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Thursday, October 29, 2020

Triple Whammy for Northwest Biotherapeutics, Inc (OTCMKTS:NWBO)

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Northwest Biotherapeutics, Inc (OTCMKTS:NWBO) is a fallen biotech fighting for survival. Investors are understandably skittish about the future prospects for Maryland-based biotech company Northwest Biotherapeutics, Inc. (OTCMKTS: NWBO), which has become a new favorite for shorts to target. Back in July 2105, shares of NWBO once traded as high as $12.04, but now they’ve been driven all the way down to $0.163.

On YTD basis, shares are down 53.17%. In just the most recent 30-day period, shares are down 32.08%. At a current share price of $0.163, Northwest Biotherapeutics is trading right around its 52-week low of $0.16. Over the past year, the highest the stock has traded is $1.60 – and even those days now look like they aren’t returning anytime soon.

For Northwest Biotherapeutics, Inc (OTCMKTS:NWBO), first and most importantly, there’s still considerable uncertainty over the company’s lead product candidate, DC Vax-L, which is an immuno oncology product to treat brain cancer. The product’s Phase III brain cancer study had been on hold since 2015, and it is only recently that the FDA gave approval to NWBO to continue its Phase III trial – but only if NWBO agreed to stop enrolling patients short of its target enrollment. That was even more confusing, given that NWBO has not fully disclosed why the trial was halted in the first place. The fact that the FDA did not allow NWBO to complete enrollment is a red flag for many investors.

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$NWBO 10-Day Chart Below:

Secondly, there are a lot of warning signals about the company’s overall financial health. In March 2017, the company had to raise $7.5 million in additional financing to shore up its cash position. According to the company’s latest 10-K, NWBO burned through $56 million in cash in 2016 and closed out the year with only $6.2 million on the books. Clearly, the company is facing a severe cash squeeze. The company’s own auditors issued a “going concern” letter about the company, stating that there were substantial doubts about the company’s ability to stay afloat.

Thirdly, there’s the overhang of a potential SEC investigation into financial dealings at Northwest Biotherapeutics. The SEC issued a subpoena for a broad investigation into the company. And the 10-K itself suggested that the company might have been engaged in questionable  financial dealings with a company that was owned by an investment fund controlled by the company’s CEO.

You would think that this triple whammy – uncertainty about the lead clinical product in development, serious financial problems and an SEC investigation into potential misdeeds at the company – might be enough to scare off all but the most foolhardy investors.

And, yet, there is the case to be made for Northwest Biotherapeutics being a highly speculative value play. First and most importantly, the company does not just have a single product in the pipeline – it actually has a technology platform, known as DC Vax. This technology uses activated dendritic cells to mobilize a patient’s own immune system, including T cells, B cells and antibodies, to attack cancer cells.

As a result of this technology platform, NWBO has another product, DC Vax-Direct, which is currently in Phase I/II trials for patients with different types of inoperable cancer. The company has completed a 40-patient Phase I trial and is now working on a 60-patient Phase II trial. So you could plausibly argue that DC Vax-Direct is the “back up plan” if there really is something wrong with DC Vax-L.

The FDA has cleared DC-Vax L for the continuation of Phase III clinical trials. While it’s less than optimal that the trial is continuing without reaching its full target size, it’s encouraging that it’s moving ahead at all. Remember – it’s been on hold since mid-2015, and that is what led to the implosion of the company’s stock price from $12 to near $0. So you could view this as a real momentum changer.

The real catalyst for NWBO, though, could occur in late May. That’s when Northwest Biotherapeutics plans to lift the “information hold” on the situation around DC Vax- L. The company has never really disclosed why the trial was stopped short of completion, and we’re about to find out within the next 30 days.

At this point, the best that investors can hope for is that the Phase III trials for DC Vax-L show promising results, and that the lifting of the information embargo does not result in any crippling information. But even then, there’s the matter of the SEC investigation and the weak cash position to consider. A lot has to go right for NWBO to turn around its fortunes. If you’ve got a large appetite for risk, then NWBO could be worth taking a look at. For more information on Northwest Biotherapeutics and other fast-moving penny stocks, please subscribe to OracleDispatch.com below.

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