Pgiam/iStock through Getty Photographs
I see I’m the one one overlaying Northwest Biotherapeutics (OTCQB:NWBO) on In search of Alpha as of late. The final 10 articles are all mine. The final time another person coated NWBO was 30 months in the past. NWBO followers are an enthusiastic lot. I cowl NWBO as a result of I recognize the engagement with them. Enthusiasm, nonetheless, cuts each methods. Enthusiasm could make you very educated about one thing, however it might probably additionally produce tunnel imaginative and prescient. If there was no such tunnel imaginative and prescient, we might notice that Northwest Bio, being a public firm, has an obligation to maintain its traders knowledgeable concerning the firm in a well timed, clear and dialogic method, like different corporations do with earnings calls. Northwest Bio has by no means had an earnings name in residing reminiscence.
Thus, it was solely an opportunity to have a look at their press releases that allowed me to come back upon a number of the newest developments on the firm. My final protection was in November, after they had simply printed the long-awaited part 3 knowledge within the prestigious and peer-reviewed JAMA Oncology. The info was excellent, and for a short interval on that day, the inventory crossed $1 on an 11 million quantity. It’s, nonetheless, again to a stagnant vary proper now.
Maybe the important thing cause for this stagnancy is the truth that all through the press launch which discusses updates for 2022 and plans for 2023, the corporate doesn’t present a date for a BLA utility. All it says is it can “submit an utility as quickly as doable after the stipulations and preparations are accomplished.” NWBO claims that in 2022 it made progress with the appliance, together with “work… on parts of the appliance bundle itself.” The corporate offers a number of stipulations to submitting a BLA, together with acquiring a producing license for its Swanson facility, and a regulatory approval of a Pediatric Investigation Plan (‘PIP’), which they obtained on an accelerated foundation. Corporations take round 6 months to arrange a BLA/NDA bundle; in uncommon circumstances, and purely anecdotally, I’ve seen as much as 1 yr of delay earlier than submitting. Nevertheless, if NWBO has no particular plans to file in 2023, that can be nicely past the vary of NDA/BLA submitting occasions I’ve seen. There isn’t any cause for the market to understand such delay from an organization that has taken 20 years to supply part 3 knowledge.
One other piece of reports is that after having such sturdy knowledge in hand, the corporate filed a significant lawsuit in opposition to entities that it thinks manipulated its inventory by damaging protection through the years. Among the many massive identify market makers who’ve been named on this securities lawsuit are Canaccord Genuity LLC and Citadel Securities LLC. The particular cost is of spoofing, inserting a lot of orders which can be by no means meant to be executed, however which make it seem that the market is extra focused on a inventory than it really is. The small particulars of the lawsuit grievance I had entry to weren’t the courtroom doc, however materials on the plaintiff legislation agency’s web site, and the one laborious reality it offered was this – “Defendants engaged in spoofing on 395 of 1,171 – or practically 34% – of the buying and selling days through the Related Interval.” If the corporate can comply with by with this cost by citing precise lists of such baiting orders through the 5-year interval they allege these to have taken place, this can be a really winnable lawsuit. These orders are sometimes positioned within the Restrict Order Guide or Inter-Supplier Citation System (“IDQS”), and data of who positioned such orders, and when, will exist.
Apparently, here is a response from one of many defendants:
“This frivolous lawsuit seems to be nothing greater than an try by Northwest Biotherapeutics to divert consideration away from its lengthy historical past of governance and administration failures, SEC costs for monetary reporting lapses, and lawsuits from its personal shareholders,” a Citadel Securities spokesman stated. “We intend to pursue any and all authorized motion in opposition to Northwest Biotherapeutics for making these false and baseless allegations, which solely undermine the integrity of our capital markets.”
It’s attention-grabbing as a result of actually frivolous lawsuits often don’t benefit a response from such massive identify corporations. It is a lawsuit which can base itself on laborious knowledge that may be simply accessible. As the corporate’s lawyer says:
“We now have the laborious knowledge,” stated Laura Posner, a associate with Cohen Milstein Sellers & Toll who’s representing Northwest. “It is laborious to dispute precise transactions and patterns.”
As the corporate says:
The corporate stated it discovered 1000’s of spoofing episodes involving tens of hundreds of thousands of “baiting orders” over a five-year span, and was capable of determine the market members utilizing buying and selling knowledge.
Northwest Bio inventory shouldn’t be new to controversy. Amongst others is the notorious case of the FBI agent who was nearly invited to analyze the corporate. That was in 2015, when Neil Woodford, a well known investor, took a big stake within the firm. An outfit referred to as Part 5 Analysis that was shorting NWBO got here out with a damning report about monetary impropriety with the corporate’s dealings with a contract analysis group, and Mr. Woodford “pitched the thought of bringing in ex-FBI agent Elliott Leary as an impartial director to run a probe into the corporate’s monetary dealings.” That effort resulted in a fiasco – for Mr. Woodford – and I’m citing this historic reference solely to indicate that Ms. Linda Powers runs a decent ship, and is a survivor. So it’s no shock that proper after having such sturdy ends in hand, she is going to go after a few of her extra well-known detractors. The listing of defendants consists of Citadel Securities LLC, Canaccord Genuity LLC, G1 Execution Companies, LLC (a subsidiary of Susquehanna Worldwide Group), GTS Securities LLC, Virtu Americas LLC (together with Knight Securities), Instinet, LLC, and Rating Precedence Corp.
NWBO has a $750mn market cap however their downside is that they do not have money to stay a going concern. They’d $11.7mn in present belongings as of September 30, 2022, and their R&D and G&A prices have been about $8mn every, per quarter, so proper now, after greater than 4 months from that final knowledge, they don’t have any money.
If the corporate can someway handle to get some money, and they can promptly file a BLA, and, most significantly, if they can show in courtroom a few of these allegations, I believe NWBO will nonetheless have its day.
Editor’s Observe: This text discusses a number of securities that don’t commerce on a significant U.S. alternate. Please concentrate on the dangers related to these shares.
