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It's not the risk factors themselves, although I believe reading them is useful...it's the CHANGES in the risk factors that can really tell you something, whether the change is in how they are ordered or whether it's a subtle wording change or a new paragraph. Obviously, not every change is important or actionable from an investment perspective. Most aren't, like changing dates or things that are non-substantive like that.
I believe every investor should know how a company views the risks in an investment in its stock...and that is most evident when something changes. I can tell you that a lot of thought is put into changing an existing risk factor because public companies know that changes are heavily scrutinized by analysts, institutional investors and in the event something goes wrong, the SEC (and potentially the Department of Justice).
My issue with the "better strategy" is that nothing like it has ever been done before. Thus, I question whether or not that is actually what the delay in releasing TLD is about.
At the end of the day, if waiting to release TLD doesn't slow down the BLA process, and whatever actions they are planning on taking in connection with TLD and a journal article materially increases the stock price, then that will be fantastic and I won't personally care that, at a minimum, they violated every principal of full and fair SEC disclosures in the process. GBM patients, their friends and families, NWBO and its investors will all win and I will attend the next ASM meeting to express my gratitude with a case of champagne.
Your explanation is entirely reasonable. I just have doubts because I don't understand the lack of TLD or any real update other than "we are waiting on publication." I've said my piece previously on why I do not think it makes since to delay the release of TLD until there is a publishing commitment for a journal article. I firmly believe there is something else going on that they are not telling us. But, I am resigned to the fact that I just have to wait for "the rest of the story," as Paul Harvey used to say.
With respect to Flaskworks, in my personal experience acquiring manufacturing businesses, when you buy something for $4 million that is intended to revolutionize an industry, it takes at least 10 times that amount of capital and at least 5 years to see it produce, if it ever actually ends up working. My manufacturing experience is not in the healthcare or medical device field and is purely anecdotal, but the point is, it is more likely than not that it is going to take a few years (and $ millions) before Flaskworks is ready for prime time. As always, I hope I am wrong.
If NWBO's manufacturing agreements with Cognate were still in place when CRL acquired them, then yes, those contracts went with the business or were otherwise assumed.
However, the absence of the Cognate manufacturing agreements in the exhibit index of NWBO's last Form 10-K, the 2020 risk factor disclosure saying they would need to enter into new manufacturing agreements with Cognate and the Company's statement in the 2021 10-K that it intends to manufacture DCVAX-L at Sawston for the "U.K. and other regions," along with the total absence of any reference to Cognate/CRL manufacturing DCVAX-L going forward (which was a major departure from the last 5 years (at least) of 10-K disclosures) makes me confident that those agreements have been terminated.
I've already addressed the Cognate/CRL manufacturing agreements in other posts. If the contracts still exist, then they should have been included in the 10-K index, unless NWBO no longer considers them material. I don't know how they could no longer be considered material, but I also don't know how they could say what they said in the last 10-K risk factors, or how they have not updated their risk factors (as required when risks change either for the better or the worse) through the last 10-Q, knowing what they know about the trial results. So, who knows what is going on with the manufacturing agreements. Their disclosures are so terrible, vague and, in my opinion, misleading (intentionally or unintentionally), that it is impossible to decipher what is actually going on.
A couple of things: First, the Lancet article and draft guidelines were recently published...the expression of those thoughts, in those documents, appears to be something that NWBO was waiting on, based on some of the summaries of conversations with DI that have been posted here. If the FDA had already accepted the endpoint changes back in October, why would NWBO care about convincing the public that historical controls should be used for its trial? Why is LL advocating for the use of historical controls during her presentations? If the FDA was on board last October, why not release TLD and include a statement that the FDA had accepted the endpoint changes?
Second, the fact that those documents exist does NOT mean that the FDA has accepted that line of thinking for NWBO's request to change endpoints, or at least that they have already accepted it.
