Northwest Biotherapeutics (NWBO): Initiating with an Outperform Rating

Northwest Biotherapeutics (NWBO): Initiating with an Outperform Rating

Grant Zeng, CFA

Northwest Biotherapeutics, Inc. (NWBO) is a clinical stage biotechnology company focused on discovery, development and commercialization of immunotherapy products to safely generate and enhance immune system responses to effectively treat cancers. The Company holds two technology platforms applicable to cancer therapeutics: dendritic cell (DC)-based cancer vaccines (DCVaxTM), and monoclonal antibodies for cancer therapeutics. The Company’s current focus is DCVax dendritic cell-based cancer vaccine programs.

NWBO’s DCVax platform technology makes use of the same immune cells as Dendreon’s prostate cancer vaccine Provenge does. DCVax uses a patient’s own dendritic cells (DCs). The dendritic cells are extracted from the body, loaded with tumor antigens, thereby creating a personalized therapeutic vaccine. Injection of these cells back into the patient initiates a potent immune response against cancer cells, resulting in delayed time to progression and prolonged survival.

The Company’s DCVax technology holds competitive advantages compared to Dendreon’s Provenge and other competitors which include low cost of manufacturing, ease of administration, high concentration of activated dendritic cells and lesser side effects.

NWBO has developed three versions of DCVax products which are complementary. DCVax-L is developed using the patient’s own dendritic cells loaded with antigens from the patient’s own tumor lysate. DCVax-prostate is developed using the patient’s own dendritic cells loaded with a recombinant antigen for prostate cancer. The third version of DCVax is called DCVax-Direct, which is developed using the patient’s own dendritic cells without any patient tumor tissue. The DCs are activated, but without addition of tumor antigens. The cells adhere to the plastic culture surface, which results in activation. All three versions of DCVax are based on the same DCVax platform technology. Together, these three versions of DCVax can cover almost all solid tumor indications. For example, DCVax-L is used when the patient’s tumor can be surgically removed while DCVax-Direct can be used when the patient’s tumor cannot be surgically removed.

The Company’s lead candidate is DCVax-L for the treatment of Glioblastoma. DCVax-L utilizes NWBO’s dendritic cells (DC) platform combined with glioblastoma tumor lysate antigens. DCVax-L demonstrated excellent antitumor activity and safety profile in Phase I trials.

NWBO is conducting a 240-patient Phase II clinical trial (designed and powered as a pivotal trial) for DCVax-L, which could become the second active immunotherapy gaining the FDA approval. The Phase II trial is also working towards recruiting patients in Europe. The Company plans to use the European data together with the US data to seek approval of DCVax-L in the US as well as in Europe if the trial results are similarly compelling as in the prior trials.

NWBO’s DCVax-Prostate vaccine was also cleared by the FDA for a 612-patients Phase III trial for non- metastatic hormone independent prostate cancer patients. The Company is looking for a partner to initiate the Phase III trial due to the scale of resources required for such a large trial.

Both DCVax-L and DCVax-Prostate have the potential to become blockbusters if approved in our view. NWBO has established an unusually deep pipeline. Its DCVax-Direct technology can target almost every solid tumor. Current targets include liver, head & neck, ovarian and pancreatic cancers.
Northwest’s monoclonal antibody CXCR4 is an experimental monoclonal antibody therapy that targets the functional chemokine receptor, CXCR4. CXCR4 is highly expressed on many cancer cell types, and is involved in three functional aspects of cancer cells including cell division, migration to distant sites, and in setting up metastatic sites and thus the spread of cancer. These functional aspects make CXCR4 a particularly attractive target for cancer therapeutics.

Great progress has been made in the past few months in terms of clinical trials, business development and balance sheet strengthening. Current valuation is attractive and upside potential is high at current price level. We are initiating coverage of Northwest Biotherapeutics (NWBO) with an Outperform rating. Our 12-month price target is $1.50 per share.

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