Northwest Bio: Buy Again, Wait For Regulatory Process
May 21, 2022
Summary
Data is excellent.
I explain the bearish commentary here.
The stock may go up on NDA announcement and other regulatory steps.
After 20 years of waiting, Northwest Biotherapeutics (OTCQB:NWBO) declared results last week. And to use a four-word opinion - those results were outstanding.
Yet the stock had a rollercoaster ride, going up 300% at one point and then subsiding to below its pre-data position.
The reason: a concerted bearish commentary against this small company. 77 million shares changed hands on the fateful day, May 10, when it finally announced results. Average historical volume of trading is less than a million. However, note the low short interest; either the market does not believe in the bearish commentary anymore, or the shorts have closed their positions at these low prices. I doubt that second conditional because the price may have gone up when shorts were trying to cover. So many would not have waited for the price to fall.
So how was such a commentary launched against a company with outstanding data? Let me explain.
First, the trial met both its pre-specified endpoints, which were:
Primary Outcome Measures:
The primary objective of this study is to compare overall survival (OS) between patients randomized to DCVax-L and control patients from comparable, contemporaneous trials who received standard of care therapy only, in newly diagnosed glioblastoma. [ Time Frame: Until death ]
Secondary Outcome Measures:
The first secondary objective is to compare overall survival (OS) between patients randomized to placebo who received DCVax-L treatment following disease recurrence, and control patients from comparable, contemporaneous clinical trials, in recurrent GBM. [ Time Frame: Until death ]
A few things to note here. First, OS is the absolute gold standard in cancer trials, and here OS was measured for two groups of patients. The first group consisted of those patients who were randomized to DCVax-L directly. The second group consisted of those patients who were randomized to placebo first, but then took DCVax-L anyway following disease recurrence.
Both groups met the clinical endpoint of OS with clean and absolute statistical significance.
The second point to note here is that there is no active control arm here. Bears have tried to make a big deal out of it but what they don't divulge to you is there is no control drug because there are none. Temodar is the only approved drug in GBM and its data is so poor as to make it effectively useless. In primary GBM, temodar gives a 4-month OS benefit and mOS of 12 months, while in recurrent GBM, 12 month OS was observed in 36% of patients. In many ways, it is better to look at historical records than a control drug - in my opinion, it produces a cleaner record.
There's a third point and at least one analyst who has been pretty vocally anti-NWBO has made a big deal about it after the trial data was published. In 2020, NWBO officially changed the study protocol to replace original endpoints to new ones. Here's the text from their March 2021 10-K:
The statistical analysis plan that we submitted to regulators for the Phase III trial embodies a different primary endpoint and secondary endpoint than did the original Protocol for the trial. Under the Protocol the primary endpoint was progression free survival, or PFS, and the secondary endpoint was overall survival, or OS. Both of these endpoints were confounded: the PFS endpoint by pseudo-progression, and the OS endpoint by the "crossover" provision in the trial design, which allowed all of the patients in the trial to cross over to DCVax-L treatment after tumor recurrence (while remaining blinded as to which treatment they received before tumor recurrence).
So what is pseudoprogression? It is an initial flare-up of the tumor after immunotherapy, which may change to a more favorable response. As this paper defines it:
Likewise, clinical experience with ICI has shown that it is common to observe early "tumor flare," described as pseudo-progression, which is considered an intratumoral inflammatory process that can last weeks to months before a favorable response is ultimately achieved.
ICI means immune checkpoint inhibitor. Pseudoprogression is a common enough phenomenon in immune therapies, and diagnostic techniques - see here - have been studied to try and distinguish a pseudoprogression from a real progression. Outside of diagnostic techniques, a good way, where possible, is to ignore progression altogether and go with an OS endpoint - exactly what NWBO has done.
In plainspeak, when you take an immunotherapy medicine, the drug activity itself may cause the tumor to get inflamed, basically acting as if disease has progressed. However, if the progression then subsides, a simple PFS endpoint is not going to be able to measure it. What is then needed is overall survival, which can tell us whether the progression was real - causing death, for instance - or it was fake, subsiding later to produce a complete or partial response, and ultimately improving overall survival.
This is exactly what happened with the DCVax-L trial. Before data was unblinded, they changed the PFS endpoint to a much more robust OS endpoint, and they saw success - so if bears are telling you otherwise, be sure you know what is happening.
Dr Linda Liau, the originator of the DCVax-L therapy, has consistently been aware of, and tried to avoid, pseudoprogression from the trial. As early as 2015, we see her adapting the design to avoid confounding it with pseudoprogression:
Progression needed to be determined by independent review on two consecutive scans for early progressor classification to avoid enrolling patients with pseudoprogression.
