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Did Northwest Biotherapeutics Just Check Off 1 Box Needed for Its Stock to Double?

By Zhiyuan Sun - May 28, 2020 at 6:54AM

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Will a 14-year clinical trial evaluating an immunotherapy for the most lethal form of brain cancer have a positive outcome?

In April, Northwest Biotherapeutics (NWBO 5.47%) disclosed that its phase 3 clinical trial to evaluate its cancer immunotherapy vaccine DCVax-L in treating glioblastoma, the most invasive form of brain cancer, may finally be coming to an end. The company believes it will reach the required number of death events in for its primary endpoint of overall survival for the trial to conclude by the end of May. It estimates that it will be able to publicly announce top-line data by June to early July.

Well, this is good news because investors have been waiting for 14 years for that announcement. Does the company's tumor vaccine possess the potential to tackle a multibillion-dollar market opportunity? Let's go ahead and find out.

Immunotherapy vaccine fighting off cancer cells in the body.

Image source: Getty Images.

What is DCVax-L and how does it work?

The following excerpt of DCVax-L's proposed mechanism of action is taken from company filings:

Our platform technology, DCVax, is a personalized immune therapy that uses a patient's own dendritic cells, or DCs, the master cells of the immune system, as the therapeutic agent. The patient's DCs are obtained through a blood draw, or leukapheresis. The DCs are then activated and loaded with biomarkers ("antigens") from the patient's own tumor.

For DCVax-L, the antigen loading process takes place during the manufacturing of the product. The loading of antigens into the DCs "educates" the DCs about what the immune system needs to target.

The ongoing phase 3 clinical trial has two cohorts where all patients undergo surgery and radiation. Afterwards, patients are given either DCVax-L alongside other standard of care drugs (SOC) or a placebo alongside SOC. Out of the 331 patients enrolled in the two cohorts, 233 deaths are required to determine whether DCVax-L possess an overall survival benefit, in addition to another endpoint measuring progression free survival, which was reached in 2017.

While event-driven trials (investigations dictating a specific number of events must occur for the trial to stop) like this can enroll fewer patients than traditional clinical trials, they can go far beyond schedule if the number of events doesn't occur. This design has lead to polarizing speculation from both sides of the market.

What the bulls are saying

Bullish investors point to a simple comparison as to why DCVax-L is more likely than not to succeed in its clinical trials. For starters, two of the standard of care treatments currently used to treat glioblastoma after surgery, Optune (tumor-treating electric fields), and temozolomide (a chemotherapy drug, TMZ), can prolong patients' survival by a median of only 19.6 months if used in combination, or 15.2 months if TMZ is administered alone.

Meanwhile, two blinded interim analyses in 2017 and 2018 showed that patients in DCVax-L's clinical trial survived for a median of 23.1 months. Even with a potential survival head start compared to other clinical trials due to a screening criterion requiring patients to be progression-free before enrollment, patients' survival in the two cohorts of DCVax-L's clinical trial compares very favorably to historical rates. Hence, bulls concluded DCVax-L is responsible for this efficacy, since, as per trial design, 90% of the entire patient population crossed over to receive DCVax-L.

What the bears are saying

Skeptics have an entirely different story to tell about Northwest Biotherapeutics, and their claims, too, are backed up by precedent. In 2006, biotechnology firm Vical initiated phase 3 clinical trials for its cancer immunotherapy vaccine Allovestin for the treatment of melanoma. The study was designed just like the Northwest Biotherapeutics DCVax-L trial, with patients randomized to receive either SOC or Allovestin, with a specified number of death events to occur in both arms for the trial to conclude.

The trial was originally scheduled to conclude in mid-2011. However, the required number of death events did not occur, and it soon became clear patients were living much longer than expected.

On February 8, 2012, CEO Vijay Samanta discussed why the trial was still ongoing on a conference call. He explained that the longer it takes for the trial to complete, the better, because a deviation from survival results in historical chemotherapy trials would indicate the experimental therapy was keeping patients alive longer.

Afterward, the trial continued for another year and a half until August 12, 2013, when, to everyone's surprise, Vical announced Allovectin had failed its clinical investigation and did not meet its primary or secondary endpoints. In other words, Vical had severely underestimated SOC's efficacy in fighting off melanoma and prolonging patients' survival.

Bears now argue the same thing will happen with its DCVax-L clinical trial.

So who is right?

In short, neither the bulls nor the bears can convince each other, because Northwest Biotherapeutics did not test the efficacy of DCVax-L against placebo in phase 2. The company had originally planned to conduct a phase 2 trial, but morphed it into phase 3 because patients expressed concern they would be randomized into the placebo arm (remember, glioblastoma is the most invasive form of brain cancer).

Unfortunately, observational comparisons regarding an experimental treatment's efficacy do not take into account that survival rates in each clinical trial can be dramatically different due to differences in eligibility criteria and treatment protocol. That is why companies conduct and finish phase 2 clinical trials as to verify an experimental therapy's efficacy against placebo before moving into phase 3.

To further complicate the matter, in 2015, the Food and Drug Administration halted DCVax-L's clinical trial. To this day, Northwest Biotherapeutics has never disclosed why the trial was halted and has only provided an update that the halt was lifted in 2017.

In its most recent annual report, the company disclosed it has only $372,000 in cash compared to $52.69 million in total liabilities. The company also failed to file its recent 10-Q on time, citing "unanticipated accounting complications related to a German tax issue."

I would recommend investors to review each case and decide which side they fall on: bear or bull. More information will be available this summer, so it's a safer bet to wait until the data is released. However, one may miss the doubling of the stock should the trial produce good results. Currently, the company only has a $200 million market cap, and today's valuation could be pennies on the dollar if its trial is successful. Although, keep in mind that investing in biotech stocks that are heavily dependent on binary outcomes is risky and not for the faint of heart.



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