Why Northwest Biotherapeutics, Inc. Shares Skyrocketed

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What: Shares of Northwest Biotherapeutics (NASDAQ: NWBO  ) , a clinical-stage biopharmaceutical company developing therapies to treat cancer, skyrocketed by as much as 36% after announcing two special approvals in Germany for its lead immunotherapy product, DCVax-L.

So what: According to Northwest Biotherapeutics' press release, under Germany's hospital exemption, and via an approval from the Paul Ehrlich Institute (the equivalent of the Food and Drug Administration in Germany), hospitals can now provide DCVax-L to patients with any type of glioma brain cancers, whether they are newly diagnosed or recurrent, and the company can charge full price for these treatment outside of its ongoing phase 3 clinical studies. Under the terms of the hospital exemption, DCVax-L must be manufactured in Germany, but is free to be given to non-German citizens in German hospitals. The hospital exemption clause has an effective period of five years. The approval itself is remarkable because, in just shy of three years, only two other products have received the "hospital exemption" and none of the prior two exerted a pharmacological effect within the human body. It also expands the use of DCVax-L to all glioma brain cancers, which is a much wider indication than its current U.S. trials.

In addition, Northwest Biotherapeutics also notes that the German reimbursement authority has deemed its DCVax-L treatment eligible for reimbursement from Sickness Funds, which is another term for German health insurers. As expected, only hospitals can apply for reimbursement, and Northwest notes that six hospitals have thus far applied for reimbursement eligibility.

Now what: Clearly, this is a big win for Northwest Biotherapeutics, which has a wholly clinical-stage pipeline at present. It's unclear how much revenue this could provide Northwest in the interim, but Northwest's press release mentions that there are roughly 7,000 newly diagnosed cases of gliomas per year in Germany. This exemption could also go a long way to validating its immunotherapy platform, which uses dendritic cells to educate the immune system to attack cancer cells. Immunotherapy platforms are all the rage on Wall Street right now, so this approval couldn't possibly come at a better time.

Despite the news, I would still suggest existing shareholders be cautious. Historically, small-cap biotech companies with cancer-fighting compounds have a very poor track record of drug approval. In addition, if DCVax-L were to be turned away by the FDA, there would be a steep gap all the way back to its next closest product in development, DCVax-Direct, for solid tumor cancers -- DCVax-Direct is currently only in phase 1/2 trials at the moment. In other words, with a valuation north of $300 million, investors' optimism may be more than priced in following today's news.

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Comments from our Foolish Readers

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  • Report this Comment On March 10, 2014, at 3:31 PM, erniewerner wrote:

    This is an interesting situation. The company has spun the news to give the impression that this is a pseudo-approval and a possible revenue stream. The "hospital exemption" program in Europe is similar to the various expanded access programs (sometimes referred to as compassionate use) the FDA oversees. Like its U.S. equivalents, the EU's program does not entail a rigorous vetting of the drugs efficacy or safety and is not an endorsement of its future approvability. Most do not realize that in the U.S. sponsors can also charge patients for compassionate use of developmental drugs, but it is not commonly done and the various health care insurers do not reimburse those expenses. For discussion of the "hospital exemption" program see:

  • Report this Comment On March 10, 2014, at 4:46 PM, DocLogic7 wrote:

    The Motley Fool research group has not done their homework on this company and like Adam Feurstein deserves a reprimand for not doing so. NWBO is a small company, set up to "go it alone" but willing to take on a partner to rapidly develop their breakthrough in dendritic cell therapy. This company has a vertically integrated business model that has befuddled those who have not taken the time to study it.. They are public company that is partially privately funded through Toucan, which is a private venture capital firm managed by Linda Powers who is the CEO of NWBO. They produce their DCVax products through Cognate which is also privately funded by Toucan and is run by Linda Powers. This arangement keeps them from any unwanted buyout and has kept them in control of a majority of the outstanding shares and warrants.

    Motley Fool and its followers have dissed NWBO through its struggles as has A.F. but today's announcement by the German regulatory agencies is confirmation of the science that sets NWBO apart. The principal developer of DCVax-L is Dr. Linda Liau from UCLA. Her technology and science has been used by NWBO to take her original therapy into clinical trials. She and other scientists confirmed that GBM has genotypes that are subsets of the entire GBM population after the phase l clinical trial of DCVax-L. Amongst these genotypes, mesenchymal GBM was found to be highly responsive to DCVax-L. This population subset represents ~33% of the total GBM population and as GBM progresses, the other genotypes mutate into mesenchymal phenotypes or characterizations in approximately 52% more of the GBM cases and become somewhat susceptible to DCVax-L therapy. This is reflected in the observation that over 80% of GBM patients are found to respond to DCVax-L which was confirmed in a recent presentation by CEO Linda Powers and 27% of phase l patients lived 6 years or longer. For those who are willing to do a little homework, I recommend reading up on the results of Medical Center Cologne (Germany)dendritic cell therapy and the story of Dr. Linda Liau at UCLA and her abstracts. By the way, I believe that this mesenchymal subset is being evaluated seperately in the current phase lll trial and if it is...

    While Motley Fool has proven methods, I strongly encourage those who read this not to wait for a more "investment grade" opportunity but to rapidly do your own due dilligence as those of us who have already done our homework are wating for the players like Goldman Sachs and the larger holding company that is THE mm in this stock to decide it's time to do their "analyst" promos. This could happen at any time but the most likely time will be when and if the DCVax-Direct abstract being submitted to ASCO is accepted.. Best wishes.

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Sean Williams

A Fool since 2010, and a graduate from UC San Diego with a B.A. in Economics, Sean specializes in the healthcare sector and in investment planning topics. You'll usually find him writing about Obamacare, marijuana, developing drugs, diagnostics, and medical devices, Social Security, taxes, or any number of other macroeconomic issues.

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