Third, with respect to Orbis, if NWBO is counting on Sawston and its 500 vaccines per year, then we are in big trouble (with respect to Orbis only...I'm all for the 500 vaccines and don't mean to downplay the significance of being able to achieve this). 500 vaccines per year doesn't move the needle on anticipated demand. They need a new manufacturing agreement with CRL or they can't satisfy the capacity and rapid manufacturing demands of Orbis, as I understand them. Hopefully a new CRL manufacturing agreement is part of the barrage of PRs LG has alluded to after the release of TLD.
Lastly, if you think datalock means that the new endpoints were accepted, great. I don't know that this is the case. But, if the datalock means with 100% certainty that the new endpoints were accepted, then I don't see why the company needed to wait for the new historical control guidance to come out in the late summer or for a journal article explaining the full trial results.
Look, I don't have any idea what is going on, none of us do. But I do know that what is happening here is unprecedented. There is a reason that no pre-revenue biotech has EVER released trial data in this way. Is it because the results are so good that they need over 13 months to tell us about? I don't know...I certainly hope that is the case.
According to a CaptainObvious post from earlier this morning, the share count increased by 33,880,127 shares from Oct. 9 to Nov. 2 (Oct. 9 is roughly when the share count started increasing materially). During that same period, 36,645,185 shares were traded.
Given that our average daily volume is 1.4 million shares and has been around that number for months, it is clear that not all of the stock underlying the warrants is being sold upon exercise. If you multiply the average daily volume by the number of trading days from Oct. 9 to Nov. 2, you get 25,200,000 shares, so the increase in volume (11.4 million shares total) from this snapshot in time when the share count started increasing materially certainly suggests that some of those trades may have been done in connection with warrant exercises, but it's definitely not all of that 11.4 million increase.
Anyway, I just thought this was slightly interesting and thought I would share.
While I have no desire to get into a debate about the merits of a R/S for uplisting purposes, I want to point out to everyone what the timing issues are.
In order to R/S, you have to get shareholder approval. That process is going to take 45 days or so. Then you have to wait 3 months for the stock to trade above $4.00 per share. I'm not sure if you can apply for uplisting prior to the stock trading above $4.00 for 3 months, but it takes a month or so for an exchange to review an application.
If they are going to wait until getting uplisted to release TLD, then we aren't getting TLD until next September, since they likely won't hold a special meeting for R/S approval and will just do it next spring at the annual meeting. Then there would be the 3 month wait, etc. The time to do all of this was at the 2021 annual meeting if TLD was going to be announced this fall. Or, maybe they are certain that the TLD and whatever else they have to announce will move the share price over $4.00 permanently...I have my doubts whether this is possible on the OTC, even with stellar TLD. But, we've waited a long time for TLD. The only justification for that is that they have something truly remarkable and ground breaking.
What the company is doing right now is unprecedented, not just for a pre-revenue biotech, but for any public company in any industry. They are sitting on the results of a 14 year trial until they think they have everything in place to release news that will lift the stock price. And this is after they told us we would have results in the fall of 2020. This is insane. There are 3 possibilities here: (i) we are in a Theranos-type situation; (ii) they are the most grossly incompetent management team of all time; or (iii) they have something big. The reason NWBO trades at $1.00 and change is because option 2 is a real possibility. Exhibit A is LG's embarrassing performance on the Big Biz show.
I am sure of it. It works the other way too...if Apple wants to do a forward stock split, they have to either have the required amount of authorized shares available, or they have to get shareholder approval to increase the amount prior to the stock split.
How did your call go with DI? Please share anything of interest.
Everyone has to remember that they can't do a traditional securities offering because they do not have an active registration statement to pull shares from. And they can't get an S-1 or S-3 on file until they disclose TLD.
So their options are to do an unregistered sale, which probably isn't feasible due to the fact that they are in the possession of material, non-public info (I can't remember all of the rules for unregistered securities sales), or to get another loan to pay off the loan coming due in November and give them operating capital for another couple months...kick the can so to speak.
