NorthWest Biotherapeutics Inc (NWBO)

[indialong]

Steve Giardino/MRC was long, now disgruntled. He wrote this in 2014:

https://boards.fool.com/the-time-is-now-for-northwest-biotherapeutics-31643022.aspx?sort=postdate

The Time Is Now For Northwest Biotherapeutics
Oct. 29, 2014 3:16 PM ET | 216 comments | About: Northwest Biotherapeutics, Inc. (NWBO), Includes: AAPL, ICPT, JAZZ, PCYC
Disclosure: The author is long NWBO. (More...)
Summary

After multiple sector wide sell-offs, many small biotechs indiscriminately lost much of their stock value.
Market forecasts and the resultant public sentiment provoked these moves rather than specific company fundamentals.
The end result is an opportunity: oversold stocks with high intrinsic value.
Northwest Biotherapeutics (NASDAQ:NWBO) has achieved a number of significant milestones over the past year while seeing its share price rise consistently on an upward trend, until somewhat recently. It may seem at first that the Company either released poor data or that something off color was discovered to cause its stock price to drop since August, but to the contrary, nothing but positive progress has occurred.

When comparing NWBO's stock chart with other biotech outfits in a similar stage of clinical development, as well as time points on the IBB and NASDAQ charts, certain trends appear. For example, the month of February saw the IBB gain 15% in that month alone, only to then lose 21% by mid April. The NASDAQ climbed 10% in Feb, then lost all of these gains likewise by mid April. NWBO, despite some momentary spikes on positive news, followed a similar trend, gaining 30% from early Feb - early March, but then losing nearly all of these gains by mid April. CLDX likewise followed a similar path.

This shows that when institutional funds decide to pull cash from a sector they do so en masse, indiscriminately selling shares of all securities held therein. And the more speculative the holding (such as developmental stage biotechs) the more they sell the security when "tightening the books." In the process, many retail investors who have set stop losses get sold out of their positions while others sell due to fear. And when a security is largely held by retail investors (as is commonly the case with developmental stage biotechs) these swings can be more volatile than normal.

Certain bears have noted these trends and have released negative articles on NWBO and other developmental stage biotech companies, taking advantage of and exacerbating the situation, despite often easily found rebuttals to their arguments (more on this below). These weaker arguments are ignored by funds who have already done their research and stand by it. They buy and sell based on analysis that pertains to a wider market sentiment. However, it is precisely because they are "over-diversified" across hundreds of securities that they are less capable of in depth micro-analysis of individual stocks than the retail investor.

It now appears that the sector wide sell off has ceased and NWBO's stock price has found strong support levels over the past two weeks. It also appears the bears are out of "fire power." There's really nothing left for them to say.

This introduces an opportunity to the savvy value investor. All signs indicate that NWBO stock is severely undervalued as the result of indiscriminate selling (funds) or emotional reactivity (retail) and primed for an upward move.

Regulatory Approval and Validations

NWBO has recently achieved two major positive landmarks. They have been the first to receive the new Promising Innovative Medicines designation from the MHRA for their lead DCVax-L product, which is awarded "following an assessment of clinical data." One of the official criteria that must be met to be awarded this designation is,

The medicinal product must be likely to offer a major advantage over methods currently used in the UK.

Of course that would refer to a major advantage over Standard of Care (SOC). This represents a significant validation for the DCVax technology, and in MHRA's opinion (the equivalent to FDA in the US) after rigorous examination, "DCVax-L is likely to offer a major advantage over SOC." The next step will be almost certain acceptance into UK's "Early Access to Medicines Scheme," whereby UK citizens may be granted access to DCVax-L outside of the ongoing Ph III clinical trial.

Also, through another program known as Hospital Exemption, the PEI (equivalent to FDA in Germany) has granted early access approval to DCVax-L in February to be used to treat any German citizen with any stage glioma, both newly diagnosed and recurrent (over 12,000 cases per year in Germany alone). This even though the Ph III trial is being tested in newly diagnosed GBM (ND-GBM) patients only.

There seems to be some confusion about just what Hospital Exemption is and how it will benefit both NWBO and patients. To clarify, and specifically as it pertains to Germany and the PEI:

Hospital exemption as implemented in Germany is an option for ATMPs utilized for highly innovative treatments that are fulfilling the criteria set by Article 28 of the ATMP Regulation. One example may be highly personalized patient-specific GTMPs that consist of autologous cells loaded with nucleic acids that are tumor-specific. For such a medicinal product, hospital exemption may be regarded as a suitable tool to support development and availability of these products, and thereby providing also specific treatment options for physicians and patients. Moreover, it also may be suitable to guide a particular ATMP into routine manufacturing towards a central marketing authorization.

And further...

The hospital exemption procedure in Germany, which is performed by the Paul-Ehrlich-Institut, is set up to ensure compliance with community rules for safety and efficacy, put in place appropriate standards for quality control of the manufacturing process including compliance with the good manufacturing practice requirements, review of available data/information and a discussion on the benefit/risk balance.

In many ways the Hospital Exemption program is similar to Accelerated Approval here in the US, but only for Advanced Therapy Medicinal Products (ATMPs) and without the granting of marketing capability.

Reimbursement negotiations between NWBO and the German Sickness Funds (medical insurers) are nearing completion and the Company has just begun treating its first patient under the program. A waiting list has also been established. Administration of NWBO's DCVax-L will be fully subsidized under the Hospital Exemption program by the German Sickness Funds for all of Her citizens.

Currently, 10 major medical institutions have applied for reimbursement. Collectively, they have the capability to treat over 3,000 glioma patients per year. At $70K/treatment (conservative), which incidentally may produce up to 5 years of vaccine per patient, that would equate to $210mm in annual sales fully realized. More hospitals will also likely come on-line and apply as these treatments progress.

It is also probable that NWBO will be able to secure non-dilutive financing to manufacture mass quantities of the vaccine for patients in Germany once price negotiations have settled, as is common practice for all approved therapies. Negotiations with the German Sickness Funds should be finalized "by year's end," according to management, and I would expect NWBO to enter talks with financers soon after that, if they haven't already.

With no competition in Germany or elsewhere for a potentially dramatic improvement over SOC in treating GBM and lesser gliomas, what financial institution wouldn't loan money to whoever owns the rights to that therapy? It represents guaranteed interest with very little risk.

Thus here we have two highly regarded regulatory bodies (MHRA and PEI) that have examined all available DCVax-L clinical data to date, and have both unanimously given the therapy an early nod of approval based on efficacy and safety of therapy, seeking to have their citizens treated with the promising new medicine ASAP, and are even willing to subsidize this therapy while it is still in clinical development (in the case of Hospital Exemption). It's hard to overstate such outstanding and literally unprecedented validation.

Detailed Modeling Confirms Regulatory Decisions

In order to accurately plot progression free survival ((NYSE:PFS)) times of two groups on a Kaplan-Meier Curve, you would need time of enrollment, time-to-event (time until death or progression of disease), and treatment assignment (tx or placebo) of each patient in the trial to produce an accurate result. Oftentimes in clinical trials the public is informed of one or more of these points, but never all of them--especially when the trial is double blinded, whose results may be used to petition for regulatory approval, as is the case with the Ph III DCVax-L trial. However, there are often loopholes to this in the form of inadvertent public release of data.

