NorthWest Biotherapeutics Inc (NWBO)

[Paullee]

Northwest Biotherapeutics: A Spike On Their Expected Imminent Approval
Apr. 22, 2025 11:46 AM ETNorthwest Biotherapeutics, Inc. (NWBO) StockNWBO

Galzus Research

Summary
Northwest Biotherapeutics is awaiting UK approval for DCVax-L, with a recent 40% share price spike due to speculation of imminent drug approval, in my opinion.
Despite promising glioblastoma trial results, NWBO faces financial instability, heavy dilution, and an uncertain market size, making it a risky investment.
Ongoing litigation over alleged stock spoofing could potentially bring a financial windfall, but its outcome remains uncertain.
With a $500 million valuation and no approved product, NWBO's resilience is notable, but I maintain a "Sell" sentiment due to high risks.
Balloon floating over metal spikes

Richard Drury

Topline Summary and Update
Northwest Biotherapeutics, Inc. (OTCQB:NWBO) is one of those undying contenders in the cell therapy space, having been stagnated in the purgatory between publishing a nominally positive, though by no means unimpeachable, phase 3 trial in glioblastoma several years ago. They, and shareholders, have been anxiously awaiting notice of approval from the United Kingdom regulators since late 2023. Heading into the Easter weekend, the company saw a massive spike in share price, a 40% increase, presumably due to speculation of an announcement about an approval decision that is long overdue (per the UK's stated goals).

Today, I want to take another look at how the investment thesis is continuing to evolve, some of the conversations that have surrounded NWBO in a period of apparent blackout of communication, and the ongoing efforts to further build on the DCVax-L story beyond what has been debated ad nauseam since the presentation and publication of their phase 3 trial.

Pipeline Updates, the Big Questions
What is not new about NWBO?

If you have not been following the NWBO clinical story closely for years, you could easily miss what they have accomplished to date. This has been covered by several analysts on Seeking Alpha, most notably Avisol Capital Partners, and in my most recent article on the company where I went relatively deep into some concerns with their phase 3 trial and subsequent submission for approval. If you want to learn more about that older story, please check those articles out. Here are some of the main points you will take away from those:

The published phase 3 trial demonstrated a statistically significant improvement in median overall survival for patients with glioblastoma when added to standard of care temozolomide after surgery and chemoradiation therapy.
There has been significant criticism of the study conduct since it shifted its primary endpoint from progression-free survival, the stated reason being that DCVax-L treatment is thought to lead to infiltration of T cells into the tumor site, and this can be misinterpreted as progression (a phenomenon called pseudoprogression).
The control arm is not a placebo from the randomized cohort of patients in the study, but rather one constructed from several "contemporary" trials with varying robustness in terms of reporting patient prognostic factors and treatment patterns.
DCVax-L was submitted for approval in patients with newly diagnosed and recurrent glioblastoma to the UK's MHRA on December 21, 2023.
The company has not disclosed any communication from the MHRA, for good or ill, indicating that no news is likely relatively good news. No CMC concerns have been identified, and the agency has presumably proffered no response to NWBO to date.
The MHRA has a stated timetable of 150 days to review "well-prepared" marketing authorization applications, but the agency has fallen substantially behind on reviews across the board. There have been over 300 working days since the initial submission for approval.
No major safety concerns have been identified with dendritic cell therapy to date.
These are the main facts that stand as they relate to the DCVax-L approval. Everyone is waiting, and a decision is expected to be rendered at any time. I have had conversations with both shareholders and opponents of NWBO, and my feelings on the question of "will this be approved?" continue to amount to the following: I think the results are reasonable enough to not be surprised if DCVax-L gets approved (mainly due to the dire unmet need in the glioblastoma space). I will also not be shocked to see the MHRA come back with issues that need to be addressed.

It is worth noting that NWBO has put considerable effort into building out manufacturing capacity for DCVax-L, with design work for a GMP-compatible system for preparing the drug being moved forward (dubbed Flaskworks). It is a linchpin piece for current shareholders highlighting the confidence that NWBO management has in getting this approval from the MHRA. It is hoped by shareholders and the company that Flaskworks will serve as a springboard to addressing notable challenges in cell therapy in terms of scalability and cost.

Continuing clinical development of NWBO's dendritic cell therapy

There are some other signs of life for the DCVax platform and dendritic cell therapy at large, although results are limited to very early clinical trials to date. The most exciting development in the last year has arguably been the opening of several phase 2 trials in collaboration with Roswell Park Comprehensive Cancer Center using a platform that NWBO licensed last year. These studies are not currently listed on NWBO's website, but they serve as an important ongoing development for the company.