Seems to me that they are going to get another loan. And I agree that the signs point to many more months before TLD. DI's email to an investor citing a post by Dr. Bala regarding the use of historical controls and Bigger's recent tweets certainly suggest that TLD is not imminent.
The fact that they didn't release TLD last November and are currently in their "silent period" because they were concerned the stock would be heavily pressured by the shorts is really concerning to me. I've never heard of a company not timely disclosing material information because they were concerned that the disclosure would hurt the stock price...that's just the price you pay of being public. Even if they were committed to staying the course of withholding TLD indefinitely, there are so many ways they could provide an update to shareholders that would not impact any potential ongoing discussions with the FDA or other regulatory bodies. It's stunning, really, from an academic standpoint...totally unprecedented.
Please ask if it is reasonable to assume that the delay in releasing TLD also means that the BLA process has not yet begun.
At this point, I wouldn't have a problem with the delay in TLD if I had confidence that the delay won't impact the timing of BLA submission (and RA approvals), but I don't think they have started yet. I can't see anything in the last two 10-Qs that indicates they are spending the cash that I think the BLA process will require them to spend.
He probably won't answer this question, but it is still worth asking. If a BLA submission is still a long ways away and can't (or won't) begin until after TLD, it would be helpful for the company to disclose this to set reasonable expectations going forward.
Thank you so much for sharing that. This seems to be confirmation that they chose to withhold TLD until a journal publication due to their concerns about TLD's affect on the stock price absent a journal article. Let me know if you think I'm taking his statement too far...I know it's just a piece of whatever your conversation was and may not actually be a fair representation.
For the moment at least, I'm going to imagine that their concerns are about releasing TLD and sustaining a stock price of $4.00 or more for 3 months in order to qualify for uplisting, rather than their concerns that if they release TLD without a journal, the stock price would fall below $1.00 or something like that.
I don't know what ATL's question was as I'm done paying attention to him for the moment, but I will try to answer yours.
First, you are correct about Item 1.02. If any of these four contracts listed below were terminated early, then there should have been an 8-K disclosure:
They have to disclose the trial results, at least eventually. The company's alleged strategy of withholding TLD until they are all set on the journal article is unprecedented and I will leave my commentary at that.
You have it right on the warrant holders...they all appear to be friendlies at this point and I assume they don't have any nonpublic info on the trial results when they are exercising.
OK...I remember the discussion now. Disclosure, and the manner of disclosure (whether in a Form 8-K or quarterly filing, etc.), are 2 different things, as are best practices. I personally would file an 8-K immediately after a failed trial. Below is another post that I made that give more context on my point.
ATL...after this comment, I'm not going to take the time to respond to you. You are not going to understand what I'm talking about because you don't understand SEC rules and regulations. I'll leave it at that.
I saw your question and have been thinking through how to respond in the best way and without typing a novel; the question on (3) is an easy thing to discuss but a hard thing for me to communicate on a message board.
I will get back to you on this, I promise. Hopefully later this afternoon. I appreciate all of your posts and respect all of your thoughts and never intended not to follow up.
You are confusing me with someone else. Good grief.
I can't speak for Ex, but the concern that I have is that there's not currently an agreement in place with CRL because FDA approval is either uncertain or still very far away.
I would expect that if NWBO has been running a parallel process of working on matters related to a journal article/TLD AND preparing the BLA for submission to the FDA, then we would have some kind of an agreement in place for manufacturing.
I don't mean to suggest that CRL would refuse the business, despite NWBO's past issues paying their bills.
I have never "selectively" applied "the 4 day rule," whatever you even mean by that.
When I say I quoted the letter, I didn't mean on this message board. And I'm not "critical" of the letter; the letter is the letter, it says what it says. I just didn't understand why you posted it. Were you trying to show me why a manufacturing and supply agreement for NWBO would be material to them?
