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quick read
Cash flat with the start of quarter. That means they financed Q3 without doing much in the way of new deals.
Almost all warrant exercise was for cash.
Subsequent events - Seeing the share count rise made it fairly obvious that warrants were being exercised. Amount raised of $8.2m is new info.
Warrant liability dropped due to a combination of exercise activity and falling stock price. That leads to a positive Net Income line that is not meaningful, same as for Q2.
277m warrants remain as of quarter end. Avg time remaining 1 year. Weighted avg exercise price of $0.28. 58m currently suspended.
If there is a delay, they make a filing NT 10-Q which buys them an extra week. No need to PR anything.
nwbo has a history of filing NT frequently (12 out of 20 quarters 2016-2020), so it would not shock anyone. However, they have been on time all 3 quarterly filings so far in 2021.
"Sunlight is the best disinfectant" - Supreme Court justice Louis Brandeis.
Another one that is pretty much certain:
Net income will be positive by a few million, but not meaningful, for the same reasons as Q2. Since nwbo stock price dropped from 6/30 to 9/30, derivative liability will fall, which gets run through the Income Statement.
Net earnings (diluted) should be a small negative (as for Q2) because that excludes the derivative liability adjustment.
My first looks because they're most likely to be interesting:
cash level
cash burn
subsequent events
related party transactions
potentially dilutive securities
nwbo short interest flat at 11.4m shares for 10/15/21
Probably mostly warrant hedging, so no fuel for a squeeze.
Per 10-Q, the Sawston lease was 20 years.
At June 30, 2021, the Company had operating lease liabilities of approximately $5.8 million for both the 20-year lease of the building for the manufacturing facility in Sawston, U.K., and the current office lease in the U.S. ROU assets of approximately $5.1 million for the Sawston lease and US office lease are included in the condensed consolidated balance sheet.
The lease liabilities are capitalized on the Balance Sheet. As of 6/30/21, that amount was $5.7m. That's less than 1% of the current market cap for nwbo, so pretty much a nit.
Advent's own website certainly makes it look like they have customers other than nwbo.
https://www.adventbio.uk/
Our clients consist of International Pharma, Emerging Biotechnology/Gene and cell therapy companies.
That sounds like more than just nwbo. Or do you think Advent is lying?
Yes, shareholder approval is required for RS, which means nwbo is not doing that anytime soon.
Shareholder approval is also required to increase the authorization limit for shares (currently 1.2 billion).
On a fully diluted basis (including all warrants and options) nwbo is well over the authorization limit. They should address that issue on the next proxy.
I don't think a RS makes sense unless nwbo is fully ready to uplist.
Think you are a bit confused. Using your example of $0.25 strike and $1 stock price for 100,000 warrants:
In a cash exercise, you pay $25,000 and get 100,000 shares. You could sell 25k to be playing with house money, or do nothing.
In a cashless exercise, you get 75,000 shares. Nothing is sold. No market pressure. There is a bit less dilution as nwbo gives you 75k shares instead of 100k in exchange for the warrants.
Do you actually believe that two buyout firms and a sovereign wealth fund would bother with a $5m deal?
None of your post addressed that question.
Korea's sovereign fund is $183 billion as of the end of 2020. I doubt they would even take a call on a $5m deal since it would be less than 1/3 of a basis point of their AUM.
One more point...
Do you really believe that there would be two buyout firms and South Korea's Sovreign wealth fund involved to raise just $5 million?
I suspect your cash guess is off by at least 10x, and probably more than 20x.
Now you're just making stuff up.
In truth, you have no idea how much cash Toucan was paid in the Cognate transaction. Both Toucan and Cognate were private, so there is no public info.
We do know from nwbo's congratulatory note that neither Toucan nor LP had any ownership stake after the Cognate management buyout.
Advent - owned by Linda Powers via Toucan.
Cognate - previously owned by Linda Powers via Toucan.
nwbo provides funds to build up Advent.
nwbo provided funds to build up Cognate.
Incestuous nwbo related-party transations in both cases.
nwbo shareholders provide funds without ownership benefits - identical.
Of course Advent used to be Cognate in Europe until LP spun it off to herself.
I see a lot more similarities than differences.
The parallels between Cognate and Advent are so striking that LP's intention to duplicate her profitable sale is obvious to anyone with functioning neurons.
Maybe heated negotiations between Linda (nwbo) and Linda (Advent) are holding up TLD news?