Management has been careful not to tell enrollment numbers for a reason. Those with an understanding of statistics can use enrollment numbers, assume the median time-to-event of the control group (in this case given placebo) based on data obtained from recent trials testing the same population with very similar criteria, and the date at which a specific number of events were triggered, to arrive a fairly close picture of what is occurring in the trial--provided the difference between groups is somewhat large. If the difference between tx and control group is small, modeling will produce inconsistent results (in that case it will require much more refinement than blinded modeling to show what's going on). Most trials fall under the latter category, in that most novel therapies show no or only modest increased effectiveness over SOC in clinical trials. DCVax-L, however, as I will show, is different.

Inadvertently the Company did in fact reveal enrollment numbers for this trial. Two plots were given: first, we learned how many were enrolled between the re-initiation of the trial in the beginning of 2011 and mid-2012 (in addition to the 33 brought forward from 2008). Next we learned how many were enrolled by late winter 2013/2014. Here's how:

--Over the summer, data was revealed on the "information arm" of 55 patients and their enrollment period, which was "over 2011 and 2012." From 1/'11 - 12/'12, 55 were enrolled in this arm. Demographic studies reveal that approximately 35-40% of treated GBM patients will be found to show signs of early progression. Therefore around 150 patients were screened and tentatively enrolled during those 24 months (vaccine was made for them)--55 were placed in the information arm once they were found to have suspected early progressive disease ((ePD)), and 95 were enrolled in the trial (approximates, but should be close).

--5/'12 PR states the trial was updated to "up to 300 patients," which was to include an up to 60 subgroup of pseudo-progressive disease (psPD) patients. This was increased to "up to 312," with up to 72 being psPD. This was the result of the demographic found in, and the point behind, the "information arm" of 55. The main cohort of 240 testing DCVax-L in patients who do not show potential early progression of disease remained unchanged since making this a Ph III trial.

--The protocol states that "at 80% enrollment of the 240 patients, or 192 patients enrolled, a Blinded Sample Size Reestimation Procedure (BSSR) will be conducted." The first change of the trial to 348 appeared on the EU clinical trials site for the UK portion of the trial around May. The CEO's first mention of enlarging the trial came back in March at a conference. She said, "we're thinking about it, it's a strategy point for us." Logically then, 192/240 were enrolled by Feb 2014 the latest (33 of them from '08), but most likely a bit before. I'll get to why their decision to enlarge or not was also a bullish indicator later on. In fact, it may be that the potential for a halt for efficacy was already at that point on the table.

--Therefore we have two enrollment points on the curve (33 brought forward, 128 total through 2012, 192 total by 2/'14). Also, 66 PFS events occurred by 12/'13.

Recent control group data from IMUC's Ph II trial and the Avastin trial for ND-GBM give a consistent 7-8 months median PFS for control. Also, at 12 months, 65-70% of control group will likely have progressive disease (PD), and at 24 months, 85-95% will likely have PD.

--Based on earlier data, at least 25 of the 66 events likely came from those 33 enrolled in 2008. The remaining 41 or less were from those enrolled from 2011 on.

The only remaining factor left is the unknown PFS times of the tx group, which can be found by simply modeling the knowns:

Initial assumption (conservative): 60% of control group will experience PD at 12 months, 85% at 24 months, 95% at 36 months, and 99% at 48 months (9 months median PFS); tx group yet to be determined.

Estimated enrollment ramp, conservatively figured:

-By 12/'08 -- 33tx enrolled
-Over 2011 -- 15tx:15placebo
-Over 2012 -- 20tx:20pl [103 total, 70 from 1/'11--12/'12]
-Over 2013 -- 50tx:30pl
-Over 2014 -- 50tx:25pl
-By 10/'15 -- 60tx:30pl [348 total]

Estimated PFS events occurred and projected [deduced data first]:

-From '08 by 12/'13 -- 27tx
-From '11 by 12/'13 -- ?tx:13pl
-From '12 by 12/'13 -- ?tx:12pl
-Over '13 by 12/'13 -- ?tx:3pl

Therefore 11 tx group enrolled since '11 contributed to the 66 events of the former first interim trigger. Here is the likely breakdown:

-From '08 by 12/'13 -- 27/33tx
-From '11 by 12/'13 -- 8tx:13pl
-From '12 by 12/'13 -- 3tx:12pl
-Over '13 by 12/'13 -- 0tx:3pl

-66 Total PFS events triggered 12/'13

Deduced tx group assumption: % PFS eventing at 12 months = 15% and at 24 months = 55%, and we will assume 70% at 36 months and 85% at 48 months

To continue estimated PFS events:

-From '08 by 12/'14 -- 29/33tx
-From '11 by 12/'14 -- 11tx:14pl
-From '12 by 12/'14 -- 11tx:17pl
-From '13 by 12/'14 -- 8tx:18pl
-Over '14 by 12/'14 -- 1tx:3pl

Subtract duplicate stats.

Result:

-112 Total PFS events to be triggered by 12/'14 (22tx:24pl)

Projected total PFS events by 12/'15:

-From '08 by 12/'15 -- 31/33tx
-From '11 by 12/'15 -- 13tx:15pl
-From '12 by 12/'15 -- 14tx:19pl
-From '13 by 12/'15 -- 28tx:25pl
-From '14 by 12/'15 -- 8tx:15pl
-Over '15 by 12/'15 -- 1tx:4pl

Subtract duplicate stats.

Result:

-173 Total PFS events to be triggered by 12/'15 (35tx:26pl)

(1st interim of 149 PFS events to be triggered summer 2015)

Lastly:

Projected total PFS events by 12/'16:

-From '08 by 12/'16 -- 32/33tx
-From '11 by 12/'16 -- 14tx:15pl
-From '12 by 12/'16 -- 17tx:19pl
-From '13 by 12/'16 -- 35tx:28pl
-From '14 by 12/'16 -- 28tx:21pl
-From '15 by 12/'16 -- 9tx:18pl
-Over '16 by 12/'16 -- 0

-236 Total PFS events to be triggered by 12/'16 (40tx:23pl)

The '11-'13 stats set the trend, and force tx to make up the remaining events. If pl events are raised, tx are de facto lowered. Based on the above, tx group set to show median PFS of 20 months.

As you can see, according to this modeling the DCVax-L group appears to be significantly outperforming placebo. It is difficult to find another way in which they reached only 66 PFS events with those two known enrollment points. I do not see another way possible. DCVax-L is likely showing exceptional efficacy.