Go look at the 2020 10-K. You will see the Cognate agreements filed as exhibits because they are material contracts. Those exhibits disappeared in the 2021 10-K exhibit index, and they told us in the risk factors that will need to enter into new manufacturing agreements. Thus, the former Cognate manufacturing and supply agreements are gone. I don't have time at the moment to go through the filings for more details.
I'm sorry, but what in the heck are you talking about "now" I'm doing something? Are you saying I've been inconsistent in the past about my interpretation of securities rules and regulations? I highly, highly doubt that, but perhaps you misunderstood something I said months ago or maybe I wasn't clear about it...
I'm not sure why you referenced Yahoo's response to the SEC comment letter it received back in 2016, but interestingly enough, I quoted this letter last week. Weird.
I will agree with you that the lack of any sign that NWBO is positioning itself for regulatory approval and commercialization could mean they intend to sell the company after the release of TLD and they could be negotiating the deal as we speak. I don't think that is likely, but it is certainly possible and it would go along way in explaining the bizarre situation that the company finds itself in today.
I understand the potential benefit of Flaskworks' technology. It could turn out to be an incredible acquisition. However, we have no visibility on the timeframe for integrating Flaskworks into the commercial production of DCVAX-L, assuming it actually works and can be integrated.
Given NWBO's limited resources, the novelty of the device/process and past history of execution speed, I am not expecting Flaskworks to be operational for at least 3 years. That's just a WAG, so who knows. I think the purchase price of Flaskworks ($4.3 million) indicates that Flaskworks is still in the development phase and will require more capital and more time before it is ready to be used in the commercial production of DCVAX-L.
At the end of the day, I really don't care if NWBO can "only" produce 500 vaccines per year out of Sawston initially. What I care about is whether this type of disclosure says something about expected demand in the near term, based on their expectations of the approval process for the 4 big regulatory authorities. It is certainly possible that they are sandbagging and have CRL lined up for manufacturing and that we will get that news after the release of TLD. That's not how public companies should operate, but this group marches to the beet of a different drummer, to be polite, so again, who knows.
If they signed a contract with a third party to manufacture DCVAX, it would be a material agreement and it would have to be disclosed on Form 8-K within 4 business days. It's not payments or the start of performance that trigger the disclosure requirement, it's the existence of the contract itself.
Below is a quote from the risk factor section (emphasis added by me):
You could be correct, but that's not how I interpreted it because of the reference to utilizing excess capacity for third party contract manufacturing purposes.
In order to provide those third party services, Sawston is going to have to spend money (either NWBO's or their clients') and time to get set up for this...it's not the kind of thing you do, or even hint at, if you think DCVAX-L is going to be commercially available and supported by strong demand anytime soon. The fact that NWBO is even thinking about third party contract manufacturing at Sawston while sitting on TLD for DCVAX-L should be an eye-opener for everyone. Yet, collectively, investors seem to ignore it.
I sure hope they are sandbagging on what I perceive as initial demand (or time to approval, if the 500 vaccines per month was in fact referring only to estimated demand for compassionate use pending UK/Europe approval).
They very will might fulfill all of the US manufacturing. Some third party needs to do it, assuming TLD supports FDA approval as we all hope, or dare I say, expect?
My point is that if NWBO is on the verge of submitting a BLA to the FDA for DCVAX-L, then there should be a manufacturing agreement today between Charles River and NWBO. The fact that there is not such an agreement is something that concerns me, or at least it is something I wonder about. Especially in light of the company's statement that they will only be able to produce up to 500 vaccines per year at Sawston for the foreseeable future.
That's kind of the point...with TLD in hand and a BLA submission that should be occurring relatively soon, the Company appears to be relying only on Sawston for manufacturing.
