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I see I’m currently the only one covering Northwest Biotherapeutics (OTCQB:NWBO) on Seeking Alpha. The last 10 articles are all mine. The last time anyone else reported on NWBO was 30 months ago. NWBO supporters are an enthusiastic bunch. I report on NWBO because I appreciate the engagement with them. Enthusiasm, however, goes both ways. Enthusiasm can inform you very well about something, but it can also create tunnel vision. If it weren’t for such tunnel vision, we would recognize that as a public company, Northwest Bio has an obligation to provide timely, clear, and dialogical information about the company to its investors, just as other companies do with earnings calls. Northwest Bio has never received a profit call in living memory.
As such, it was just an opportunity to look at their press releases that allowed me to stumble upon some of the latest developments at the company. My last coverage was in November, just as they had just published the long-awaited Phase 3 data in the prestigious and peer-reviewed journal JAMA Oncology. The data was excellent and for a brief period that day the stock surpassed $1 on volume of 11 million. At the moment, however, it is again in a stagnant area.
Perhaps the main reason for this stagnation is the fact that the company doesn’t provide a date for a BLA filing throughout its press release, which discusses updates for 2022 and plans for 2023. It simply states that “an application will be made as soon as possible after the prerequisites and preparations have been completed”. NWBO claims it has made progress with the application in 2022, including “working…on parts of the application package itself.” The Company provides several requirements for filing a BLA, including obtaining a manufacturing license for its Swanson facility and regulatory approval of a pediatric investigational plan (‘PIP’), which it has received on an expedited basis. It takes companies around 6 months to prepare a BLA/NDA package; On rare occasions, and purely anecdotally, I have seen a delay of up to 1 year before filing. However, unless NWBO has specific plans for filing in 2023, this will be well beyond the range of NDA/BLA filing times I’ve seen. There is no reason for the market to appreciate such a delay from a company that has taken two decades to produce Phase 3 data.
In other news, after having such strong data in hand, the company has filed a major lawsuit against companies it believes have manipulated their shares through negative reporting over the years. Notable market makers named in this securities lawsuit include Canaccord Genuity LLC and Citadel Securities LLC. The specific charge is spoofing, placing a large number of orders that are never meant to be filled but make it appear that the market is more interested in a stock than it actually is. The small details of the lawsuit that I had access to were not the court document, but material on the plaintiff’s law firm’s website, and the only hard fact it presented was this – “Defendants have committed spoofing at 395 out of 1,171.” involved – or nearly 34% – of the trading days during the Relevant Period.” If the Company can comply with this charge by providing actual lists of such decoy orders during the 5-year period that they claim to have taken place, it will be a very winnable lawsuit These orders will typically be placed in the Limit Order Book or Inter-Dealer Quotation System (“IDQS”) and records will exist of who placed these orders and when.
Interestingly, here is a response from one of the defendants:
“This frivolous lawsuit appears to be nothing more than an attempt by Northwest Biotherapeutics to divert attention from its long history of governance and management failures, accusations by the SEC for financial reporting delays, and lawsuits by its own shareholders,” said a spokesman for Citadel Securities. “We intend to pursue all legal action against Northwest Biotherapeutics over these false and baseless allegations, which only undermine the integrity of our capital markets.”
It’s interesting because really frivolous lawsuits usually don’t deserve a response from such reputable companies. This is a lawsuit that will be backed by hard data that may be readily available. As the company’s attorney says:
“We have the hard data,” said Laura Posner, a partner at Cohen Milstein Sellers & Toll, who represents Northwest. “It’s hard to dispute actual transactions and patterns.”
As the company says:
The company said it found thousands of spoofing episodes containing tens of millions of “bait orders” over a five-year period and was able to identify market participants using trading data.
Northwest Bio stocks aren’t new to the controversy. Among them is the infamous case of the FBI agent who was almost invited to investigate the company. That was in 2015 when Neil Woodford, a well-known investor, took a large stake in the company. A company called Phase Five Research, which shorted NWBO, issued a damning report about financial impropriety in the company’s dealings with a CRO, and Mr. Woodford “toted the idea of bringing in former FBI agent Elliott Leary as an independent director conduct an investigation into the company’s financial affairs.” These efforts ended in fiasco – for Mr. Woodford – and I quote this old reference only to show that Ms. Linda Powers sails a tough ship and is a survivor. Hence it is not surprising that, having such strong results in hand, she will attack some of her more prominent critics.The list of defendants includes Citadel Securities LLC, Canaccord Genuity LLC, G1 Execution Services, LLC (a subsidiary of Susquehanna International Group), GTS Securities LLC, Virtu Americas LLC (including Knight Sec urities), Instinet, LLC and Score Priority Corp.
NWBO has a market cap of $750 million but their problem is that they don’t have the money to run a business. They had $11.7 million in working capital as of September 30, 2022, and their R&D and G&A expenses were each approximately $8 million per quarter, making them now, more than 4 months behind them last dates, have no cash.
If the company somehow manages to get some money and they are able to promptly file a BLA, and most importantly if they are able to prove some of these allegations in court, I think NWBO will still will have his day.
Editor’s note: This article covers one or more securities that are not traded on a major US exchange. Please be aware of the risks associated with these stocks.
