NorthWest Biotherapeutics Inc (NWBO)

[Chiugray]

Continuing the MM's 1.5B synthetic naked shorting hypothesis.

The (hypothetical) Wargame:
Into the financial wargame strategies of (defendant) Market Makers (MM) and (plaintiff) NWBO.
(All strawman numbers for illustration purposes, for education/information and a fresh perspective)

The Shorts
Why 1.5B synthetic naked shorts?

The Setup: MM’s risk management, their assessed Cushion
- Retail shares: 1.5B naked + 1.6B OS shares = 3.1B float shares
- Convertible warrants and notes (MMs directly buy) overhang: 339M
- NWBO financing for commercial expansion: additional shares TBD

The MM covering math:
- 40% of Retail shares will likely sell over 90 days: 1.26B shares
- Pay a small premium to buy convertibles notes direct from Note Lenders: 0.34B shares
- 40% of NWBO financing: Estimate offering will be 50M shares, and they can obtain 20M shares
- Note: A financing suppresses price and puts a “cap” on any near term appreciation, especially in first 90 days after approval.
- Total: 1.62B shares

Because of above, MMs believe they are safe to create synthetic naked short contracts for up to 1.6B shares. Even in the case of NWBO approval, they figure they are insulated from this turning into a giant short squeeze scenario.

Why? Because Short Hedge Funds pay very large fees to create and maintain such contracts.


NWBO Wargame strategy
Key catalyst: MHRA approval of DCVax-L for GBM

Counter moves:

1. Retail shares: Drop multiple PRs and positive catalysts in a multi-step roll out.
- Example: MHRA approval, NICE, Flaskworks, opening London Welbeck leukapheresis facility, Phase 2 Direct, uplisting to exchange, etc.
- Retail holds strong. New money buyers and existing Retail buy back. That leads to a net 10% leak, not 40%.

2. 339M convertible overhang: If MMs can negotiate, so can NWBO. NWBO secures a “white knight” buyer. Incentive for them is buy cheap without running up the price. 339M share cushion drops to 0.

3. NWBO financing: Instead of a typical Financing via broker, NWBO does an ATM (At-The-Market) financing program.
- Short squeeze prices and volatility in Month 1 “Shakeout” and Month 2 “First betrayal” (my previous posts) are substantial and NWBO can raise early and substantial cash amounts at peak prices with minimal dilution.
- This pushes out a normal expansion financing until later, at higher prices. The traditional “financing” doesn’t put a cap on price appreciation.
- ATM is for fewer shares. Say only 10M shares in ATM are sold to MM to cover, but they will be sold at “timed” higher, squeezed prices.
- The safety valve for MMs buying shares in the offering is closed out.

Summary
- NWBO shrinks the MM’s anticipated supply of 1.62B shares to 0.32B shares.
- MMs face a 1.29B share structural deficit
- In my “Modeling a ‘Large’ short squeeze scenario” post, I figure a short squeeze of this magnitude takes 3 months, as each layer of naked shorting institution capitulates.