There has been an interesting development published by Linda Liau, one of the Scientific Advisory Board members for NWBO and the main mind behind DCVax-L. In a randomized, phase 2 trial published in Nature Communications, researchers combined a product called ATL-DC (fundamentally the same as DCVax-L) with various "adjuvants," most notably a Toll-like receptor family agonist (either poly-ICLC or resiquimod).

A total of 23 patients were randomly assigned to receive ATL-DC plus either poly-ICLC (9 patients), resiquimod (9 patients), or a placebo (5 patients). All patients had glioma grade III or grade IV (grade IV being glioblastoma). In the full cohort, the median overall survival was substantially improved with the addition of poly-ICLC (52.5 months) compared with placebo (7.7 months), although the authors did note that the study was not powered to formally compare these groups and that patients in the placebo arm had more adverse prognostic features, so it is possible that arm underperformed what you would expect.

Notably, all 4 patients with IDH-mutated grade III glioma remained alive with ATL-DC plus poly-ICLC. These findings, if confirmed in a more well-powered trial, could be a remarkable boon for patients with these brain tumors. Of course, there is a strong tendency for findings to regress to the mean, and outstanding early results tend not to be reproducible. So I view this as positive, but too early to make a definitive judgment about the prospects of outstanding benefits from these combinations.

I do, however, eagerly await any updates on the opening of a new trial. NWBO has a license and supply agreement in place for TLR agonists, and they have disclosed that they're in talks with other companies to in-license booster agents. They are also apparently designing a new combination trial, although details have not been divulged.

Litigation Updates
If you want to go down a real rabbit hole, there is another seemingly important narrative developing for NWBO. Specifically NWBO alleges "that the market makers deliberately engaged in repeated manipulative spoofing of its stock from December 5, 2017 – August 1, 2022, causing NWBO to sell more than 274 million shares at artificially depressed prices in violation of Section 10(b), Rule 10b-5 and Section 9(a)(2) of the Securities Exchange Act of 1934."

Following the breadcrumb trail of this lawsuit is X user hoffmann6368, who has continually followed the story for years and offers interesting insights into how the proceedings are progressing. He wrote an article 2 years ago demonstrating some public evidence for spoofing, highlighting the alleged damage that it did to NWBO's share price.

To date, the proceedings have mainly followed along the lines of a "will they/won't they" in terms of dismissing the case outright (in favor of the defendants, including Citadel Securities, Canaccord Genuity, and others) versus moving forward toward discovery and court. So far, the proceedings have marched on with no sign of going poorly for NWBO. However, we do not know what damages the company stands to collect if the case goes their way.

Financial Overview
As of the end of 2024, NWBO held $2.2 million in cash and equivalents, with no other liquid assets. They had current convertible notes, notes payable, and a contingent payable derivative liability totaling $42 million. Non-current liabilities totaled $37.4 million.

For 2024, NWBO had $66.5 million in operating losses, with other expenses bringing the net loss for the year to $83.8 million. The actual cash used for the year was $57 million, offset through various financing vehicles, notably:

$14.2 million in issuance of common shares.
$1.5 million from exercise of warrants.
$34 million from the issuance of notes payable and convertible notes payable.
These financing arrangements were used to basically fully offset the net loss for the year. This is similar to how they were able to fund operations in 2023 and in prior years as well. This has led to increases in interest expense, and while this has kept the lights on, it is worth noting that it has contributed to substantial dilution of the common stock year over year:

2025: 1.391 billion shares.
2024: 1.190 billion shares.
2023: 1.073 billion shares.
2022: 0.960 billion shares.
2021: 0.842 billion shares.
2020: 0.649 billion shares.
It is also very much worth bringing up that in the annual filing, NWBO has listed the following related to their ability to continue operations without an infusion of capital:

We depend upon our ability, and will continue to attempt, to secure equity and/or debt financing. We cannot be certain that additional funding will be available on acceptable terms, or at all. Our management determined that there was substantial doubt about our ability to continue as a going concern within one year after the consolidated financial statements were issued, and management’s concerns about our ability to continue as a going concern within the year following this report persist.

To be fair, this statement was present in the Q3 2024 filing, and similar statements have been included in filings going back further than 2019, and NWBO is still here and kicking. So make of that what you will, and factor it into the investment thesis. They do have access to up to $50 million in additional financing through a deal with YA II PN, Ltd that began last December, so they're not quite going anywhere yet, either.

