. Apologies in advance for this off topic post ...
Lots of support already, but I think it would be great to show a little bit more.
Danny Nickerson - 5 Year Old w/ Brain Cancer
Hi Evaluate,
I noticed the part about abbreviated assessment for orphan drugs, but I wanted to be conservative when assessing the first potential $ sales could roll in from Germany. Thus, I took a very conservative approach and assumed the benefit assessment and price negotiation were still outstanding as of Feb 21st.
With regards to the 12-month "Preparation Phase", I am assuming most of the data was gathered and packaged for the German PEI would be sufficient for the benefits assessment. This is an assumption on my part and not something I am completely sure about.
Thanks
Hi Dok,
I read that slide differently.
Based on the title, "The 7 Biggest Misunderstanding of Benefits Assessment in Germany”, I interpreted this slide as a list of all misconceptions. Orphan drugs being exempted from benefit assessment is one of the key misconception that people typically walk away with. Based upon that interpretation, the August 2014 timeframe does not make sense and it should be the Feb 2015 timeframe.
To clarify on the past discussion I had with Pyr, he believed the assessment performed by the German PEI was sufficient for the pricing negotiations with the different hospital agencies. Because of this assumption, he arrived at the 6 month deadline for when the negotiation would be completed.
I do not agree with his assumption (my first and only disagreement so far). I think all German agencies act very independently from each other unless specifically stated. Thus, the assessment performed by the PEI to grant hospital exemption to DCVax-L is not sufficient for pricing negotiations.
On Slide 16, it states that the benefit assessment for pricing negotiations must be conducted by the IQWiG and then proven by G-BA. As the PEI is not highlighted anywhere in this slide, I am assuming a new benefit assessment has to be executed.
If my assumption regarding the strict independent nature of each regulatory agency highlighted above is correct AND that the negotiation process began immediately after hospital exemption approval was granted, then I believe pricing negotiations will be complete somewhere around Feb / Mar 2015.
According to the financial reports, Cognate is paid thru a combination of equity and cash. I am not sure what the % breakdown is ... but that is part of the reason why it is a bit more expensive.
Once I am in front of the computer, I should be able to look up the previous year pay out for services using equity.
I agree, the last thing we need is "ambulance chaser" gunning after MD Anderson.
Even though I am a strong believer of immunotherapy for the future of cancer treatment, MD Anderson is an institution that provides treatments for the current folks who have cancers currently.
Hi TOB, the 2nd statement made by MD Anderson from Jim is very neutral, IMO. It states the same thing that Linda has been communicating via her PRs, just in a bunch of different words.
I think it is logically leap to say that MD Anderson "validated" the doctor's words AND is rebuking NWBO also. In reality, it is just saying that the ongoing trial data is not a representative conclusion and can still change.
From what you wrote, it appears to me that you are using Jim's words to validate the Doctor's. I believe, Jim was just re-iterating the fact that MD Anderson does not believe this trial has provided anything conclusive. Jim never said that the data shouldn't be shared, just that it is not conclusive.
Now ... the weight of the Doctor's opinion is a different story. Just because you hold a VP position does not mean that he is well versed in all of the current ongoing clinical trials. Nor does this mean he wrote the current handbook of policies that governs how open phase I/II data from MD Anderson should be shared. He might not even be part of the process of approving any part of trials that relate to sharing data. Not saying his opinion is not worth something, but just saying that there is still a large range of variables to consider and placing his opinion on a pedestal. One of those variables is his responsibilities in the processes that govern a clinical trial.
Tonight? I think that might be a bit pre-mature. Considering Linda's background, I think she might consider an offering if reimbursement negotiations in Germany are not progressing at the speed or amount she was hoping for.
Plus, TZOR mentioned in another post, that there is still $17MM worth of shares waiting to be picked up by a hedge fund.
Ideally, I am hoping the Hedge Fund executes it's $17 MM stock purchase option over the next 3-6 months. Then news regarding German reimbursement and patient interest would make the revenue forecast desirable that it will prevent another dilution .
According the American Cancer Association ...
http://www.cancer.org/treatment/treatmentsandsideeffects/clinicaltrials/compassionate-drug-use
The following quote:
A company sponsoring a drug in the late stages of drug development, such as Phase III clinical trials, can offer expanded access programs for patients who are not able to enroll in a clinical trial. (See Clinical Trials: What You Need to Know to learn more about the phases of clinical trials.)
The FDA generally approves these EAPs if the drug has shown that it works at least somewhat to treat cancer in the clinical trials that are being done. This can allow a lot of people access to the unapproved drug, as long as they meet the requirements of the EAP.