Even after a few years, the same problem crops up and protocol has to be developed to avoid it:
1. Screen-Fail for protocol 020221 due to either: - Radiographic evidence of disease progression or pseudoprogression at the Baseline visit under protocol 020221, as determined by central imaging review, OR - Insufficient vaccine manufactured for protocol 020221 (i.e. less than 5 doses).
And in 2018 as well:
Patients were excluded if they already had apparent early disease progression/recurrence or pseudo-progression at the baseline visit, similar to the inclusion/exclusion criteria of other recent trials in glioblastoma..
The study's primary endpoint is PFS, and the secondary endpoint is OS. PFS has not yet been evaluated for this publication and will be the subject of later analyses to allow for central, multi-factorial assessment by an expert panel, using criteria currently emerging as appropriate for immune therapy in this patient population where progression can be complex to determine and pseudo-progression is a known confounding phenomenon.
Progressive disease or pseudo-progression (which are indistinguishable at this point)..
These quotes tell me why the company finally changes the original protocol itself, from PFS to OS. There is nothing controversial here, and for shorts to say there is one (which involves prominent scientists like Dr Liau, as seen in the quotes above) may be overplaying their hands. NWBO can be a poor investment for many reasons - but not because of this one. Like Dr Paul Muholland says:
Original primary endpoint, when trial designed in 2007: Progression-Free Survival (PFS) While the trial was underway, Pseudo-progression (PsPD) became recognized as major issue -- difficulty distinguishing real vs. PsPD is an even bigger issue with immune cell therapies: vaccine-induced infiltration of immune cells PFS endpoint not feasible due to PsPD. So, SAP focused on OS, and specified OS as the primary endpoint before unblinding.
One more issue the bears which has confused investors is the crossover trial design and how that led to adding a crossover component to the endpoints. First, here's what Dr Paul Mulholland says about the need for crossover:
Crossover was necessary for feasibility and ethical reasons: Necessary for enrollment and retention of patients in era when immune therapies not yet generally viewed as promising for cancer Important to justify all patients undergoing invasive leukapheresis procedure. No benefit to placebo patients unless they could receive their autologous product made from the leukapheresis
In effect, 90% of patients went on to take DCVax-L over the years. There's a necessity to differentiate between crossover patients and originally DCVax-L randomized patients, which is why the new secondary endpoint was introduced. So again, I think this invalidates the bearish concerns.
Moreover, this also explains the following from the Paul Mulholland presentation:
OS endpoints could not be within-study comparisons of DCVax-L patients vs. placebo patients, because placebo patients received DCVax-L following crossover. So, the OS endpoints compared DCVax-L patients with external controls. This approach fits well with growing commentary in support of streamlined trial designs and use of external controls where classic within-study comparisons are not feasible.
This is why external controls were used; because internal controls, the actual patients, found DCVax-L so good that they went for it en masse.
These are the final data:
DCVax-L data
DCVax-L data (Company website)
The data speaks for itself. Look at those survival tail data. No other GBM trial has shown such improvements over historic controls in long-term survival curve tails.
Before I conclude, let's not forget the excellent safety data, which was comparable to placebo. Of nearly 3000 treatment injections, there were only 5 SAEs. Temodar has a terrible safety profile.
Financials
NWBO has a market cap of $707mn and a cash balance of $7mn. I mentioned a loan in my previous articles with an interesting angle:
Here's some detail on a new $15mn loan they received:
On November 22, 2021, Northwest Biotherapeutics, Inc. (the "Company") entered into a loan financing with Streeterville Capital, LLC (the "Lender") pursuant to which the Company received net proceeds of $15,000,000 (the "Loan"). The Loan has a maturity of 22 months. No payments are due for the first 8 months of the Loan term. …Upon announcement of the top line data ("TLD") from the Company's Phase III clinical trial of DCVax®-L for glioblastoma brain cancer, the Lender has a then springing right to exchange the outstanding balance of the loan for common shares priced at the price of the first private placement transaction following TLD less a 12% discount and to purchase another 50% of that number of shares at the same price. This then-springing right expires 14 days after the post-TLD private placement.
As it says here, the lender can transform the loan to equity if TLD is announced. I will wait to see if they do it because prices are back to where they were before. Since the company has now announced strong TLD, I am hoping they will get access to more funds to run this through the regulatory process.
However, longs must accept that NWBO's finances are in dire straits. They spent $13mn in the previous quarter, so they really don't have money to survive another. Expect fundraising on this data; we would be lucky if it is not dilutive.
Bottomline
NWBO is again a buy. These prices are low, and the stock, with excellent TLD, is now heavily derisked.
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