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Northwest Biotherapeutics, Inc. (NWBO.OB) interview with Linda F. Powers CEO

May 15th, 2012 by John Eastman

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Northwest Biotherapeutics, Inc. (NWBO.OB) is a development stage biotechnology company that develops and commercializes immunotherapy products that generate and enhance immune system responses to treat cancer. John Eastman interviewed Linda F. Powers, CEO for this article.

JE: So tell me, how would you distinguish or set apart the type of work that Northwest is doing from others in the industry?  What makes the road you’re going down better, or more significant?

LP: Well, I think there are several things that make us different and stronger.  For one thing, we have built into our business strategy multiple chances to win.  We are pursuing both of the two largest medical markets in the world, the US and Europe, in parallel; what we sometimes refer to as the two continent strategy.  Next, we have a product that’s based on a technology platform that we believe will be applicable to basically all solid tumor cancers unlike, for example, targeted therapies for one particular cancer or a couple of particular cancers.  This technology and the products based on it should be applicable to basically all solid tumor cancers because of the way that they function.  Thirdly, we have developed several complimentary product lines.  We have a product line designed to address medical and clinical situations where a patient is having their tumor removed, as well as another product line for situations where the patient is not having their tumor removed, or is not able to.  Additionally, we have multiple clinical trials already either completed or underway in multiple different cancers.  So the combination of multiple markets, a technology for all the different cancers and embodiment in multiple product lines that cover the different market and clinical situations as well as progress in terms of the development pathway on several of them at once, gives us a very deep pipeline and multiple, I think, differentiators.

JE: So given the known risks, the ups and downs of clinical trials and results, do you feel that the diversity that you have can overcome negative factors, the negative situations that come up doing clinical trials and setbacks?

LP: Yes.  We do and it’s not just the diversity although that’s a very important factor too.  It’s also the strength and consistency of the performance of this product, this technology.  It’s a well known concern – and a legitimate one of investors – that well maybe you have great results in early stage trials but maybe they don’t do as well in the later stage trials.  Well, a couple of points about that; firstly, the point that you’ve put your finger on is a very powerful one.  The product has performed. DCVax technology has performed consistently across multiple diverse cancers, including  primary brain cancer, late stage prostate cancer and metastatic ovarian cancer.  Again, these were in small, early stage trials, but there was consistent performance in more than doubling survival time in the patients that received it.  That kind of consistency across very diverse cancers is very encouraging. A lot of times you see great results in a few patients and that’s great for them.  It’s wonderful.  It’s like they won the lottery, but it doesn’t do anything for the rest of the patients.  Our product, DCVax has performed consistently across patients as well as across diverse cancers.  More than eighty percent, of the patients that have taken DCVax have substantially exceeded standard of care in terms of time to progression, and survival time. We’ve added literally years of extension of time to progression and time to survival. When we come to a later stage trial, (if the results are even a fraction as good), we don’t have to replicate fully the results of the early stage trials.  Even get a fraction of that in the later stage trial, that’s a clinical outcome improvement to be approvable.

To put that into concrete terms, as an example in the brain cancer trial, the standard of care, median survival is fourteen months with everything, standard of care, surgery, radiation and chemo.  Our patients, and again across all the patients, across all the age groups, genders, whether it was a full resection of the tumor or a partial, whatever their Karnofsky Performance Score (which means their physical condition at the time of surgery), across all of those different patient characteristics, our median survival was three years.  That’s such a huge improvement, given that products such as Temodar were approved based on two and a half months of added survival. So from our perspective, if you look across all those factors, we’re very mindful of the common risk of things not going as well in the late stage trials as the early.  When you add up all those factors, yes, we think we’re pretty unique in that regard.

JE: There are thirty clinical trial sites right now for DCVax?

LP: Actually thirty-seven.

JE: Tell me about the partnership with King’s Health Partners.  Why is it significant?

LP: It’s really significant in some of the ways that are similar to why the Fraunhofer Partnership in Germany (we already announced) is so significant. Number one, it’s a large-scale organization.  It’s a very highly respected organization by all parties, by physicians, by patients and importantly by regulators.  They have large-scale capacity.  They have existing physical facilities, GMP Clean Room facilities to make the cellular product in, and they had experience for ten years in working with other versions of immune therapies. Just like Fraunhofer, they have actually dedicated their existing GMP facility to our programs.  It’s a small one but they’re in the process of constructing a much larger one as well so it brings us all of those things. And partnering with them gives us access to the UK market, a major market.  One of the leaders in the European Unions, especially for these kinds of medical products.  The UK has been very much at the forefront of novel medicines and, from a regulatory standpoint, encouraging novel medicines

JE: So the clinical trials for DCVax are Phase 2, correct?