Sorry to intrude on this question Evaluate, but I wanted to expand it a bit to cover some additional points.
For an expanded access trial (other wise known as compassionate use), does the FDA takes the results of these patients into consideration?
I thought this trial was designed to provide the DCVax-L treatment to patients who did not qualify for the actual trial. If it is a compassionate use trial, would the results of the treatment be used for/against DCVax-L in the FDA approval process?
Does a compassionate use trial signal an increase in the probability for approval?
Yes ... the very first case study patient, the one with Sarcoma, should've received the 5th injection sometime at the end of May.
From the very first press release,
The specific case study announced today involves a sarcoma patient with a large tumor mass and multiple inoperable metastatic tumors in the lung. This patient received the first 3 DCVax-Direct injections through the course of a month, starting in February. He received a fourth injection in early April and then was scanned for results in early May
Not necessarily ... the sold shares would just fall into the inventory pool of shares for the Market Maker firm that executed the transaction.
Typically, when anyone sells shares, the shares are just added back into the overall inventory of shares available. When anyone buys shares, it is generally the same case.
If the pool grows bigger, the price drops in response to "clear" inventory. If the pool grows smaller, the price increases ... etc.
In addition, that inventory pool of shares is used by Market Makers to hedge against option risks (i.e. sold calls, sold puts, etc) and shorted positions.
The goal of these market makers is to stay neutral on all transactions will pocketing the difference in the spread. There is ALWAYS a pool of shares.
My understanding of this could be off, but this was what was taught to me by a friend of mine who worked for a Market maker firm several years back.
Thanks Pyrr, I was assuming benefit assessment started when the decision was announced on Feb. 21.
I guess the following scenarios apply then ...
Best Case - End of August, pricing negotiations finish
Worst Case - End of Feb 2015, pricing negotiations finish
I think this would help everyone on German revenue expectation and further announcements. It might be safe to say, no news till End of August / Beginning of September (factoring in the 3 week translation period).
This timetable is only suppose to be for reimbursement and pricing negotiations.
I believe that the patient still has access to DCVax-L while assessment/negotiations are on going. I will have to read this document more in-depth later tonight after work to understand if my interpretation is correct.
A big question on everyone's mind right now is when German revenues can be seen. This document might just help set some expectations ... which in this case would be Feb 2015. IMO.
Pyrr, first of all thanks for all the awesome research and wonderful aggregation of ideas/thoughts.
I've been doing research (when time permits) on the German Reimbursement system and how it works. Below is a link from Ecker+Ecker that I think provides a solid overview of the process.
Key Takeaway from me is that once a Drug has been allowed to claim reimbursement, it takes 6 months for a benefit assessment followed by 6 month of price negotiation. A total of 12 months before final price is set.
If NWBO received the German approval on Feb 21, then the benefit assessment will go on till the end of August. Price negotiations will not be completed till end of Feb 2015.
I sort of rushed my review of the deck, so might have mis-interpreted the information.
http://ecker-ecker.de/pdf/ReimbursemPharmaMedDeviceGermany2013_06_06.pdf
Maybe my understanding of DCVax-L is off ... but the longer it takes for events to occur for a cancer like Glibo ... then the more effective the immunotherapy product is right?
So if 60% occured back in December, and the next 80% doesn't hit till this December, that should speak VOLUMES of the efficacy of the product.
I believe, in a way ... every day that passes where the next event has not triggered is just another positive data point. Please correct me if I am wrong ...
Hi Pyrrhonian,
Question regarding Eloxatin. Was the interim results every shared? Or did the DMC delay the efficacy recommendation ... leading to an AA from the FDA.
Looking at some past examples of BioTech companies that focused on immunotherapy vaccines, I am beginning to better understand why there are so many non-believers regarding Immunotherapy Vaccines ...
1. CEGE, a defunct BioTech attempted to create a cancer vaccine for Prostate Cancer. Their science was to use "Dead" vaccine cells + immuno response activators to generate a strong immuno response.
2. IMUC, hopefully everyone knows about this company.
3. DNDN, the most infamous of them all. Approved product with minimal gains + extremely high cost +
Anyone else know of other failed BioTechs that were also trying to create a cancer vaccine but has failed to pass FDA or failed in the marketplace?
Hey Dok, I believe they do.
Here is a link that provides additional information regarding RECIST and Choi and how size sometimes does not matter.
http://jnci.oxfordjournals.org/content/98/18/1272.full