|Is Northwest Biotherapeutics (OTC:NWBO) Ready To Mount A Comeback?|
|Wednesday, 16 June 2010 05:34|
Last week, a very detailed report authored by renowned research pharma analyst Dr. Navid Malik caused some excitement in the pharmaceutical industry about Northwest Biotherapeutics' (OTC:NWBO) DCVax® immunotherapy vaccines to treat cancer.Dr. Malik, who is well respected in the industry for spotting potential blockbuster drug therapies, wrote the stellar report about NWBO’s breakthrough DCVax®-Brain cancer vaccine - whose striking survival and cost control metrics – is delivering on the promise of fully customized immunotherapeutic vaccines tailored for each individual patient.
We reported rumors involving several entities who had contacted Northwest Biotherapeutics immediately following the publication of Malik's report to our subscribers last week. We also reached out to Linda Powers, the Chair of NWBO's board so that she could help us explore not only those rumors, but also some compelling next gen biopharma topics surrounding her company further.
Much like Dendreon's ground-breaking Provenge cancer vaccine, DCVax®-Brain now in Phase II/III clinical trials. It is entirely personalized for each recipient and, to date, its power and success has begun to cause the sudden stir. Fully 85% of the patients treated with DCVax-Brain in the company’s clinical trials have lived longer than the 14.6 months median survival time. Furthermore, 22% of the patients treated with DCVax-Brain have now reached or exceeded the 6-year survival mark. Under the standard of care treatment, less than 5% of Glioblastoma patients are still alive after 5 years. Just as significant, 80% of all the patients receiving the treatment experienced a positive response – far better than the typical 25% response rate for most cancer drugs. And, unlike chemotherapy, DCVax vaccines are non-toxic and are well tolerated. What’s more, DCVax® is non-toxic with no serious side effects, and is a far more cost effective treatment option over chemotherapy for both the patient and the healthcare system at large.
In the case of Glioblastoma, the median time from initial diagnosis to death with full standard of care treatment - surgery, radiation and chemotherapy - is only about 14.6 months. With NWBT’s DCVax-Brain vaccine added, that survival time is extended to a median time of about 36.4 months in clinical trials thus far.
Published rumors involving entities who had approached NWBO about potential partnership and/or licensing deals involving their cancer vaccines caused the company's stock to spike briefly last week, but small cap investors have seemed hesitant to risk large bets on the company given some of the confusion about two claims of patent infringement (dating back several years) against NWBO by Lonza Group AG.
While the company had issued press releases aiming to clarify the situation, we decided to kick start our two part interview with Linda Powers on that topic.
Q: Is the Lonza lawsuit still a dark cloud over the DCVax® patents or technology?
NWBO's Linda Powers: There’s no cloud now and there was no cloud at the time. It was a completely trumped up case.
The best we can figure is that Lonza was trying to get a piece of the action. Lonza initiated the lawsuit, they filed a complaint, and the contents of the complaint were claimed patent violations. They claimed that our dendritic cell vaccine products were violating something like 8 different patents of theirs and they had 30 different claims and it was a huge complaint and everyone was quite surprised by it.
The gist of it on all of their claims was that Northwest was somehow making unauthorized use of their technology to do gene modification of cells. Well that was baloney on its face because none, underscore, none of Northwest’s products are gene modified cells. They are naturally occurring cells in their natural state that are activated by mimicking what goes on in the body. This lawsuit was filed in July 2007, and at the same time as filing the lawsuit, Lonza was suggesting we just resolve the whole thing by just taking a license to their technology. We said ‘No, we don’t have any use for the technology and we’re not paying you a piece of the action for a license that we don’t need and wouldn’t use’. So we fought back. I think they were quite surprised by that.
Bottom line, with in a matter of months, which is extremely fast litigation process, Lonza withdrew all of the claims they had made against all of Northwest’s products except the prostrate cancer vaccine. They withdrew unilaterally. They didn’t receive anything for this. NW didn’t pay for this. Northwest didn’t agree to anything. What Northwest did was threaten sanctions for filing an utterly basis lawsuit and that triggered Lonza to withdraw all but the prostrate claims, so by the end of year 2007, all that was left was the prostrate claims, and those were disposed of the following spring, just a couple of months later, when Northwest continued to say ‘not only no, but hell no, we’re not taking a license to your technology and the prostrate product is no gene modified either’.
So what Lonza argued then was one step removed. They argued that because a supplier, a contract manufacturer of the recombinant protein antigen, may have used Lonza’s technology in the production of a batch of protein, which Northwest was not involved in and didn’t choose the technology for, Lonza tried to make that a liability of Northwest because Lonza, in the intervening years, had done a partnering deal with that contract company and couldn’t sue them, so they sued Northwest and we fought back. Bottom line: Lonza ended up withdrawing all of those claims as well. The only thing Northwest agreed to do was to throw away the remainder of the batch of recombinant protein, the PSMA protein, that is one of the components of making the prostrate product, and that batch had been sitting in the freezer for 8 years, you couldn’t use it for anything anyway.
