NorthWest Biotherapeutics Inc (NWBO)

[Poor Man -]

Doubt this is a short covering since the deal is with an existing institutional investor.

Think about this:

The capital raise provides an over-allotment for the purchase of 5.88 million shares over the next 60 days at $3.00 a share, with warrants for another 2.94 million shares at $4.00 that represents $29.4 million in cash to the company, nearly two-thirds of the entire possible cash amount from the capital raise.

In addition, Northwest granted to the investors a 60-day overallotment option to purchase up to an additional 5.88 million shares of common stock at a purchase price of $3.00 per share, for an aggregate purchase price of approximately $17.6 million. In connection with such purchase of shares pursuant to the over allotment option, the investors will receive warrants to purchase up to 2.94 million shares of the Company's common stock with an exercise price of $4.00 per share and an exercise period of five years commencing on the 6-month anniversary of the warrant issuance. (Gross Cash Proceeds = $29.4MM from this piece of the transaction)

Now, why even have this condition for such a short period of time for such a large amount; why even spend the time negotiating this unless management (and the purchaser) believes this will happen? And if the company is depending on the sale of these shares and exercise of the warrants to be a large part of the funding through 2016, then why such a short window of only 60 days! – why doesn't the investor insist on a longer expiration for those warrants?

The only conclusion is that management believes an accretive event will happen within that period of time, and may have better alternatives after that period. There are also warrants to purchase shares within 6 months at $2.25, representing ~15% of the potential cash from the total transaction. That looks to be part of the deal to mitigate downside risk to the purchaser if events don’t unfold as expected and as further inducement.

That $3.00 strike on the warrant within 60 days is very telling.