|Financing facilitates a great deal for Northwest Biotherapeutics|
|Tuesday, 07 June 2011 06:50|
Of course, some of the strongest concerns about NWBO (and countless other biotechs) have been associated to the lack of adequate financing needed to get to their platform to the Promised Land. The most recent financing announcement may finally address some of those key issues. How badly have some of the pundits bashed NWBO for “not ever having enough funding to push their pipeline forward?”
Yesterday’s news about the $3 million note and warrant financing gives the company a larger amount of funding all at once than they have had for the last 4 years. Perhaps more importantly, the timing of the funding coincides beautifully with the ramp up and acceleration of the clinical trial programs. In fact, we are expecting more visibility for those trials and we’re hearing that perhaps even more locations may be announced. If so, that will speed up the regulatory process. Investors have to love those possibilities.
In addition, this financing provides NWBO the ability to carry the company through the period while it goes through the registration process for the already announced follow-on funding of up to $25M. We also like it because the financing will not result in any shares coming into the market anytime soon. As we look at the fine print here, it looks like the conversion shares under the Note will not come into the market for up to 2 years. Look closely and you will see that the terms include 18 months until conversion can be exercised at note maturity + 6 months after certain qualifications.
As we see it, even the warrant coverage that was announced as part of this deal will ultimately be beneficial to Northwest Biotherapeutics because there is no sign of a cashless exercise. This means the warrants can only be exercised by having those holders put forth more money into the company-- up to $3 million more, on top of the $3 million already announced and put into the company under the note. This makes yesterday’s financing announcement ultimately a $6 million cash deal for the Company.
If only every financing in biotech was this good and non-dilutive to shareholders, seriously.
To me this also speaks to how the investors are feeling about NWBO’s cancer vaccine potential. The company was able to get these terms because there are very positive things cooking and on the horizon. The nature of the investor putting in the funding is another form of affirmation. Here we see a multi-billion institutional investor, with a successful track record, putting in all those millions and taking the risk by themselves-- not as a syndicate of funds putting in $500K each, for example.
The announcement points to a nicely executed financial foundation which should enable NWBO to continue accelerating their programs while they go through an effective and creative registration statement for the first tranche of up to $25 million in follow-on funding.
That registered equity facility is equally important for several reasons:
Again, the terms are greatly more favorable financially than anything the Company has had access to anytime in recent memory,
The universe of investors who can invest in NWBO given these terms (including the issue of tradable shares) sets the table for an increasingly competitive situation among interested investors, with NWBO benefiting from much better terms and less dilution as a result.
Let’s not forget that this facility is being provided by the Company's largest shareholder, Toucan Partner. There are no worries about a financing nightmare because Toucan has every incentive to administer this facility in a way that will provide maximum lift to company shares.
So, again, this equity facility appears to be a very creative win-win for all concerned and is nothing like some of the equity facilities that cast a negative cloud or earn a doubtful reception in the marketplace. We have seen a number of those and the companies who use them have a very difficult of a time getting out of their own way as stock prices try to rise.
That certainly does not appear to be the case here. In fact, for a Company that some have been concerned would not be able to raise enough funding, they deserve a lot of credit for coming up with a financing model that now catapults them further into a strong position. We hope that others can actually emulate this model after they study the details of this deal.
Armed with multiple FDA authorized clinical trials for their product pipeline, and an aggressive US and European program which is being put in place, NWBO should be able to productively utilize every dollar this program will yield to build value in the company.
Just as we told our readers when the stock was trading at $.40 in mid-may, NWBO has been positioning itself for some big moves. They are clearly not done. These developments further position the Bethesda, MD based company ahead of most other emerging cancer immunotherapy players. That fact is becoming even more pronounced given some of the news we’re seeing after some of the early presentations at ASCO . I’ll save some of those observations for my next report, but it certainly looks to us like NWBO has some of the best early clinical trial results in the most number of cancers in the entire cancer vaccine space.
Last but not least, remember what Linda Powers, Chairman of the Board of Northwest Biotherapeutics hinted to investors when she told us the Fraunhofer partnership was “a first step in a broader European strategy.”
To me this says there are more upcoming news catalysts and that it’s time to buy on the dip. Let’s see how much higher thse shares have now been primed to go. In the meantime, congratulations to the team at Northwest Biotherapeutics and their shareholders. Let’s hope others take note of your recent accomplishments.