Strengths and Risks
Strength - On the precipice of a momentous regulatory decision

NWBO continues to find itself on the cusp of getting their approval that has seemed just out of reach for years now. Shareholders and articles have speculated on when the MHRA will render a decision, and I, for one, continue to think that an approval is likely, owing to the nominally positive data we've seen so far and the frankly dire unmet need that is glioblastoma. NWBO has a real shot at becoming a commercial company in the near future.

Risk - Uncertain market size for the approved label

Glioblastoma affects well over 200,000 people a year around the world, and it's recognized as a major area of unmet need. However, it's important to keep in mind that the first approval (and the only one submitted by NWBO to date) is restricted to the United Kingdom, where that number is more like 3200 patients per year.

Not all of these patients will be amenable to surgery, which is necessary to acquire the tissue needed to pulse the patient's dendritic cells with tumor lysate. It has not been disclosed how many patients were screened to enroll the 223 patients in the JAMA study, but it did take 94 centers across 4 countries.

We don't yet know the cost, but if the projection of around $54,000 (based on the projected $37,000 in 2011 adjusted for inflation) per year per patient, then capturing all 3200 patients in the UK would yield $172.8 million in new annual earnings per year. This ignores the population of patients currently living with glioblastoma, of course, but given that the 5-year survival probability is only around 5%-10%, this is unfortunately not going to be a large patient population that stands to benefit from an approval.

So if that pricing is correct, the ceiling for the UK cohort of patients with glioblastoma is relatively set, and of course, they won't be able to penetrate the entire market. Obviously, this projected cost is very old. Moreover, there is the possibility of patients from other countries going to the United Kingdom for treatment, although it is very difficult to guess how many patients with glioblastoma want to travel that far and are willing/able to pay.

Couple that with a payer in the UK that does not have a history of playing nice with cell therapies, initially rejecting reimbursement of various CAR T-cell therapies due to cost concerns. And even if the MHRA does not have grave concerns, that does not mean that the GBM results will pass muster as being worth reimbursement.

Risk - Dilution has and may continue to erode investor potential

NWBO has done a remarkable job in keeping the lights on through various vehicles without having issued a formal public placement, meaning from the surface, it would appear as though this company never dilutes its common shareholders. Of course, they have a convertible note arrangement that can bring in tens of millions of dollars left.

With 1.7 billion shares authorized, NWBO can continue to issue common stock to fund operations for probably a few more years before needing to up that limit. Unfortunately, that increases the potential erosion of a share purchase today, to the tune of around 22% further potential dilution. They have also issued more preferred shares to fund operations, which can put common shareholders further back in line when it comes to returns.

Bottom Line Summary
NWBO continues to present a remarkably tenacious investment scenario. They've managed to scratch and scrape together funds for years and years to keep the lights on, and they're very close to realizing a dream of developmental biotechs: a drug approval.

This dream has contributed to a frankly outlandish valuation, considering the challenges the company has faced. As I write this, NWBO is worth almost $500 million. The market says that right this moment, at a price-to-sales ratio of 5, NWBO is worth a company making $100 million in annual revenues.

Compare that to the situation of a company like Adaptimmune, which has ha cell therapy approved and has launched its product and is generating sales. They have almost $100 million in liquidity, revenues, growing reach, and another drug approval likely in 2026, and the market is valuing them at just $60 million. NWBO sits at almost 10-fold higher with no approved product.

It's a testament to the resilience, in a manner of speaking, of the shareholders in this stock. But it is what gives me continued pause on diving in with a "Buy" sentiment on this equity. Even though we're talking about a penny stock, it's a penny stock with a massive outstanding share count, raising its overall valuation.

Shareholders are currently anticipating news on a few fronts. First, approval of DCVax-L in the UK. Second, news of the lawsuit that they hope will bring an infusion of cash. Third, a collaboration with a big pharma partner to fund the initial commercial launch, or possibly an entire acquisition at a steep premium.

But shareholders are not anticipating the challenges that come when that approval news comes. Unless it's a serious surprise, regulatory approvals are frequently "sell the news" events, and then NWBO needs to start executing on launch and sales. With 25 full-time employees (supplemented by consultants), it is unclear if the company is geared up for launch, so the success of the commercialization is far from a known quantity.

For these reasons, NWBO continues to present a too-risky proposition, even if you assume that approval is coming. I continue to hold a "Sell" sentiment at these levels.