LP: Yes.

JE: So that’s in the United States, an FDA approval process.  The European, Germany and London regulators will have to approve by their respective regulators for use in those countries as well?

LP: That’s the objective. But how the system will work – and this is a really important part of our strategy is this; it’s the same trial.  We are simply adding the European sites into the same trial that’s already underway in the US, rather than doing a separate parallel set of trials in Europe.  That’s really important for several reasons.  First of all, it saves us a lot of time on the front end; more than a year but that’s not the key.  They key is that by being all the same trial, all the data is going to be pulled together.  All the data is going to be presented, when the time comes, in an application for product approval in each location.  In the US, we’re going to include both the US and European data, and in Europe we’re going to include both the US and European data, and it makes it a very strong package.

JE: The King’s Health Partners trial will be centered on treating GBM?

LP: Yes.  Dually diagnosed GBM.

JE: Tell me about DCVax prostate.  That’s a Phase 3 trial?

LP: Yes. It’s approved.  The FDA has approved a six hundred and twelve patient Phase 3, double blind, randomized, placebo controlled trial.  That was several years ago. We have that on standby as our second program while we proceed with the brain cancer as the lead program, and as we’ve always said, our strategy is to move the brain program forward as aggressively as possible ourselves, and then as we reach a certain point in that process, we turn our attention to partnering on the prostate program. Our business strategy is to partner the prostate program. The reason for that is because it’s a very large-scale trial with probably a hundred trial sites and forty to fifty million dollars of costs.

JE: Should we expect to see more significant agreements like the King’s College one from your company?

LP: Potentially.  We have had various stages of discussions in other countries in Europe.  However, I will say the potential of just the two markets that we’ve already developed is enormous.  Germany has a population of eighty-five million people and the UK has a quite substantial population as well and very importantly, they have hardly any trials going on in brain cancer.  There are a lot of clinical trials going on for brain cancer in the US.  Not just immune therapies but drugs of various kinds. It’s a bit crowded.  Not at all in Europe; I think first you’re going to see us really capitalizing on that value first, even as we have some footprints coming along elsewhere.

JE: Explain to me how the company’s products, which are not as toxic as chemotherapy ones, are more effective.  How are they more cost effective? And if successful, will this change the nature of how doctors and patients think and act about treating cancers?

LP: We think totally yes and you’re already starting to see it especially driven by patients who are clamoring for this type of treatment because chemo is hell on the patients. Let me answer this question in two steps; first the biological effectiveness, clinical effectiveness and then the cost effectiveness, because the cost effectiveness flows from the clinical effectiveness.

So first the clinical effectiveness; the sophisticated “drugs” today typically target only one target or at most a couple of targets on a cancer cell and they take a sort of attempted silver bullet approach and drug discovery has been much of the search for the better silver bullet.  Our approach, and we think the strength of our product, is the polar opposite in two ways. First of all, our product mobilizes your whole immune system, everything, your T cells that you hear about all the time, your B cells that make antibodies and your natural killer cells, your macrophages, your neutrophils.  You’ve got an entire army of players.  To give you one comparison, just one type of player is your B cells.  You have many different B cells and they make many different kinds of antibodies.  Well, the big blockbuster drugs in the world of cancer today are single, individual antibodies.  Avastin is an antibody.  Herceptin is an antibody; each of them to one target on cancer.  You’ve got one type of weapon being used, just an antibody, and you have only one target being targeted and hit.

We mobilize the whole immune army so you have many types of weapons.  You’ve got antibodies being deployed but you also have killer cells being deployed. We use the biomarkers from the patient’s own tumor and we use the whole set of them, which is also a distinguishing factor of us versus other immune therapies:  we’re targeting the whole set of targets on the cancer cell.  That is why that’s so strong in the first place.  The more we learn about cancer, we understand that it’s a personalized disease and it needs a personalized treatment. There’s huge patient to patient variability, even within an individual patient, the cancer mutates and evolves over the course of the disease quite significantly. So if you target just one target on there, what happens is many patients don’t express it in the first place, which is why most cancer drugs only get a clinical response in twenty-five or thirty percent of the patients who take them, and some such as Erbitux made by ImClone, only eleven or twelve percent of the patients who take it get any clinical response.  To remind you as I said earlier, over eighty percent of our patients get a clinical response.