So that’s it. Northwest didn’t pay a nickel to Lonza. They didn’t take a license to their product. They didn’t agree to any kind of restriction or anything else. That’s it. The totality was a complete and utter withdrawal by Lonza.Q: So there’s no truth to the rumor that the DCVax® prostrate trial was terminated due to that lawsuit?
NWBO's Linda Powers: No. In fact, there was no prostrate trial occurring during those years. That’s a new one. That’s creative. I haven’t heard that rumor before.
Many years prior to that, way back in 1998, 1999, 2000, the phase I and II trials were done. Then, in 2003, the company, under the old management that left back in 2003, had started a prostrate trial which they discontinued because they ran out of funding. Then there was a hiatus of several years. During that time Toucan Capital came into the picture, recapitalized the company, began building the company, restructuring the clinical trial program, everything. One of the first elements of restructuring the clinical trial program was to redesign and craft a new phase 3 trial for prostrate cancer, submit it to FDA and get approval for it. This was a couple of years back now. However, that trial has never commenced anywhere for the simple reason that conducting that one trial alone will cost $35 to $40 million dollars and Northwest does not have $35 to $40 million dollars to conduct one trial, so it’s been sitting on the shelf these past few years since the FDA clearance.
Q: Why did you give up on prostrate when it has a larger financial potential? Why not focus here instead of on the brain cancer?
NWBO's Linda Powers: It’s purely a function of dollars and time. The dollars to conduct the prostrate trial phase 3 is 35 to 40 mil, for brain, it’s 10 to 15 million which is an utterly different scale of resources to come up with. And, because brain cancer kills so fast, unfortunately, the trial and path to product approval is years and years shorter. The third reason why is that people underestimate what is the market potential of brain cancer. There are two types of brain cancer. There’s primary brain cancer, meaning that it starts in the brain and when it does it stays in your brain, it doesn’t travel anywhere else in your body. Then there’s metastatic brain cancer, meaning it started somewhere else – breast, lung, colon, etc – and ultimately metastasized to the brain, which is what kills patients. Even if you just take the primary brain cancer, and you figure just a modest percentage of patients getting the treatment – 10%, 20% of primary brain cancer, you’re still into blockbuster sales territory. People don’t realize that. You’re well in excess of a billion dollars in sales.
Q: Where do you see this compound being manufactured?
NWBO's Linda Powers: Our new Memphis facility. It is far newer, far more efficient, far better equipped and located within sight of the airport and Memphis is a worldwide shipping hub for both FedEx and UPS. So it’s an ideal location for shipping all across the US. So point #1, the facility is more than a decade newer than the California facility which was quite old and inefficient in layout. Point #2, the logistic value of being in a worldwide air hub. And Point #3, the cost structure. To put it in perspective, the whole lease of the entire 35,000 sq. ft. facility in Memphis – the entire lease cost per month is less, actually substantially less than just the electricity bill was in California.
Q: And obviously that facility has been cleared by the FDA? You’re comfortable with the set up of the new facility?
NWBO's Linda Powers: Yes. You know who built the Memphis facility? Cell Genesys. Cell Genesys was riding high for years, neck and neck with Dendreon until 2008 when they completely crashed and burned and went out of existence. And Cell Genesys in those years, was spending 100 million per year on corporate operations. Those are the guys who built the Memphis facility. No sooner did they build the facility then they decided not to do that type of product anymore and they mothballed the facility. So we bought a brand new facility for cents on the dollar in a terrific air hub location.
BioMed Reports: Next topic: brain. Can you clarify who actually owns the technology, is it NWBT or UCLA?
NWBO's Linda Powers: Like most biotechnologies in the US, it was partially developed in an academic type setting, and Northwest has a collaboration with UCLA. Under the collaboration, Northwest receives all the data. Northwest has paid for the trial costs. Now the trial was carried out and conducted by UCLA and Linda Liau M.D., Ph.D. who is the principal investigator also conducts a number of trials. She’s tinkering with treatment regimens all the time and she has a big program going on. In terms of who owns the DCVax® Brain Program, clearly, Northwest owns it. The hallmarks of owning it…Northwest has all the data and is the one interfacing with and conducting the process with USDA. So NW is the one going through the regulatory pathway. Northwest is the one who applied for and has been granted orphan drug status on the DC Vax Brain product. That is purely orphan status owned by Northwest and under that status, Northwest will get 7 years of exclusivity for DCVax® Brain. By all those measures, having the data, progressing through the regulatory tract, having the commercial positioning with the orphan drug, it’s all in Northwest’s hands.
BioMed Reports: Why should investors be noticing NW right about now? Give us a thumbnail of where the company is.
NWBO's Linda Powers: There is a confluence of favorable factors. Some of them are company factors. Some of them are FDA mindset and acceptance and regulatory supportiveness factors. And some of them are marketplace factors: physician acceptance, product rollout potential, etc.