BSSR Procedure Portends Treatment Effect

In addition to the high likelihood that DCVax-L is showing strong effect based on enrollment data and the 66 events threshold, NWBO also had a separate interim look set aside in the trial design specifically for sample size reestimation:

Designation as a Phase III trial
Expanded and enhanced statistical endpoint analyses
Addition of another cohort of patients which can potentially expand the application
of DCVax®-L, and which increases the trial to up to 300 patients
Addition of interim analyses for efficacy
This occurred in May 2012, based on data obtained in the information arm enrolled up until then. It showed that a significant number of suspected early progressors actually had what is called "pseudo progression," meaning the MRI that showed tumor progression was actually showing radiation damage instead. The pseudo progressor's (psPD) life expectancy is much higher than those with true early progression for obvious reasons.

NWBO decided to enroll these psPD in their own randomized, placebo controlled arm, whose results would be supplemental to the main cohort of 240. At first it was "up to 60," but this later changed to "up to 72." Hence the trial total changed from 240 to "up to 300," and then "up to 312." It remained that way until rather recently:

In addition to the 240 patients, approximately 72 patients with newly diagnosed GBM with evidence of possible progressive disease at baseline will return at 10 weeks post radiation therapy for a repeat MRI. Patients who are then determined to have progressive disease will not be enrolled and the remaining patients, (pseudoprogressors), will be randomized 2:1 into a separate arm to assess the safety and potential efficacy of DCVax-L in patients with pseudoprogression.

When they enlarged the trial recently to 348 patients, it was not from 312 that they did this, but from 240. The psPD arm was always separate, and not influenced by a sample size reestimation procedure. It had enough flexibility in and of itself ("up to"). The FDA gave clearance only to resize the main cohort of 240:

In addition to the planned interim analyses for the primary outcome, a sample size re-estimation will be performed after 80% of the 240 patients have been randomized. An independent statistician (IS) will be provided a dataset with all available primary outcomes (i.e., times to progression, death, or censoring) for the randomized cohort, without treatment group assignments. The IS will calculate the Kaplan-Meier curve for the combined randomized cohort (DCVax-L-treated and placebo treated patients). The median time to PFS (M) will be estimated from this curve. The IS will use M as the assumed median for the placebo group. The IS will then calculate a sample size assuming a median PFS of M for the placebo group, and the same hazard ratio, Type I error rate and power used in the original sample size calculation. The re-estimated sample size (N*) will be used to determine if a sample size modification is needed as follows:

If N = 240, no change will be made; If N is > 240 and = 360, the Sponsor will increase the sample size to N; If N > 360, the Sponsor may choose to either continue the trial with a sample size of 240 or terminate the trial.

This is known as a blinded sample size reestimation proceedure (BSSR), which are often conducted in Ph III trials. Treatment assignments are blinded, meaning they can see the stats on the individual, including PFS time, etc., but cannot see if they were given tx or placebo. This particular one in NWBO's trial represents an adaptive increase in sample size.

Oftentimes an increase in N (sample size; total patient allotment) in small, open label studies is the result of a need to increase powering due to a smaller difference between control and treatment groups than was expected, in order to obtain statistical significance (p-value </= 0.05). This becomes realized due to their being no blind--data on efficacy is examined openly along the way. However, in a BSSR procedure, there is no way to know which assignment is tx and which is control, and so whole group or "pooled" event rates are examined instead. If the entire group is living longer than expected (or experiencing progression later than expected), you increase N in this case in order to secure against any unknown variance, such as the control group eventing later than was initially anticipated (from Biopharmnet):

Blinded sample size re-estimation uses interim data without unblinding treatment assignment to provide an updated estimate of a nuisance parameter in order to update the sample size for the trial based on the estimate. Nuisance parameters mentioned in this context are usually the variance for continuous outcomes or the underlying event rate for binary outcomes.. It is usually preferable for SSR based on updated information about nuisance parameters to be performed on a blinded basis.

If at an interim point the pooled event rate were much lower than expected, then this might indicate either that the underlying population rate is unexpectedly low, or that the treatment effect is larger than expected..

If there is much uncertainty concerning the treatment effect, one could consider using an SSR procedure, such as that described by Gould (1995), in combination with a group sequential design that allows for early stopping for efficacy. The latter can allow stopping the trial early in case the low event incidence is due to an exceptionally large treatment effect [note that in the DCVax-L protocol, if the BSSR returns a result to increase N > 360, the trial may be halted or continued until unblinded interim analysis].

Greater than expected efficacy in reducing the rate of an event such as mortality could cause fewer than expected events in the active treatment group and in the trial as a whole, leading to an unnecessary increase in the sample size. Lower than expected event rates in both treatment groups (for example, because the patients entered were less ill than anticipated) also could cause a lower than expected overall rate. Increasing the sample size is sensible in this case. We cannot determine the reason for the lower overall event rate until we unblind the treatment assignments.

And so we see that with BSSR procedures, increasing N often means the whole group is "eventing" later than was assumed in the pre-trial design phase. An increase from 240 to 348 suggests that the pooled event rate at 80% enrollment (which, due to lag of enrollment also nearly coincided with 66 events) showed a significantly longer time-to-event than was assumed in the initial DCVax-L trial design. The design had accounted for 6.5 months PFS difference in tx group above control group. If this was maintained at the BSSR interim, the trial would have been enlarged to approximately 300 patients total (making statistical significance an even greater likelihood). An increase to 348 is showing much more difference than that between groups. It is nearly up to the amount of increase that would have triggered consideration for a halt--360 (at which point it would represent an overwhelming increase in time-to-event of the whole group, such that the likelihood of it constituting only an abnormally long time-to-event in placebo group would be exceedingly small--it could only be the result of an exceptionally large treatment effect).

Because we know the control group in GBM studies show median PFS of around 7-8 months with best SOC quite consistently, we can be fairly confident this aberrant increase in whole group time-to-event is most likely the result of a larger than expected treatment effect.

So as not to blind the reader with science by taking them through various algorithms, there are a number of valuable statistics calculators available online. Harvard has one based on the same Shoenfeld formula used in the DCVax-L trial here:

Let's experiment with what certain parameters would elicit using the DCVax-L trial's BSSR procedure.

The trial was initially designed with the following (input into calculator):

.02 Significance Level, 2-sided
9 (months) Accrual Interval, 5 (months) Follow-up Interval
7 (months) Median time-to-failure (control)
.82 Power (82%)
[leave blank] Total number of patients
1.929 Hazard ratio
When you hit 'calculate,' you should see the following:

A total of 209 patients will enter this two treatment parallel-design study. The probability is 82 percent that the study will detect a treatment difference at a two sided 2.0 percent significance level, if the true hazard ratio is 1.929. This is based on the assumption that the accrual period will be 9 Months and the follow up period will be 5 Months and the median survival is 7 Months. The total number of events will be 97.

which is pretty close to the initial design of 240 patients enrolled, 110 total events required.

Now let's do what the BSSR procedure outlines, and put a new potential "whole-group event rate" into the "Median time to failure (control)." Let's try 14 months. What's the read-out (leave "Total number of patients" blank)?

A total of 358 patients will enter this two treatment parallel-design study. The probability is 82 percent that the study will detect a treatment difference at a two sided 2.0 percent significance level, if the true hazard ratio is 1.929. This is based on the assumption that the accrual period will be 9 Months and the follow up period will be 5 Months and the median survival is 14 Months. The total number of events will be 97.

