The Street Sweeper

About the Author The Street Sweeper

Sonya Colberg joined TheStreetSweeper in early 2012 as a senior investigative reporter after racking up an impressive pile of journalism awards for her past work at two major daily newspapers. For example, Colberg recently won top honors – recognized by the Society of Professional Journalists and the Associated Press alike – for her performance in the tough investigative reporting field. During her long and decorated career, she has walked away with major prizes for her in-depth coverage of business and healthcare as well. A fearless reporter with incredible writing skills, Colberg has now teamed up with Melissa Davis – another award-winning journalist who serves as senior editor of TheStreetSweeper – to deliver hard-hitting coverage of risky stocks to the investment community.

Valuing Northwest Biotherapeutics, Inc From A Bearish Perspective

TheStreetSweeper issues an alert about a desperate situation occurring at Northwest Biotherapeutics, Inc (NASDAQ:NWBO). The biotech’s recently hyped effort – early Phase 1 data for its experimental cancer tumor injectable shows 27 of 39 patients remain alive after up to 18 months after injection – comes at a heavy, perhaps even fatal cost.

NWBO retained the services of Cognate BioServices to conduct clinical trials and associated work. Now, Cognate has hit up NWBO for $8.2 million and the biotech is coming up short. It still owed Cognate $5.8 million as of March 31.

This is just the latest in a series of stunning negatives, including:

*1. Cash has plummeted to just $3.2 million.

*2. Cash burn hit ~$17 million.

*3. Working capital deficit soared to $86 million.

*4. CEO Linda F. Powers’ company bio doesn’t mention it, but Ms. Powers was Enron’s senior vice president for global operations, though she wasn’t implicated in the scandal. She controls NWBO’s major funding sources Toucan Capital and Toucan Partners, holders of ~4% of outstanding shares.

*5. Expensive lawsuits have gone in NWBO’s favor and against it, such as a class-action securities lawsuit alleging the company issued misleading press releases. NWBO agreed to settle for $1 million. NWBO has also received demand letters from shareholders seeking access to books with the intention of investigating possible mismanagement and breaches of fiduciary duty. One demand has been settled, two more remain under discussion.

*6. Market value is $760 million. With just 12 full-time employees, the company last year spent $85.6 million in R&D and $16.9 million in general and administrative costs.

*7. Extremely promising competing therapeutics are undergoing testing by Stanford and numerous companies.

*8. Serious doubts exist about NWBO’s survival, according to its SEC filings:

“Because of recurring operating losses, net operating cash flow deficits, and an accumulated deficit there is substantial doubt about the Company’s ability to continue as a going concern.

*9. NWBO’s 10-K filing warns: “We will need to raise substantial funds, on an ongoing basis…”

Indeed, it adds: “Any financing will involve issuance of equity and/or debt, and such issuances will be dilutive to existing shareholders.”

*10. Operating losses exceeded its abysmal revenue – a $194,000 research grant – by a factor of 117:

The recent NWBO stock chart:

It looks like NWBO may have to reel out another potentially dilutive stock offering or increase debt if it hopes to survive another quarter.

TheStreetSweeper expects NWBO stock will get hammered back to around the $5-$6 pre-rally level, especially considering that we believe an offering is imminent.

  • SarahKnows

    Even the most naive investor knows that there is standard boilerplate in all company reports that lists possible adverse consequences of holding stock. These typically include every conceivable occurrence other than “the sky falling.” To suggest that the company’s reports include the possibility of failure, the need to raise cash and the other disingenuous comments made in this article is typical of the reporting we have come to expect from “the Street.” I suspect, these same paragraphs appear in filings by “the Street.com”. Please give us a break.