Replies to post #62647 on NorthWest Biotherapeutics Inc (NWBO)

[Chiugray]

Dan_P, Sorry for the late reply. My only point about raising these 2 scenarios is to underline the asymmetric investment opportunity we have now with NWBO at $0.80/sh. I am the first to admit that while working I might daydream about putting money in Stock #1, having it double, moving it all to Stock #2, and having that double too. Then I imagine myself riding high, and if it happened a 3rd time, well I could just as well retire early. ?

I wanted to show here that even in this daydream scenario (doubling an investment and doubling it again, 4 times), the returns are still less than if NWBO’s stock price recovers from today’s woefully undervalued $0.80/sh to $12/sh, the price just a couple of weeks before the new patient screening hold took place.

Scenario A (doubling 4 times) provides a 7.5X return on investment or a 650% profit.
Scenario B (NWBO goes to $12/sh) provides a 15X return or a 1,400% profit.

The second question is related to risk. Obviously the probability of Scenario A is unrealistically small that one would not practically invest in this way.

Scenario B is the risk profile for DCVAX-L Phase 3 to succeed or fail, whether it be in a couple of days or in 9 months. Regardless the risk profile as determined by each investor based on their own due diligence should not have objectively changed because Phase 3 is blinded, and nobody knows the results.

What did change in the last 6 months is the reward side of the risk / reward profile because the stock price dropped from $12/sh to $0.8/sh, and that provides an asymmetric opportunity for a 15X return.

Also consider: DiMassi study 2/11/13: slide 10, Phase Transition Probabilities for Cancer Drugs by Cancer Type where the probability of moving from Phase 3 to NDA/BLA submission is 41.1%.
http://www.nationalacademies.org/hmd/~/media/3288F1F02DDB45D19A6A212B6AA3A78E.ashx

Although 41% is just a historical average probability of success and has no direct correlation, it is a strong data point.

With regards to the potential stock price if Phase 3 is ultimately successful, consider this:
Smith on Stocks 3/22/16:
"I think that if one year from now, top line results are not in but DCVax-L is judged to have a reasonable chance of success and the phase 2 trials with DCVax-L and DCVax Direct are ongoing, that the market capitalization could be $500 million to $1 billion. Remember that this broadly describes the current market view of Kite and Juno which have market capitalizations of $3.7 billion and $2.1 billion respectively. If DCVax-L does succeed in phase 3 and the phase 2 trials of DCVax-L and DCVax Direct are viewed optimistically, the market capitalization could be $5 billion."

Assuming Phase 3 succeeds, at a $5B market cap, 170M fully diluted shares (150M now + 20M to raise an additional $100M at $5/sh), i calculate NWBO’s price to be $29/sh.

Question 1: Which scenario below gives you a higher return?

Scenario A: Invest $40, $10 on 4 different stocks. Each one will double in price. In the perfect world, your timing is perfect. The $10 investment in Stock #1 doubles in price first; you sell it and move 100% of the proceeds ($20) to Stock #2 where you already have a $10 stake in. Stock #2 price/sh then magically doubles in price; you sell that ($60) and invest 100% of the proceeds into Stock #3. Then Stock #3 magically doubles on queue, and you repeat the process, moving all the funds into Stock #4. Miraculously Stock #4 then goes on to double as well. In this scenario you hit the jackpot!

Scenario B: Invest $40 into NWBO today at $0.80/sh. Upon regulatory resolution of the current hold on recruitment for DCVAX-L, which can come any day now, NWBO's stock recovers from $0.80 to it's previous high of $12/sh price.

Question 2: Given what we know that we don't know, what is the relative investment risk / reward profile of each scenario?