The company, although it’s tiny and has functioned on a shoestring, has continued to doggedly progress and has continued to rack up what is the most valuable of all things which is the long term follow up data with the next regular update coming in the July timeframe. The most important reason why people should not go away from the company is because the product is working so well. The product continues to work very well. The clinical outcomes data, the extension of survival in the patients and the extension of the time until the disease progresses.
At this point you have various parties out there including one, IMUC, who are very intently claiming that they have the best results out there that have ever been seen and they don’t. Their time to the tumor coming back is 17.7 months. Northwest's time to the tumor coming back is over 26 months. In the world of brain cancer, having 9 more months difference before the tumor returns is huge. So far, their survival data is only into the mid 20 months, Northwest is into the upper 30 months for the average time, and more than 22% of the patients have reached or exceeded more than 6 years which has never been seen. This is the value of the super long term follow up data. So one of the reasons why people would be foolish, I think, to go away from Northwest is because the results are so strong.
A second reason it would be foolish to move away from Northwest is that the company’s market cap is so low and you’re starting from such a low base that in terms of potential investment returns are well into the Dendreon range and above because you’re starting from a much lower base for a run up than with what Dendreon achieved. So you have a product that’s working. You have an investment potential that has a tremendous number of potential developments as it were, and you have a product that is targeting a cancer with blockbuster potential where there’s virtually no meaningful competition. How many products get to come into the market and have billion dollar sales potential and so little competition that the patients, the customers themselves, are demanding the product? Not very many.
A second thing that is really important is regulatory. You know, Dendreon has really helped to pave the way on the regulatory pathway with the agency. In the past, the way that cancer treatments got evaluated was all shaped around chemotherapy drugs and the way that they worked. One of the biggest differences between how immunotherapies work and how chemo drugs work is immunotherapies take a lot longer sometimes to show up their effectiveness. You know you take a chemo drug and you’re throwing up within hours and it’s hopefully poisoning the tumor within hours. Immune therapy you take and you’re talking days, weeks, months for it to do its job. But, it’s kind of like the tortoise and the hare. In the end, the immunotherapies, the successful ones that are starting to arrive now, are proving to be more effective. But FDA had to kind of re-jigger their thinking, and they’ve put out a new guidance document. They’ve adopted a more flexible viewpoint on what kind of endpoints can be satisfactory and how those endpoints for the end of the trial can be met and so forth. So that’s a kind of opening up. It’s not nearly as much as one would wish it to be by a long shot, but it’s still important, and it wasn’t there as recently as a couple of years ago, and now it is.
A third set of factors is acceptance by physicians and the general community. For over 100 years, it’s been a holy grail to develop immunotherapies for cancer, and there’s been a long track record of failures – some of them bad failures, toxic failures. Now that you’re starting to have to first success stories, everybody, every physician, every patient all of a sudden wants to hear all about it. Wants to look at new things, wants to try the new things. Where before there was a kind of atmosphere of giving up on these things in a lot of quarters, now, it’s the flavor of the month, the hot thing. Everyone wants to talk about immunotherapy. Every physician is rethinking the arsenal, the type of treatments they use.
So it’s a combination I would say, of the company’s own factors, regulatory and the physicians opening their mindset a bit has created a really favorable confluence of circumstances right now.
Q: We’re in a sector where investors expect homerun hits. Are we expecting some positive movement from the company? Something tangible?
NWBO's Linda Powers: There’s a whole series of milestones, events, which will be unfolding over the coming months. Some of them have to do with resuming and accelerating the enrollment in the brain cancer trials. Literally doing just that much is step number one. There continue to be doctors and patients calling in from all over the country asking ‘when are you going to resume enrollment in your large randomized phase II trial? We have patients we want to put them on it’, there’s accumulated demand, etc. So the first thing is ramping up the brain trial and showing the ongoing and accruing data. The enrollment in the trial depends on having the resources and so on. If it’s done at full speed, that trial is predicted to reach its endpoint in 18 months. That’s really fast. That’s not an interim data point, that’s an end point. On that track you will probably have an interim data point at around the 12 month mark and the endpoint at 18 months.
In terms of the prostrate trial, the company has stated publically that as soon as the brain trial is ramped back up again, the company will turn its attention to that $35 to $40 million dollars of financing for the prostrate trial to get rolling.
I can tell you that the company has received multiple inquiries about DCVax® prostate, not surprisingly in the post-Dendreon period, from big pharma as well as financial parties, and we think it will be a huge newsworthy event when we do that transaction. We’ve begun focusing on that and we’re allowing ourselves some time to get the right transaction done. That, I think that will be a major milestone kicking off, especially if we go the route of a partnering deal. Obviously, that would be a major announcement and event.
Q: Has that been reported publicly? If not, what can you tell us?
NWBO's Linda Powers: We’ve been approached and are in early stage discussions. This is the summer of the brain and the fall of the prostrate so to speak.
Note: Tomorrow, we will continue our interview discussion with Linda Powers and visit the topic: Is NWBO poised to surpass its closest competitor, Dendreon?
Disclosure: Long NWBO