Did nwbo coin the name Vision Centre, or was that name already in use prior to nwbo purchasing the site?
Go directly to the CompaniesHouse site for UK filings. There is no new information. Nothing related to Sawston.
Confirmation statement made on 3 October 2021 with no updates
Warrant exercise can be cash or cashless. Since that won't be broken out until the next 10-Q, you don't know that they've taken in anything.
nwbo management has never done any of this before. It is totally unsurprising that every step takes longer than expected. It is also unsurprising that they keep uncovering new multi-month steps that they didn't even know existed.
This points out the hubris of Linda's comment about big pharma only bringing a checkbook. She vastly underestimated the difficulty of pretty much everything, and was clueless as to the knowledge base necessary. An experienced partner would have helped immensely.
The numbers support your feeling that nwbo is communicating far less than in the past.
nwbo's official communication for 2021 thus far is 7 SEC filings and 2 PRs mainly about Sawston.
1/15 10-Q
1/26 8-K about new auditors
3/5 8-K loan agreement
4/16 DEF 14A - proxy
5/13 10-Q
5/24 8-K proxy voting results
8/16 10-Q
For comparison, 2020 had 28 SEC filings and 10 PRs.
My version explains a dropping stock price in conjunction with expanding Shares Outstanding. Your alternative does not fit the data.
Who needs a wolfpack when you have millions of shares in friendly selling?
nwbo Shares Outstanding up 5.5m in a week. Either those warrants were expiring or they were exercised to sell.
Kab,
Think you have the key points.
I didn't see anything in the docs specifying a date for delivery of shares from warrant exercise. Perhaps some of warrant holders on here have gone through that process?
Another strategy to de-risk the warrant exercise is to short in advance, effectively locking in price. From the data around the end of June (shares outstanding up indicating warrant exercise, short interest down) it looks like we saw 6-7 million shares use this approach.
Shorting in advance might be particularly advantageous for your scenario of quick moving price. i.e. exercising to take advantage of what might be a short term spike.
https://www.sec.gov/Archives/edgar/data/1072379/000114420412066236/v329460_ex4-2.htm
The number of shares issued via cashless exercise depends on the current stock price as expressed by VWAP.
Shares = [(A-B) (X)] / A
(A) = the VWAP on the Business Day immediately preceding the date on which the registered holder elects to exercise the Warrant by means of a “cashless exercise,” as set forth in the applicable Election to Purchase;
(B) = the Exercise Price of the Warrant, as it may have been adjusted hereunder; and
(X) = the number of Warrant Shares that would be issuable upon exercise of the Warrant in accordance with the terms of the Warrant if such exercise were by means of a cash exercise rather than a cashless exercise.
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The formula is designed to make the profit potential identical. If the holder wants to provide cash to nwbo, then cash exercise accomplishes that goal. However, with cash exercise market risk is a tad higher, and it ties up some cash.
There's a table in the nwbo 10-K that shows exactly how Shares Outstanding grows over time.
There are notes showing how many warrants and options are outstanding and how that changed.
You don't have to guess about cash exercise vs cashless. That info is available too.
Your assumptions are wrong.
Your conclusions are nonsense.
https://www.sec.gov/ix?doc=/Archives/edgar/data/1072379/000110465921044832/nwbo-20201231x10k.htm
I suggest that you scroll down to page F-8 in the link as a place to start.
Absolute nonsense.
If nwbo was getting such great legal advice, they would not have had multiple issues with the SEC. They would not have made the same blunder with NASDAQ twice.
The history shows they have failed to get the best legal advice on a number of occasions.
Spot on.
All the talk about whose name is on a certificate is nonsense.
Bottom line is that Toucan (Linda Powers) owns Advent, not nwbo shareholders, and all benefits of Advent will accrue to Toucan.
Advent's success is not dependent on nwbo. Advent's website makes it clear they have other customers. Bolding is mine. https://www.adventbio.uk/
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CLIENT PARTNERSHIP PROFILE
Advent aim to provide GMP production facilities and systems which will be adaptable to our clients needs. This gives the capacity for clients to scale-up and improve their ATMP manufacturing capabilities according to their unique product and patient requirements.
Our clients consist of International Pharma, Emerging Biotechnology/Gene and cell therapy companies.
Except for insiders who were given warrants/options, anyone who holds warrants has funded nwbo, some multiple times. Many have extended warrants when requested.