This is a clear example of how they went from 240 patients to 348. The overall event rate is probably closer to 14 months (note that the higher this goes, the higher the required N). Now consider what this means:

If randomized 2:1, tx:placebo, with assumed PFS rate of 13.5 months and 7 months respectively, then 13.5 x 2 + 7 / 3 = 11.3 months original whole-group event rate premise. According to our calculations using their BSSR outlined in the official protocol, the whole group event rate is apparently 3 months higher than originally assumed. Meaning DCVax-L is likely showing greater than 6.5 months difference above placebo group.

But it's actually more than that. The above 11.3 months assumes all patients have evented. However, at an interim look, if one group is eventing more rapidly than the other, then at a lesser percentage of total possible events, the ratio will be different than 2:1 (in this instance). If, for example, tx has a median PFS of 18 months, let's say, and placebo has a median PFS of 7 months, then after 66 events out of a possible 240 (or 28% of total) there will be more events coming from placebo group than tx, even with twice the amount of total patients enrolled to the tx group. This would cause that 11.3 figure to drop to around 9-10 months at the time of the BSSR procedure for the assumed whole-group median time-to-event. That would make the difference between groups over 12 months.

Also, of the 66 events, those that were from the placebo group, which I estimate to be around 30, would constitute the worst performers in the trial (as obviously they progressed first). These are too few to establish a true median, and so represent left skewed data (lower than historical median). Even censored data would be skewed by them (trends are carried over to plot censored points). The same can also be said about those who progressed in the tx arm.

Thus the new whole group event rate of around 14 months is showing that tx is outperforming placebo by a large margin--unless the placebo group is performing at a median PFS of well over 12 months, which according to the abundance of data on GBM patients treated with SOC alone is highly unlikely (especially at that early stage of the trial).

Many may also wonder where the increase in required events came from. Returning to our calculations, the initial design assumed 240 patients would accrue in 9 months. This, however, was drawn out to around 36 months by the time of the BSSR. Let's see what happens when you input a different enrollment curve:

(Keep .02, 2-sided; change 9 months Accrual to 36, 5 Follow-up; 7 months control Median; .82 power; Total # of patients 348; HR [leave blank]):

A total of 348 patients will enter this two treatment parallel-design study. The probability is 82 percent that the study will detect a treatment difference at a two sided 2.0 percent significance level, if the true hazard ratio is 1.482. This is based on the assumption that the accrual period will be 36 Months and the follow up period will be 5 Months and the median survival is 7 Months. The total number of events will be 271.

When you increase the accrual time, it requires a higher percentage of events (in this case over 70%) to avoid a loss of alpha due to such lag (extended enrollment introduces the potential for greater type I error). This is the main reason for requiring more total events before unblinding data.

Notice also another side-effect of increasing N: the hazard ratio has dropped to 1.482. This means that now only around a 4 months difference between groups is required to achieve statistical significance. This was clearly not the primary intention of the resizing (the parameters for this have been clearly outlined above), but rather a side "benefit," so to speak. This would also make for a very low p-value at the first scheduled interim of 149 events if tx effect is indeed what our modeling anticipates, which would likely result in an early halt for efficacy.

In summary, for certain BSSR procedures such as the one employed in the Ph III DCVax-L trial, an increase in N tends to correlate with an increase in treatment effect so long as the control group is performing as expected. An increase from 240 patients to 348 shows the overall event rate is much lower than anticipated. This could mean placebo group is far outperforming expectations, but that is less likely (especially with GBM, and especially early in the trial). A BSSR procedure using the methods in the DCVax-L protocol that returned a result of "increase to 360" could potentially have been halted for efficacy, even in the absence of unblinded data, due to the extremely low probability it would mean anything other than exceptionally large treatment effect. 348 is close.

Anecdotal Data Supports Detailed Modeling

A number of detailed meta-analyses on whole tumor lysate loaded dendritic cell (DC) vaccination have been promulgated. Two such analyses on DCVax-L-like vaccination effects may be found here and here.

In the former, the following was noted:

Methods:

A total of 409 patients, including historical cohorts, nonrandomized and randomized controls with high grade gliomas (HGG) such as GBM, were selected for the meta-analysis.

Results:

The treatment of HGG with DCs was associated with a significantly improved one-year survival ((OS)) (p<0.001) and 1.5-, 2-, 3-, 4-, and 5-year OS (p<0.001) compared with the non-DC group. A meta-analysis of the patient outcome data revealed that DC immunotherapy has a significant influence on progression-free survival (PFS) in HGG patients, who showed significantly improved 1-,1.5-, 2-, 3- and 4-year PFS (p<0.001).

Conclusions:

Thus, our meta-analysis showed that DC immunotherapy markedly prolongs survival rates and progression-free time, enhances immune function, and improves the efficacy of the treatment of HGG patients.

In particular, and in regards to progression-free survival (PFS), which is the primary endpoint in the Ph III DCVax-L trial, they noted:

Information on the 1-, 1.5-, and 2-year PFS was available for two trials, which contained 145 patients (30 patients received DC immunotherapy). DC immunotherapy led to a 1-, 1.5-, and 2-year PFS of 70%, 50%, and 37% (21/30, 15/30 and 11/30), respectively, in HGG patients who received DC treatment, whereas the 1-, 1.5-, and 2-year PFS in the controls was only 32%, 15%, and 3% (37/115, 17/115, and 4/115), respectively.

Both of the trials showed a longer disease-free survival for patients who received DC immunotherapy in comparison to the historical or randomized cohorts at one, one and a half and two years. The estimated pooled OR for the two trials showed a highly significantly improved one, one and a half, and two-year PFS for patients receiving DC immunotherapy.

In other words, more than double the effectiveness of SOC alone at 1 year, over 3x as effective out to 1.5 years, and over 10x as effective out to 2 years. That is astounding, especially when considering the only advancement in decades was Temodar back in 2005 (now generic temozolomide), which added a meager 2.6 months overall survival to surgery and radiation alone.

In addition to anecdotal data, recently, information on survival data in the DCVax-L information arm was released. As explained above, these patients were a mix of early progressors ((ePD)) and pseudo progressors ((psPD)), though predominantly the former. According to RANO criteria, the rate of incidence of psPD among suspected ePD is likely no more than 25%. Data on the info arm revealed the following:

According to initial analyses, the median Overall Survival for all 55 patients is 18 months.

Given that these patients were randomized or excluded from the trial within the first month following chemoradiation, those that experienced both ePD and/or psPD within this time were also those with a poorer prognostic outlook. The earlier it is experienced, the worse the prognosis--even for psPD: (note: psPD are compared to normal progressors in this poster, not ePDs).

Thus the true prognostic factor for ePD for the purposes of an accurate historical comparison with the information arm is 7 months median OS, and that for psPD is around 20 months. A median OS of both groups combined using upward bound RANO criteria (conservative) would be between 10-12 months. One study showed 11.2 months combined group median OS:

13 patients (52%) were found to have ERP, of whom 5 (38.5%) were pseudoprogressors. Patients with ERP had a lower median OS (11.2 mo) than those without (not reached) (p < 0.001). True progressors fared worse than pseudoprogressors (median survival 7.2 mo vs. 19.0 mo, p < 0.001.

