Northwest Biotherapeutics, Inc (OTCMKTS:NWBO) has been beaten down over the years, but just recently started to show some signs of support and a touch of upward momentum. That was apparently enough for the company to go to the market and withdraw another sum (in return for more shares headed out). Specifically, the company announced that it has entered into definitive agreements with institutional investors for a registered direct offering with gross proceeds of $1.75 million.
According to the release, “in the transaction, the Company will sell approximately 8.75 million shares of common stock at a purchase price of $0.20 per share. Additionally, the investors will receive five year warrants to purchase up to approximately 4.375 million shares of common stock with an exercise price of $0.22 per share.” The market didn’t like it, sinking the stock nearly 20%.
Northwest Biotherapeutics, Inc (OTCMKTS:NWBO) bills itself as a development stage biotechnology company focused on discovering, developing and commercializing immunotherapy products that generate and enhance immune system responses to treat cancer.
NWBO operates in the United States and is incorporated in Delaware, USA.
According to company materials, “Northwest Biotherapeutics is a biotechnology company focused on developing personalized immunotherapy products designed to treat cancers more effectively than current treatments, without toxicities of the kind associated with chemotherapies, and on a cost-effective basis, in both the United States and Europe. The Company has a broad platform technology for DCVax dendritic cell-based vaccines. The Company’s lead program is a 331-patient Phase III trial in newly diagnosed Glioblastoma multiforme (GBM). GBM is the most aggressive and lethal form of brain cancer, and is an “orphan disease.” The Company is also pursuing a Phase I/II trial with DCVax-Direct for all types of inoperable solid tumor cancers. It has completed the 40-patient Phase I portion of the trial, and is preparing for the Phase II portion. The Company previously conducted a Phase I/II trial with DCVax-L for metastatic ovarian cancer together with the University of Pennsylvania.”
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As noted above, the company just announced that it was moving to capitalize on recent support and issue more shares as part of a direct offering.
According to the release, Rodman & Renshaw, a unit of H.C. Wainwright & Co., acted as the exclusive placement agent for the transaction. The placement is expected to close on or about September 22, 2017, subject to satisfaction of customary closing conditions.
The problem with this move is that it sets a further precedence for current and prospective secondary market shareholders. The message is: you have no protection from dilution. When the stock finds support, the company is going to monetize it immediately.
Whether or not that is truly the case is irrelevant. The point is the optics of the thing. It’s very hard to find new opportunities for support or upward momentum if shareholders and prospective investors believe they will only end up as the sucker in a foil for more fundraising. To heal that sentiment, the company needs to release a statement explaining the move and a precise accounting for deployment of the new funds so as to characterize this as a special situation rather than just another step in a trend of dilution.
According to the release, the deal was actually built on a shelf registration from last year in October.
Recent action has seen a bit less than 370% during the past month in terms of shareholder gains in the stock. Market participants may want to pay attention to this stock. NWBO is a stock whose past is littered with sudden rips. Furthermore, the name has benefitted from a jump in recent trading volume to the tune of 77% beyond its prior sustained average level.
Now commanding a market cap of $50.3M, NWBO has virtually no cash reported on the books, which must be weighed relative to about $532K in total current liabilities. NWBO is pulling in trailing 12-month revenues of $363K. In addition, the company is seeing recent top line growth, with sequential quarterly revenues growing at 454.5%. As more color becomes clear on the name, we will review the situation and update our take. Sign-up for continuing coverage on shares of $NWBO stock, as well as other hot stock picks, get our free newsletter today and get our next breakout pick!
Disclosure: We hold no position in $NWBO, either long or short, and we have not been compensated for this article.