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Money Week
Three ways to profit from mergers

Dec 23, 2009


Biotechnology

With drug pipeline woes continuing for big pharmaceutical companies, the quickest remedy is to buy compelling biotech firms.

Although no credible rumors have surfaced and management hasn't indicated that it's even interested in a deal, I'd put Northwest Biotherapeutics (OTC BB: NWBO.OB) on my shortlist of takeover targets in this area.

As I wrote back in November, the company's DCVax treatments for prostate cancer, plus the most lethal type of brain cancer - Glioblastoma multiforme - have demonstrated significant promise.

For instance, the median survival time for patients receiving Northwest's DCVax-Brain treatment checked in at 36.4 months, more than double the standard of care (surgery, plus radiation and chemotherapy).

The results prompted Dr. Ronald Warnick, Chairman of the Mayfield Clinic and Director of the Brain Tumor Center at the UC Neuroscience Institute to declare, "DCVax has real potential to become a standard therapy for glioblastoma."

In addition, Northwest's recent success in raising $2.1 million in funding (per its September 28, 8-k filing) shows that investors also believe the company's treatments hold promise. Receipt of a US patent for its automated manufacturing process could also attract potential suitors, as mainstream interest in immunotherapies picks up and big pharmaceutical companies look to secure key intellectual property.

Again, this is a small company that still has to complete large clinical trials. But for a potential suitor, the early results could be promising enough to entice them to make an offer.

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