However, the median OS of the information arm patients treated with DCVax-L was found to be 18 months. That expresses not just a 6 months increase over SOC alone based on the latest historical comparisons, but a 50% increase over historical control. In oncology, and in neuro-oncology in particular, that would represent a total coup over current SOC.

It isn't hard to see why the highly regarded PEI and the MHRA are seemingly so fond of DCVax-L, and apparently anxious to allow their citizens access to this promising new medicine.

Low CD4+ Patients

In a PR over the summer, NW Bio announced that along with trial enlargement they were also able to acquire regulatory approval to analyze CD4+ cell count as an additional prognostic factor. This is good, as otherwise you may inadvertently be comparing poor performing low CD4+ patients in the tx group with better performing high CD4+ count patients in the control group, or vice versa. Also, if one group is later found to have a predominance of these patients enrolled compared to the other, analysis of the data will now account for that (just as it does for other prognostic factors such as age, extent of resection, etc.).

However, after examining the study NW quoted from which they derived their 40% figure from more thoroughly, I've determined there may actually not even be any patients in the DCVax-L trial with CD4 counts below 200, and may actually be few with CD4 counts below 400.

In the study from which NW got their 40% figure (http://bit.ly/1pI86MG), even if we only considered baseline data (cell counts before receiving SOC), the % that would have been able to enroll in the DCVax-L trial would drop from 40% to 20%. I'll show below where I got this from. But the point is, those are baseline numbers, which drop significantly after receiving SOC. That 20% goes down to basically 0% when all things are considered. DCVax-L trial criteria states:

"Patients must have adequate bone marrow function.. absolute lymphocyte count >/= 1,000/mm3"

and the study quoted above notes:

"Subjects who developed grade III-IV CD4 count depression had significantly lower CD4 counts (458 vs. 887 cells/mm3, P<0.0001) and total lymphocyte counts (1,044 vs. 1,645 cells/mm3, P<0.001) before beginning radiation and temozolomide treatment than those who did not."

and

"The reduction in CD4 counts paralleled changes in total lymphocyte counts"

In the study quoted, those who had CD4 cell counts below 200 two months after receiving SOC had a median BASELINE lymphocyte count of 1,044, with a range of 331-2,790. About half of these (n=38) would have been denied entry into the DCVax-L trial if using their baseline figures only. Those of greater than 200 CD4 counts two months after SOC had (had is the operative word) a median baseline lymphocyte count of 1,645 with a range of 672-4,736. About 25% of these (n=58) would have been excluded from the trial just from their baseline cell counts (and those had CD4 counts over 200 two months after SOC).

Therefore, even before those patients in the study NW quoted had received SOC and thereby acquired lymphopenia, half of the 38 and 25% of the 58 were already too immune suppressed to be granted admittance into the DCVax-L trial. In fact, 33 of the 96 would have been turned away on baseline data alone.

Where did 40% come from in the study? The 38 patients represent 40% of the 96 total. But of these, 50% would not have made it into the DCVax-L trial from their baseline data alone. Now we're at 20%.

Also in the study, they may or may not have had Gliadel wafers post-surgery. That would exclude them from the DCVax-L trial. This may also have contributed to low CD4 levels. Further, in the study it appears a number of them had prolonged steroid use (how many for how long is undefined, however). That may also have had an effect (although perhaps not very large) on CD4 counts, and is an exclusion criteria for the DCVax-L trial.

Also of note is how many were "biopsy only," and required higher doses of steroids. The low CD4 group had an imbalance of them (although not quite stat sig):

"Instead, patients died early from progressive growth of their HGGs. One potential explanation for this finding is that highly immuno-compromised patients were poor prognosis patients with the largest postoperative tumor burden who required higher doses of glucocorticoids. Although this would be consistent with data in Table 1 showing that patients with lower CD4 counts at 2 months were older (60.9 vs. 56.6 years) and more likely to have been biopsied than resected (26% vs. 16%), these differences are not statistically significant. As noted in Table 1, patients with lower CD4 counts were more likely to be on glucocorticoids when beginning radiation and temozolomide treatment (92% vs. 79%, P 0.04)."

Of course, gross total or near gross total resection is an inclusion criteria necessary for admittance into the DCVax-L trial, and biopsy only is an exclusion criteria.

So, the above would have removed even more of the 38 patients that were found to have CD4 counts below 200 two months after receiving SOC. This may reduce the 20% down to 10-12%. But the figure is actually much lower, because those who seek to enroll in the DCVax-L trial must have a blood draw to determine eligibility between 2-4 weeks after having gone through SOC (months after those baseline data). Their cell counts will have already fallen off 30-50% over that time (see figure 2 on pg. 5 in the quoted study).

From this, and considering many in that study above had biopsy only with more extensive RT and steroid use, and used Gliadel wafers, etc., we can determine the number of patients that have entered the DCVax-L study with CD4 cell counts below 200 will be very few to none. In fact, there shouldn't be many with CD4 counts below 400, as in the study the median lymphocyte count of 1,044 correlated with a CD4 median of 401. Remember, a 1,000 lymphocyte count is the minimum requirement for entering the trial, and 2-4 weeks after SOC.

Any % of the DCVax-L trial participants most probably will not represent severely low CD4 patients (although this should also cause and improvement in tx effect, as CD4s play a central role in immunotherapies). However, there will be a wide range of CD4 levels, which should definitely paint a picture. Probably from the mid to upper 300s on up to over 2,000, with a median of around 800 or so (based on the demographic spread in that study). But there will almost certainly not be those with 30-150 CD4 counts that are severely immuno-suppressed.

DCVax-Direct and the Upcoming SITC Meeting

In collaboration with MD Anderson, Orlando Health and UCLA, NWBO will be presenting up to date data on the Ph I/II DCVax-Direct trial at the upcoming SITC meeting, Nov. 6-9. The abstract that was accepted and the study data are both embargoed until Nov. 4th, but the latter should contain new information accrued up to the date of the conference.

According to SITC guidelines:

-Verify the data presented in the abstract has not been published prior to November 6, 2014, or if previously published contains significant new data.

-Agree that the abstract submitted to the SITC 29th Annual Meeting is embargoed until 8:00 am EST on November 4, 2014

-Agree that, if accepted, the noted presenting author or a co-author will present the abstract at the 29th Annual Meeting.

The 11 study authors and their affiliations are:

Vivek Subbiah, MD, Assistant Professor, Department of Investigational Cancer Therapeutics, University of Texas M.D. Anderson Cancer Center Houston; Omar Kayaleh, MD; Orlando Health, Ravi Murthy, MD, MD Anderson Cancer Center, Texas; David Hong, MD, U. T. M. D. Anderson Cancer Center; Siqing Fu, MD U. T. M. D. Anderson Cancer Center; Aung Naing, MD U. T. M. D. Anderson Cancer Center, Texas; Anthony Conley, MD, U. T. M. D. Anderson Cancer Center; Chitra Hosing, MD, U. T. M. D. Anderson Cancer Center; Indreshpal Kaur, MD, U. T. M. D. Anderson Cancer Center; Robert Prins, PhD, ULCA; Funda Meric-Bernstam, MD, U. T. M. D. Anderson Cancer Center; Marnix Bosch, PhD, Northwest Biotherapeutics, Maryland.

