Northwest Biotherapeutics, Inc (NASDAQ:NWBO): Heading For A Reversal?

Northwest Biotherapeutics, Inc (NASDAQ:NWBO) is grabbing headlines again. The company put out some data at the end of September purporting to a phase 1 trial of its DCVax-Direct treatment, and response has been mixed. At first glance, the data looks highly indicative of efficacy, but a number of commentators have pointed out what they deem to be weaknesses in its presentation. In response to these, Dr. Marnix Bosch, Chief Technical Officer of NW Bio, issued a more detailed description of the numbers and what they represent. Over the past few months, we have discussed NW Bio on a number of occasions in an attempt to ascertain the company's chances of recovering from its decline. The latest data supports a bullish thesis, but the fact that the company remains quiet on its brain cancer phase 3 weighs on this bias a little.Here is our interpretation of the latest data, and look at a potential explanation for the ongoing phase 3 silence.First, the data. In short, it looks very good. It wasn't a big trial, as is the nature of phase 1s like this, but survival rates look impressive, and when considered against the fact that these patients are pretty much without any other option (i.e. they have undergone most other available therapies) then they are even more so. 20% of patients were still alive at the two-year mark post trial, and the longest survivor is still alive after nearly 3 years. 50% of patients have average actual individual survival time of 26.7 months, compared to an expected 12.3 months.This latter figure was one that caused some of the issues, with some highlighting the data as a potential red flag. We think that's overly critical, however, and that the company’s chosen comparison method is perfectly logical and reasonable in this sort of trial, at this stage. In the above-mentioned Bosch release (which we think is a response to the Feuerstein article) the company highlights exactly this fact.So what about the phase 3 study? Well, it is frustrating for shareholders but that NW Bio and its management have remained quiet on the issue is almost a positive sign rather than a negative. Why? Because this suggests that the issue is rooted in the drug extending survival, and NW Bio not wanting to compromise the trial by getting into a discussion about which patients are in the control arm and which are in the active arm (and in turn, having these patients request a switch).Consider this scenario.The drug is working far better than anybody expected and patients are living longer as a result. We know that patients are living longer, as the company has already referenced this as a factor in the current situation. The FDA wants to stop enrollment in its current shape (two thirds active, one third placebo) because if the drug is working very well, it wouldn't want to enroll onto a control arm because that would be unfair. It is now waiting for a certain number of events (patient deaths) so as it can say with any degree of certainty whether the extension in survival is because of the drug. Management didn't want to discuss this, because then patients on the control arm might want to shift to the active arm, which would render the trial invalid.That's a perfectly reasonable scenario that explains management's silence and the FDA action to stop enrollment, while also continuing treatment for those already active in the trial.The former referenced trial is set to complete in December this year, and we should see top line that purports to both the already discussed phase 1 element and the phase II element that is currently underway released on completion. As this data hits, we expect to see some volatility based on its inference. If the top line is as strong as the data that has just been released, we think it might mark a turning point for NW Bio, and the start of a longer term reversal. There's also the potential for a spike on the advancing of the GBM situation, and any clarity offered.Bottom line here is that the situation is strange, but there will almost certainly be a simple and reasonable solution. The scenario outlined above would be exactly that. Phase 3 aside, the lower pipeline is robust, and while it's not particularly popular with its shareholders right now, NW Bio still looks good as a speculative exposure. We will be updating our subscribers as soon as we know more. For more updates on NWBO, subscribe to our newsletter below!Disclosure: We have no position in NWBO and have not been compensated for this article.