If DCVAX-L was expected to be approved by the FDA in the next year or so, then you would expect to see manufacturing contracts with other third parties, which would have to be disclosed as material contracts under Form 8-K, given where the company is in its development today. Maybe these 3rd party manufacturing contracts are part of the "barrage of positive news" that LG said would occur after the release of TLD. It would certainly be huge for the company to announce positive TLD that supports approval, along with news that NWBO has entered into manufacturing contracts that will allow the company to initially supply 2,500 to 5,000 vaccines per year.
If it's just Sawston that will be producing DCVAX-L initially, and they can only produce a max of 500 vaccines per year for the foreseeable future, then as awesome as that would be for those 500 patients, that type of demand is not going to support the kind of stock price we all hope to see after the release of TLD. 500 vaccines at $200K per patient is $100 million per year and I would argue that if that's the near term demand for DCVAX-L, then the stock may be priced for perfection today. Speculation regarding future indications beyond GBM and/or a potential buyout could certainly drive the stock price higher, but I don't think it would get near anything approaching double digits...especially while listed on the OTC.
I don't know, something just doesn't add up to me with respect to the company's prior PR that said they would be able to produce up to 500 vaccines per year at 2% of Sawston's capacity, and that they planned to use excess capacity to provide manufacturing services to 3rd parties (instead of adding DCVAX-L production). Add it to the list of NWBO statements (and actions/omissions) that don't add up, I guess.
Flaskworks incorporation into DCVAX-L's manufacturing process is years away, if ever. That's per the company's own disclosures.
That is an interesting theory and you could very well be correct. But doesn't Charles River already possess the manufacturing information now via its acquisition of Cognate? I was operating under the assumption that Sawston's manufacturing process that are under review at the moment would be substantially the same as Cognate's.
For what it's worth, I now believe that they are waiting to release TLD until the journal article has been accepted for publication (or published, whatever). The reason I believe this is because there is no other reasonable explanation for the delay at this point.
I get the manufacturing thing, but what I do not understand is why Cognate (or Charles River) is not ready to go on that front. I mean, I understand that we don't know anything about Cognate, and they could be going through the certification process for DCVAX-L right now. And I understand that Charles River's acquisition of Cognate last year and some of Charles River's statements regarding the future could be interpreted to suggest that the manufacture of DCVAX-L is something they are anticipating.
But, Cognate basically got erased from the 10-K and in the risk factors, NWBO implied that Sawston was going to be supplying all DCVAX-L products in the near term. Which suggested to me that FDA approval would be after the UK/Europe, or that they planned to ship vaccines back to the U.S. from Sawston. So if Sawston can only manufacture 500 vaccines per year and they are planning to use the remainder of the facility for 3rd party contract manufacturing in the near term instead of building out more DCVAX-L production space (and this statement was made with TLD in hand), then what does that mean for the anticipated demand for DCVAX-L?
It just seems weird to me that Sawston is now viewed as a potential gating item for approval, when Cognate/Charles River should be driving that bus in the U.S. and should have been far ahead of Sawston. I get that we are talking about different RAs, but I think it is strange that Cognate all of a sudden became an afterthought in the Company's 10-K.
I 100% agree with you that manufacturing is an incredibly important piece of the puzzle. Unfortunately, there's a lot of conflicting noise in what the company has said (and not said) on that front.
What NWBO says they are doing, delaying the release of TLD until the full data set is ready to be published in a journal, is unprecedented for a biotech.
The strategy is very confusing to me, but I don't have the information that NWBO's management does, so who knows...maybe it will end up working out for the best.
At this point, what I care about is that the delay in releasing TLD has not slowed down the BLA application. I am very concerned that they have not really started that process, as their operating expenses over the last couple quarters don't suggest to me that they are doing much, especially if they are working on Sawston. However, they appear to be paying some consultants with stock options, so maybe that's where the BLA-related expenses are buried.
I do believe they have an approvable drug. But I'm very uncertain as to what the market size for the drug ultimately will be and the timeline for commercialization.
I am not speculating on the PIPE transaction. It is what they said in the 10-Q. You just don't understand what they are talking about.