NWBO will be presenting during the poster sessions on Nov. 7th, and the title of that poster is:

"Activated autologous dendritic cells injected intratumorally are able to overcome local and systemic immune suppression imposed by the tumor and its microenvironment."

The title is quite definitive. It represents an absolute statement, which is difficult to come by in scientific literature.

So central is the concept of immune suppression in oncology:

Generating an anti-tumor immune response is a multi-step process that is executed by effector T cells that can recognize and kill tumor targets. However, tumors employ multiple strategies to attenuate the effectiveness of T-cell-mediated attack. They achieve this by interfering with nearly every step required for effective immunity, from deregulation of antigen-presenting cells to establishment of a physical barrier at the vasculature that prevents homing of effector tumor-rejecting cells and the suppression of effector lymphocytes through the recruitment and activation of immunosuppressive cells such as myeloid-derived suppressor cells, tolerogenic monocytes, and T regulatory cells.

Apparently DCVax-Direct is "able to overcome tumor immune suppression, both locally and systemically." It will be interesting to examine the content of the soon to be released study data proving this point.

It is unknown whether the study data will be on several specific patients that have undergone the entire course of therapy (6 injections over 8 months) or available whole group data based on those that have received at least 5 of 6 injections (representing a minimum of 4 months on therapy). But whatever the basis for the paper, it has the backing of three world renowned leading medical institutions, and the data presented at the conference will later appear in a peer reviewed medical journal.

Preliminary Ph I data showed the following:

-By Jun 11, 2014, 20 patients had received at least 3 of the 6 total injections, and 13 of these 20 (65%) patients showed tumor cell death, tumor shrinkage, substantial accumulation of immune cells in the tumors, and/or stabilization of their disease.

-9 of the patients had received 4 of the 6 planned injections, and all 9 of these 9 patients showed tumor cell death, tumor shrinkage, substantial accumulation of immune cells in the tumors, and/or stabilization of the patients' disease.

-Biopsies taken in 3 of these 9 patients showed no live tumor cells in the tumor that was injected. These 3 cases include diverse, advanced and particularly aggressive cancers: 1 metastatic pancreatic cancer case, 1 metastatic colon cancer case and 1 metastatic sarcoma cancer case.

-One patient, Allan Butler, the first patient treated in this DCVax-Direct trial, was featured in "Stand Up to Cancer" on September 5th, on the National Geographic Channel. His primary injected advanced pancreatic cancer tumor showed 100% necrosis after 5 of 6 injections, and he has achieved stability of disease (this after all other chemotherapeutic options were exhausted and his cancer rebounded undeterred). He is now 20 months from initial diagnosis, far beyond the median overall survival in this indication, and almost one year from initiating therapy with DCVax-Direct.

Typically, pancreatic cancer patients who fail chemotherapeutic treatments do not live beyond 7 months, and statistically only 2% of those failed patients go on to live beyond a year. Clinical studies overall reveal that 50% of such advance stage IV pancreatic cancer patients die within six months and 77% die within one year. As few as 2% survive 18 months (today, Allan Butler is back to work full time).

By November, all 20 of these patients will have received at least 5 of the 6 planned injections, and most of the remaining 20 (36 planned was over-enrolled to 40 patients total) will likewise have received 5 of 6, with the remainder having received 4/6 (enrollment completed in early July).

Given that several have now completed the full 6 injections, it is likely that a detailed scientific analysis on their data will be presented in the study, as this includes the full course regimen of the trial. Should data continue to trend positively (and the choice of title might confirm this), the results would be truly unprecedented.

A Fast Regulatory Pathway for DCVax-Direct

Recently, the FDA granted Accelerated Approval (AA) to Keytruda for the treatment of advanced metastatic melanoma. AA is often based on easier and quicker to prove surrogate markers, such as Objective Response Rate (ORR). Confirmatory trials are required thereafter, but the treatment may immediately be marketed and made available to patients. Actually, the only real difference between AA and full MA is this very requirement.

But a look at the data shows that Keytruda wasn't especially impressive.

For the recommended 2 mg/kg dose based on data in 89 patients, the overall response rate was 24 percent (95% CI: 15, 34), with one complete response and 20 partial responses (21/89). At the time of analysis, 86 percent (18/21) of patients with objective responses had ongoing responses with durations ranging from 1.4+ to 8.5+ months, including eight patients with ongoing responses of 6 months or longer. Fourteen percent (3/21) had progression of disease 2.8, 2.9, and 8.2 months after initial response.

However, these patients had failed all other approved therapies. Similarly, DCVax-Direct patients suffer from inoperable metastatic tumors, and have likewise failed all other available therapies.

Tx data with Keytruda was limited to 89 patients for the approved dose. Another cohort was enrolled alongside the one quoted above with 84 patients at the same stage of disease. They received a higher dose of Keytruda but performed worse. There was no non-treatment control in this approval.

When there are no available therapies for an indication the approval process can be had much faster (as is evidenced with Keytruda). Should DCVax-Direct show an excellent safety profile with significant glimpses of efficacy, a follow up open-label study of around 150 patients (which can be completed in under a year once fully enrolled) may provide the basis for AA using ORR. Given the data available so far, and what will soon be published from SITC, it appears a likely scenario.

The potential market for DCVax-Direct is hard to conceptualize: all stage IV inoperable solid tumor cancers. They will focus their eventual efficacy trial on one indication--whichever appears to respond best to DCVax-Direct by the end of the 64 patient Ph I/II. If results of that larger trial show Direct is even modestly effective, AA will be nearly guaranteed. Thereafter they may submit studies testing DCVax-Direct to obtain approval via label extension for other indications (pancreatic, colon, sarcoma, etc.).

What's more, rather than compete against checkpoint inhibitors, DC vaccines theoretically should work synergistically with them. As Dr. Keith Black from Cedars-Sinai Medical Center pointed out:

Dr. Black is building on his success with vaccine strategies and new research is focusing on combination treatments, which combine dendritic cell vaccines with the use of check-point inhibitors.

The best-known example of a checkpoint protein is PD-L1 (for Programmed Death Ligand 1 and its receptor is PD-1). The body needs PD-L1 to keep T-cells from attacking healthy cells. To evade detection, cancer cells may up-regulate (speed up the production of) PD-L1 as a shielding mechanism. Checkpoint inhibitors work against checkpoint proteins to expose the shielded cancers to T-cells without causing immune cells to attack healthy tissue.

Dr. Black is very optimistic about this combination strategy, "It becomes a one-two punch, because DC vaccines teach the immune cells how to become activated against the cancer, and the checkpoint inhibitors are essentially releasing the brakes on the T cells and hyping them up."