Some of those folks sold short to hedge profits, yet the stock price is currently 5x the average warrant strike price.
Please explain the mechanics of how you think hedging has hurt the company.
Hedging nwbo warrants doesn't damage the company.
Pretty much all of the warrant holders are known to the company, and have provided much needed funding. They're "friendlies".
Given that the average strike price for warrants is $0.28, there is a significant percentage profit. Hedging locks in that profit.
I think some folks were surprised to find out that the short interest was friendlies rather than nefarious types. This was shown in early July by warrant exercise pushing up shares outstanding and shrinking short interest by 6m shares. Of course if the remaining short interest is similar hedging, that invalidates the short squeeze thesis.
There is no financial advantage to exercising early because you expect a price increase. The only reason to exercise early is to sell (or possibly cover, see below).
nwbo warrants are deep in the money. If they still have time to expiration, warrant value rises in tandem with any rise in stock price.
Consider a warrant holder who is hedged by shorting. If that short is recalled, and it is not possible to find borrow elsewhere, then they might prefer to exercise warrants and cover.
Also consider the similar case of what happened in late June to early July with warrant expirations. Shares Outstanding rose. Short Interest dropped. Stock price was fairly stable on ordinary volume. The likely explanation is that the warrant holders exercised, then delivered those shares to cover rather than selling in the market.
The sharesOut increase probably indicates there are some September nwbo warrant expirations. Hard to keep track after so many extension deals.
It will be interesting to see if the next two bi-weekly reports show any drop in short interest, as happened around June expirations. Latest FINRA data was 11.2m short as of 8/31/21.
Your grad student and "paper on the copier" examples are both problematic.
The SEC has pressed charges against employees at a financial printer for trading based on material they were hired to print.
A person at Business Week was charged based on trading in advance of their own column being published.
Very well said.
Every upcoming conference starts with giddy nwbo anticipation, but ends in disappointment. There is no reason to expect anything different this time.
A: kraken and nwbo TLD
Q: What are two things none of us has ever seen?
nwbo message board posts do not hamper the company's operations, nor do they affect anyone's cancer treatment. They are not the reason we're 11 months post data lock with no results from a 15+ year trial.
Curious how you'll react to the flip side of your scenario - sometime in 2022 nwbo finally releases a modest TLD, and tries to hype a sub-group that does benefit.
When Peter Lynch was on top of the world at Fidelity, someone asked if he ever talked to the technical analysts. He said "Yes, but only because their desks are between my desk and the mensroom".
You're wrong about Duffy and Innes being nwbo corporate officers. There is a list of "Executive Officers" in the proxy statement, and they're not on it.
https://www.sec.gov/Archives/edgar/data/1072379/000110465920039528/tm2013863-1_def14a.htm
https://www.sec.gov/Archives/edgar/data/1072379/000110465921051466/tm212568-1_def14a.htm
Jean Davis was hired as CFO, clearly an officer role. She was on the list of officers for 2020, but not 2021 when no longer in that role.
Duffy and Innes were hired as VPs, but not C-suite roles.
I'm curious where you saw Innes' compensation detailed. He's not mentioned in any proxy statements. Don't recall anything in 10-K or 10-Q. There is nothing in the PR about hiring him. He has never filed a Form 4 (and in my view is not required to file).
nwbo hired Duffy to a non-officer position. There was no requirement to disclose anything about his compensation.
No one can PROVE that he did or did not receive options, but I would be shocked if options were not part of the package to recruit him from Merck.
Take a look at the hirings for both Kevin Duffy and Jean Davis.
Both were PR'd. Neither PR talks about compensation.
There was no 8-K filing for Duffy, which is reasonable as he was not an officer level hire.
Davis was initially hired as CFO, which did merit an 8-K filing. That is where her compensation and options were first shown. It notes that the options vest on mutually agreed milestones. The subsequent proxy notes 643,055 currently exercisable. She is no longer shown on the 2021 proxy as she is no longer CEO/Officer.
My take:
There is no public record as to whether Duffy received options, although it would certainly be appropriate for his level. Even if he was granted vestable options, he did not stay long enough for meaningful vesting.
If Duffy did wind up with any nwbo securities, any prospective employer that found that problematic could just require him to exercise/sell as a condition of employment. Not a big deal.
"SOC for a range of cancers" ???
How's that going to happen? Merck has to run a new Keytruda trial for every different indication, yet you somehow believe nwbo will get approval for cancers on which it has never tested?