NorthWest Biotherapeutics Inc (NWBO)

[AngeloFoca]

Major Shareholder Wants Inquiry Into Northwest Biotherapeutics Allegations -- Update
Today 5:19 PM ET (Dow Jones)Print

By Denise Roland

LONDON--A major shareholder is urging biotechnology firm Northwest Biotherapeutics Inc. to hold an inquiry into allegations about the governance of the company by Chairman and Chief Executive Linda Powers.

Neil Woodford, a U.K. fund manager well-known for investing in the biotech industry, has sent a letter to the board of the Bethesda, Md.-based company to recommend it establish an independent special committee to investigate the claims. The letter was contained in a filing with the U.S. Securities and Exchange Commission.

He proposed the board appoint Elliott Leary, a former special agent of the Federal Bureau of Investigation who now conducts investigations for the global risk-management firm Freeh Group International Solutions LLC, as a nonexecutive director.

If appointed, Mr. Leary then would convene a special committee of nonexecutive directors to investigate the allegations, which were made largely by an equities research group, and which raise questions about what the research group says are the company's financial dealings with vehicles related to Ms. Powers.

The Woodford letter, which was dated on Tuesday, concluded: "In this way, we and other investors can then be satisfied that the Company will have the benefit of a fully independent investigation."

Ms. Powers in interviews on Friday and Saturday with The Wall Street Journal denied there have been any financial irregularities between Northwest and entities related to her. She termed the allegations as "baloney." She said payments for services to such entities had been cleared by the Northwest board, independently audited and filed where necessary with regulators.

She said Northwest had repeatedly been subjected to efforts by analysts and others "to throw mud against the wall at us." She said she "shared the view" of Mr. Woodford that there should be an investigation and "wanted to see this stuff put to rest once and for all."

Mr. Woodford's letter said Northwest Biotherapeutics' board had earlier this month agreed in principle to his proposal and that Mr. Leary had met with the board last week. Company officials confirmed the meeting took place.

Ms. Powers said the company planned to appoint a new board member and launch an independent review "on a rapid basis and soon" and that while the search for a nonexecutive director is focusing on Mr. Leary, the process hasn't been completed.

Phase Five Research, which carries out analysis of health-care and biotech companies, last month published a scathing report raising questions about Northwest's technology in development and accusing Ms. Powers, of using the company "as her personal checking account to financially support her investment" in other private ventures. In its report, Phase Five noted that it and its employees may take long or short positions in companies they cover.

Phase Five claimed that since 2004 around $310 million in cash, shares, warrants, options and other benefits had been transferred from Northwest to the Toucan Group, an entity controlled by Ms. Powers and her husband.

Ms. Power said Northwest didn't know how Phase Five came up with the $310 million figure. Les Goldman, who heads Northwest's business development, said any payments to a company related to Ms. Power would have been made to a Toucan portfolio firm Cognate BioServices in return for further development and manufacture of Northwest's cancer treatment for use in clinical trials involving hundreds of patients.

The two executives pointed out that a large percentage of payments to Cognate would have been in unregistered and non-tradable locked-up shares.

The activist move is an unusual one for Mr. Woodford, who typically adopts a passive stance. He made his first investment--$25 million--in the company last year. He has since invested an additional $70 million into the company across two subsequent fundraisings, and currently holds a 28% stake.

Of that total, he agreed to his most-recent investment, of $30 million, just days before Phase Five Research made its allegations. Mr. Woodford said in the letter that he "only became aware of these allegations after the completion of our recent investment" in the company.

Mr. Woodford is one of only a small number of life-science specialists investors in the U.K., and his backing is highly sought by biotechs.

Northwest Biotherapeutics is developing a treatment that involves altering a patient's own immune cells to make them more effective at fighting tumors. Its most advanced treatment is for brain cancer, but it is also conducting early-stage research in ovarian cancer. The company says it is investigating the potential of the approach in a wide range of solid cancer tumors.

Write to Denise Roland at [e-mail]

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(END) Dow Jones Newswires

November 28, 2015 17:19 ET (22:19 GMT)

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