Various studies are currently underway testing this theory in the clinical setting. With all of the publicity lately surrounding checkpoint inhibitors, if their efficacy is markedly improved by DC vaccination first, the latter will experience even more urgency to market.

Rebutting the Bear Thesis

There are really only three things the bears have re-stated over and over again concerning NWBO and their DCVax technology:

1) DC vaccines have been shown to be weak in the clinical trial setting (a la ICT-107). If approved, few will use the therapy, and the fate of the company that stands behind them will be similar to that of DNDN.

The information provided above already disproves this in large part (data on some 700 patients between the two meta-analysis studies and detailed modeling). But to go a step further, let's consider IMUC.

This Company conducted a randomized Ph II trial testing their lead product, ICT-107, in ND-GBM patients. The results showed that ICT-107 increased patient's OS and PFS by about 2 months each, respectively. In a subset analyzed that expressed the HLA-A2+ antigen (one of 6 in the vaccine), these rates increase to some 4.5 months PFS and 4.5 months OS. If they can reproduce those results in HLA-A2+ patients in a confirmatory Ph III trial, ICT-107 will certainly become an approved therapy for ND-GBM (recall that nothing has shown an improvement in treating GBM since Temodar, which increased OS by 2.6 months). HLA-A2+ would represent some 35% of GBM sufferers.

As a result of this data, which isn't exactly disappointing (Avastin on the other hand is disappointing--and is currently approved for recurrent GBM in the US, showing no increase in OS--it has also penetrated the market over 80%), many people lumped ICT-107 in with DCVax-L, as they both use DCs to educate the immune system on what to target.

However, there are vast differences between the two therapies, which have been enumerated ad nauseum. What many people are unaware of, however, is that a number of clinical trials in the academic setting confirm whole tumor lysate loaded DC vaccines like DCVax-L are far superior to antigen specific, peptide loaded DC vaccines:

Presenting the trial results, Dr. Yang said, "In the glioblastoma grade 4 group...overall survival in the whole tumor-pulsed lysate group is significantly improved compared to the [DCs] pulsed with peptide, and this difference was statistically significant, with a P value of .0357." Earlier results on 26 of the patients showed an overall survival of 35.5 months vs 17.5 months in favor of the whole-tumor lysate vaccine group.

Considering the entire group of 34 patients, survival at 1, 2, and 3 years for the whole-tumor lysate group was 91%, 55%, and 47% vs 50%, 33%, and 0% for the peptide antigen-pulsed DC group, respectively. Survivals of University of California-Los Angeles glioblastoma control patients receiving the current standard of care for the respective time points were 69%, 34%, and 21%.

He also monitored peripheral blood immune cells in the patients and found that the patients who received the whole-tumor lysate DC vaccine and who had the longest survival had decreased CD4+/CD25+ regulatory T cells (P = .029), which are immunosuppressors. Conversely, in the peptide-pulsed DC group, the investigators saw no change in the regulatory T cells. "This may potentially suggest a mechanism for this difference in overall survival," Dr. Yang said.

Also, in the ICT-107 trial, 25% of those in treatment group had 0 of 6 presenting antigens. This may have been an error in screening, but it certainly skewed results. Not only this, but there are any number of peptides that may be used to load DCs with, but only those that are also tumor rejection antigens are effective at training the immune system to destroy cells presenting them. And according to data published in Oncoimmunology, only a handful of tumor associated antigens (TAA) are also true tumor rejection antigens (TRA):

As discussed in detail in several recent reviews, ideal TAAs should not only be specifically expressed/overexpressed by malignant cells (to avoid, or at least minimize, autoimmune reactions against non-transformed tissues), but also behave as tumor-rejection antigens (TRAs), i.e., allow for the elicitation of an immune response that results in tumor eradication. Though only a few TAAs constitute bona fide TRAs.

No one really knows to what degree the proprietary ICT-107's six selected antigens are also bona fide TRAs, nor to what extent. This would certainly have an impact on the vaccine's effectiveness.

Also, it may be that ICT-107's strong Ph I results were due to having selected patients with better prognostic outlooks. Their Ph I results showed median PFS in newly diagnosed GBM patients of 16.9 months and median OS of 38.4 months. The DCVax-L Ph I showed about 24 months PFS and 36 months OS. Notice the difference in PFS. When one examines PFS and OS rates in patients with a better prognostic outlook they show quite similar to IMUC's Ph I data. However, DCVax-L proved truly capable of significantly delaying progression itself. IMUC's Ph I data can be explained away as that of healthy patients. NWBO's Ph I cannot.

Regarding DNDN and Provenge, let's start with the data. Provenge showed an improvement over placebo of 4.1 months OS in its approval trial. Of course, that would have made it the new SOC in the metastatic castration resistance prostate cancer space, if it wasn't for the 600% cheaper, far more aggressively marketed Zytiga (abiraterone acetate). Johnson and Johnson received approval for Zytiga around the same time as Provenge, but their data showed it actually edged out Provenge in improving OS:

A pre-specified interim overall survival (OS) analysis was performed when 552 events had occurred. This analysis demonstrated a statistically significant improvement in OS in patients receiving abiraterone acetate compared with patients who received the placebo. (HR = 0.646; 95 percent CI: 0.543, 0.768; p 0.0001). The median OS was 14.8 months for patients who received abiraterone acetate compared with 10.9 months OS for patients who received the placebo. An updated OS analysis, conducted after 775 events, demonstrated a median OS of 15.8 months for patients who received abiraterone acetate compared with 11.2 months for patients who received the placebo (HR = 0.740; 95 percent CI: 0.638, 0.859).

Zytiga showed 4.6 months improvement in OS. Really, what more is there to say? It doesn't require leukapheresis (much easier to administer), it doesn't cost $93K for three months of tx like Provenge, it's sponsored and heavily marketed by JnJ, and most importantly, is more effective than Provenge. Most insurers won't even subsidize the latter as a result, while Zytiga is forecast to earn over $2B in sales next year (2015).

Now, if instead Provenge showed 10 or 12 months OS over control, very few would choose Zytiga.

Comparing Provenge to DCVax-L is a faulty one on various levels, the most important one being potential competition--but let's start with the effectiveness of the two therapies:

In NWBO's Phase I/II multi-center clinical trial in late stage, metastatic prostate cancer, DCVax-Prostate added 18 months of patient survival (to reach overall survival of 38.7 months).

Provenge adds 4.1 months, Zytiga adds 4.5 months--DCVax-Prostate adds 18 months OS.

How about cost?

NWBO's DCVax will be priced in the range of $37,000 per year for up to 3 years of treatment. The pricing of DCVax will also be substantially below the price range of most antibody drugs and "targeted" drugs for cancer. Such drugs are typically priced at $60,000-80,000 per year, and can exceed $100,000 per year. Such drugs also carry significant side effects, and often only extend survival for as little as 10 weeks. The key to the substantial pricing advantage of DCVax is NWBO's proprietary batch manufacturing process together with its cryopreservation technology for frozen storage of the finished vaccine.