Secondly, what happens with every drug you know in cancer?  Sooner or later it stops working because if you’re hitting one particular receptor on a cancer cell, cancers are very sophisticated.  They’re not just a lump of tissue, and they will stop expressing that one receptor like a turtle pulling its head inside a shell.  We target the entire set of biomarkers on the cancer and it’s really hard for the tumor to get around that and escape it.  It can’t–not express all their receptors.  Do you see what I mean?

JE: Yes.
LP: So the combination of having multiple weapons attacking the whole set of targets is why we think we’re getting such consistent results. So that’s the answer to your question about why we’re so biologically effective. That’s a distinguishing factor as I mentioned for us, not only vis-à-vis targeted drugs, but also vis-à-vis targeted immune therapies such as ones that use synthetic biomarkers and only use a couple of them.

JE: And the cost effective factor?

LP: Well, with these therapies, the healthcare system would not be paying for a hundred percent of patients to take a drug when only twenty-five percent of them get any effect of it.  Secondly, the healthcare system would be getting a lot of bang for their buck with years of extended survival instead of two months of extended survival.

We plan to charge approximately in the range of thirty-seven thousand dollars a year per year of a three year treatment regimen, so about a hundred and ten thousand dollars for all three years combined, and with that we can still produce very nice EBITA (Earnings Before Interest, Taxes and Amortization) margins for our investors.  As you know, that’s way below the pricing matrix.  I mean Avastin is typically sixty to eighty thousand a year.  Even all standbys like Temodar are fifty, sixty thousand a year.

JE: So you see the healthcare companies falling behind this once you have successful clinical trials and the product has come to market?

LP: We really do because of huge cost effectiveness and because of one more thing I haven’t mentioned to you, which is simplicity, absolute simplicity.  The finished product is loaded in a standard syringe that every clinic on the planet has and it’s administered intradermal, under the skin, as a shot in the arm, like a flu shot or an insulin shot.  That’s it.  No three and four hour infusion of toxic chemo or even a three or four hour infusion of immune therapy.  It’s a shot in the arm under the skin, that can be administered anywhere.  Not just in these centers of excellence – which are great – but is not where ninety plus percent of the cancer patients get their treatment.  They get their treatment in regular doctors’ offices and community hospitals, and so we’re positioning this to become a new standard of care and it has, we believe, the profile to make that possible.  It has the clinical effectiveness.  It has the cost effectiveness and it has the simplicity.

JE: So this could significantly change how doctors treat patients in treating cancers.

LP: We think so.  We absolutely think so.

JE: So let’s talk a little about your recent financing for the company.

LP: Well, the ongoing financing of the company is what’s enabling the company to ramp up its programs and to continue to move forward aggressively on its late stage clinical trial program, so that financing is the latest step in enabling us to move these programs forward.

JE: So from an investor’s perspective, the fact that you have successfully lined up this financing to continue to carry out your programs should be a positive indication.  Correct?

LP: Correct.

JE: Now that we’re on the subject of investors, why should an investor be interested and excited about this company?  What would draw them in that says ‘I should be involved in this company as an investor or a stakeholder’?

LP: Well I think the combination of the strengths that we’ve talked about, the multiple chances to win and the strength in terms of the consistent performance of the technology and the upside potential that comes from all of those multiple chances to win compared to where we are today.  Our stock price is tiny today.  We’ve not had any run up.  It’s the contrary.  We’re at an extremely economical ground floor type of price and market cap for any investor who would be considering this at the present time and given the stage that our programs are at, and the milestones along the way, that will be happening in the programs that we’ve discussed over the next twelve and twenty-four months. I think it would be really hard for an investor to find that combination of upside potential and low price in the landscape.  Basically we’re an undiscovered gem from our perspective in terms of the value that’s been quietly building, but we’ve been working very intensively to get all these programs to an inflection point.  We have two programs at late stage, one of them well underway in the execution and the other one standing in the wings for partnering, plus a deep pipeline that is already cleared by FDA to go into clinical trials. To have two continents, two markets, the share price and market cap that we have, I think is an absolutely unique value opportunity.

JE: You’re active in the US market.  You’re very active, as we just discussed in the European markets and seem to be growing that area.  Are you addressing or have any planned activity in any of the Asian markets?

LP: That’s a very interesting question.  We think that’s a very interesting region and we think it’s very suitable for partnering.  So we’ve got a great footprint of our own in the US and Europe, and we think that if we compliment that with a potential partnering out of that region that that could be really strong.  So that’s something that we’re quite interested to pursue.

JE: OK, Thank You.

LP: Your welcome

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