In that regard it's not only much cheaper than Provenge, but it's nearly half as expensive as Zytiga, which costs around $5K/month (DCVax would cost around $3K/month on average).

DCVax-Prostate is approved for a 600+ patient, Ph III trial. However, as the space is so crowded, with other novel therapies on the horizon looking to soon enter it, they have focused primarily on the GBM space, where there is literally no competition on the horizon with therapies to treat the entire ND-GBM population. Also, DCVax-L has been granted orphan drug status in the US and EU, which carries 7 and 10 years of marketing exclusivity respectively. In other words, there won't be any competition to deal with from like vaccines should they even reach the space during DCVax-L's potential "tenure."

There have also been no significant advances in treatments in the last 10 years in the GBM space--and that, Temodar, again only increased OS by 2.6 months. The public has been desperate for any advancement in therapy for decades now. Anecdotal studies and early clinical data suggest that DCVax-L may increase patient's lives by almost 2 years on average.

As you can see, comparisons drawn between DCVax-L and Provenge and between DCVax-L and ICT-107 are faulty, and therefore any negative sentiment derived from these comparisons is misplaced.

2) NWBO is a scam operation that funnels money from shareholders to Cognate Bioservices, owned by NWBO's CEO Linda Powers, who performs all of the manufacturing of DCVax for outrageous compensation. This represents a conflict of interest.

Calling NWBO a scam company would mean that they somehow managed to fool the PEI and MHRA, and recently hoodwinked MD Anderson, Orlando Health and UCLA to partake in this scheme with DCVax-Direct with them. The only thing used to prove the above bear argument is R & D expenses, most of which has nothing to do with Cognate.

But it should be mentioned that it is very difficult if not impossible to find a manufacturing facility willing to produce large quantities of vaccine and secure increased manufacturing capacity, in the case that such a vaccine owned by a dormant developmental stage biotech company is granted regulatory approval, including meeting international sanctions and manufacturing practices overseas for mere shares. Initially, that's all Cognate was given. Eventually they began receiving cash as well, but not with any impropriety compared to other companies' Ph III trial manufacturing expenses.

But the argument fails primarily on one major point--after investing millions of their own dollars into NWBO, if DCVax fails, Cognate will incur massive losses (all of their warrants will become worthless). They will only escape this situation with a profit if DCVax-L obtains Marketing Approval (MA).

3) The trial is clearly experiencing problems (for instance, needing to increase N) and is unlikely to meet its primary endpoint of 4 months improvement in PFS between groups. But even if it does, PFS is an unacceptable endpoint to FDA for MA.

All but the latter were already well covered in the body of this article. But regarding PFS as an endpoint, consider the following, noted by John Fauber of the Milwaukee Journal Sentinel:

Axitinib, manufactured by Pfizer, was allowed on the market based on a commonly used surrogate known as "progression-free survival," which means patients survived longer before doctors detected a tumor worsening. Patients given axitinib saw no noticeable progression of their disease for an average of 6.7 months, 2 months longer than the 4.7 months for those who got a control drug (P<0.0001, 95% CI). But patients who got axitinib did not live any longer. Before axitinib was approved, an FDA reviewer noted it would be the seventh drug for renal cell carcinoma approved by FDA since 2005. Only one of them, a drug known as temsirolimus (Torisel), had actually proven to help people live longer.

"While it is acknowledged that shrinking a tumor or preventing it from progressing may not be a direct measure of improvement in survival, symptoms, or function, as the magnitude of that shrinkage or delay in growth increases, our confidence that the result is likely to predict clinical benefit increases," Stephanie Yao, an FDA spokeswoman, said in an email.

Cross-over effect can also cause confounding of OS. When patients are allowed to cross-over from placebo to tx, the OS results may be skewed by introducing tx to placebo patients after progression (however, if the result is an OS that is far better than historical controls, there would be no question of tx effect on OS). Patients are in fact crossed-over to tx after progression in the DCVax-L trial. The article continues:

Last year, the FDA approved the drug trametinib (Mekinist) to treat metastatic melanoma in patients who had certain genetic mutations. The drug was approved because it increased progression-free survival by 3.3 months over standard chemotherapy.

But records show the agency initially wanted the maker of the drug, GlaxoSmithKline, to show an actual overall survival benefit as the primary measure of the drug's effectiveness. The FDA backed off that request and allowed the company to use the surrogate measure of progression-free survival.

A spokeswoman for GlaxoSmithKline said the company used the surrogate because that measure would not be affected if patients in the control group worsened and wanted to switch into the group getting trametinib. Often cancer clinical trials allow "crossover" of patients, which can make it more difficult to find out whether there is an actual survival benefit. In part, crossover is allowed for ethical reasons; it also creates an incentive for patients to enroll in clinical trials.

Considering the above, and also that Avastin was approved by the FDA based an increased PFS in treating recurrent GBM patients, even when no improvement in OS was found (subsequent studies without cross-over likewise saw no OS benefit), it appears that PFS is an acceptable endpoint to the FDA, just as has always been stated in FDA Guidelines.

The bears haven't provided a viewpoint that cannot be refuted. And in my opinion they are even easily refuted.

Conclusion

The anecdotal evidence of efficacy and modeling herein increases the likelihood that DCVax-L will find eventual regulatory marketing approval. The urgency of foreign regulators in getting it to patients as quickly as possible also confirms this.

A sum-of-the-parts analysis of NWBO based on product sales of DCVax-L (in excess of $1B/year for ND-GBM alone) would yield a market cap of over $3B. This figure doubles if NWBO obtains approval of DCVax-L for recurrent GBM as well (which seems likely if results from anecdotal studies repeat in a randomized trial). Temodar and Avastin saturated the market to over 80% penetration in under 2 years from approval--so great is the need in this space. It is too early of course to ascribe a market cap of $3B-$6B, but given the likelihood they achieve MA for DCVax-L, plus imminent reimbursement for treating German citizens under Hospital Exemption, a current market cap of between $800mm-$1.2B seems reasonable. This would equate to a further diluted share price of $12-$17. Analysts seem to agree.

DCVax-Direct valuation is hard to quantify. Even 30% penetration into the inoperable colon cancer or pancreatic cancer market would be well over $1B in annual sales for either. There are no approved therapies at a certain point for any stage IV inoperable cancer. Millions die each year in need of any therapy with the power to extend their lives and inprove their QoL for the time they have remaining. Considering the glimpses of efficacy and near flawless safety profile for the DCVax technology, that puts it high on the list of potential therapies to meet this growing need.

When considering the above, NWBO has the potential to fare as well or better than JAZZ, ONYX, PCYC, ICPT and a host of other small biotech companies that went on to attain much higher market caps or were bought out. The greater risk in this situation may be missing another one in the making.

These companies also had experienced negative sentiment and high short interest at times before approval, but afterwards many looked and said, "How did I miss that?" Hind sight is always 20/20. Even not getting AAPL at a good price is a regret many investors carry.

The above investment thesis shows that NWBO may very possibly follow successful biotech company's footsteps. Everything is there.