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Woodford's new biotech could be the next Amgen

Fund manager Neil Woodford has snapped up shares in Northwest Biotherapeutics. We speak to the boss of the US firm on her hopes.

 
Woodford's new biotech could be the next Amgen

(Update: this article has been amended to clarify that Northwest wants to be the leader in dendritic cell cancer vaccines not in the entire area of immune therapies.)

The boss of Northwest Biotherapeutics (NWBO.O), the US cancer drug specialist that is the latest investment by fund manager Neil Woodford, believes the firm could become the next biotech colossus if medical trials of its products go well.

The Nasdaq-listed company is valued around $300 million (£200 million) today but chief executive Linda Powers said if phase III trials for its main tumour treatment were successful next year the firm could eventually match biotech pioneers Genentech and Amgen.

Genentech was sold to Roche (ROG.VX) of Switzerland for $48 billion (£30 billion) in 2009 and Amgen (AMGN.O) is the world's largest independent biotech company valued at $123 billion (£78 billion) on Nasdaq, the US technology stock exchange.

Many successful biotech companies end up being snapped up by big drugs companies hungry for new products but Powers insisted she wanted to ‘go big or go home’.

‘Our intention is to stay independent and not to be bought by another company,’ she said.

Cells technology

Woodford’s addition of Northwest to his £3.4 billion CF Woodford Equity Income fund has highlighted the Maryland-based firm's bid to lead a new wave of anti cancer immune therapies.

Developing agents that help the body’s immune system fight diseases is already big business. For example, drugs giants like Bristol-Myers Squibb (BMY.N),  Merck (MRK.N) and AstraZeneca (AZN) are focused on 'checkpoint inhibitors' which prevent tumours hijacking our immune system's 'on/off' switch.

Another area of research are 'engineered' T-cells, a form of white blood cell that are specially adapted to attack cancer cells.

Northwest is tackling neither of these. Its ambition is to lead a new field of 'dendritic' cancer vaccines. Its DCVax technology harnesses the dendritic or ‘master’ cells that organise the human body’s defence system. 

Powers compared these cells to generals in charge of the army of T-cells, B-cells and antibodies in our bodies. Unlike other treatments which activate only one type of agent – or soldier – in the immune system, the dendritic cells from Northwest can control the whole lot.

‘We activate the entire immune system to fight the tumour,’ she said, adding that this reduced the toxic side-effects that can make other treatments unpleasant.

In September the UK’s drugs watchdog, the Medicines and Healthcare Products Regulatory Agency (MHRA), chose Northwest’s DCVax-L brain cancer treatment as its first ‘promising innovative medicine’. This is part of a new scheme designed to make it easier for patients to access unlicensed drugs.

DCVax-L can be used on all operable, solid tumours (ie, not liquid, blood cancers). It can be used on ovarian cancer but has excited most attention in its application to glioblastoma multiforme, an aggressive brain tumour, where tests have shown it can extend patients’ life expectancy from 14 months to three years. Final phase III clinical trials are underway at King's College London while 10 hospitals in Germany have also applied to start this stage of testing. It is taken as a small phial of liquid.

Northwest is also developing a sister drug, DCVax-D, that can be injected directly into the body to offer hope to people with inoperable tumours, such as pancreatic cancer.

High-risk investment

Powers urged caution on any investors looking at the company following Woodford's investment. Small biotech stocks are notoriously high-risk investments: generally loss-making in their development phase, their share prices rise and fall in response to news from the laboratory and clinical trials.

Even if drugs make it through the lengthy approval process, commercialising new treatments was difficult, she said.

Powers pointed to Dendreon (DNDN), a rival cancer specialist that she said ‘fell flat on its face’ this month by filing for chapter 11 bankruptcy.

Shares in Northwest have soared from 30 cents to more than $5 in over two years. But the company, which was briefly listed on the Alternative Investment Market (AIM) in London a decade ago, has operated consistently in the red. It lost $65.8 million (£42 million) before tax last year, a slight reduction from a loss of $67.3 million in 2012 but up from losses of $32.8 million in 2011.

Powers, a venture capitalist, owns over a third of Northwest shares. She got involved with the company after investing in it through the Toucan Capital Fund II fund she also runs. She joined the board in 2007 and became chief executive in 2011. She said Northwest, which was established in 1996, had had two ‘near death’ experiences in the aftermath of the 9/11 terrorist attacks in 2001 and after the collapse of Lehman Brothers in 2008.

She said she had been impressed by Woodford for doing his own research on Northwest, which is followed by only one analyst, according to the Nasdaq website. Other top institutional investors include Vanguard Group, Franklin Resources, BlackRock Fund Advisors, Goldman Sachs and Royal Bank of Canada.

Woodford’s investment comes amid speculation that he plans to launch a biotechnology investment trust next year. The Citywire AA-rated fund manager has a long history of peppering his funds with small technology and unquoted companies such as Re-Neuron (RQE), e-Therapeutics (EXTP), Imperial Innovations Group (IVO) and Circassia (CIRCI). In June he revealed his interest in launching a fund that held fewer stocks and was more growth-focused than his equity income fund. The company said it was considering its options for a second fund and no decision had been made on the focus or structure of a new launch.

6 comments so far. Why not have your say?

SJB

Nov 26, 2014 at 17:36

Advise Woodford to invest in Oxford Biomedical. Up 127% in last 6 months and still rising...........

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mike88

Nov 26, 2014 at 18:11

Thought Woodford ran a UK fund so why is he investing in the US?

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Evaluate

Nov 26, 2014 at 18:19

Nice article.

Please note in regards to: first ‘promising innovative medicine’ (PIM), that this is part of the UK EAMS program = Early Access to Medicines Scheme. The next step in this program is for the company to apply for Step 2, which involves have a Scientific Opinion issued, and this is estimated to take 90 days or less. Therefor, brain cancer patients in the UK could wind up with early access to DCVax-L treatment as soon as Q1 of 2015.

"Final phase III clinical trials are underway at King's College London while 10 hospitals in Germany have also applied to start this stage of testing." Actually, the final phase III trials are underway in over 50 locations in the USA, plus King's College London, plus at 1 site in Dresden, Germany. The company is looking to not only expand its hospital sites participating in the phase III trial, but also has been gearing up their "Hospital Exemption" early access program in Germany. The company recently announced that this HE program has now commenced with the first patient receiving treatment, additional patients being assessed and a waiting list has started. This is significant, since it will represent meaningful initial revenues to this developing biotech company. The company is finalizing negotiations with the german Sickness Funds in regards to the approved eligibility for Insurance Reimbursement.

"Northwest is also developing a sister drug, DCVax-D, that can be injected directly into the body to offer hope to people with inoperable tumors, such as pancreatic cancer." Actually this treatment, DCVax-Direct, is currently being tested in a combined Phase I/II trial in the USA. Phase I has completed enrollment and is nearing completion of its treatment protocol. Some early encouraging results have been seen, and the company recently announced it intends to commence Phase II in at least 2 cancer indications soon. The company has indicated that during Phase II it may decide to test this treatment based on injections into multiple tumor sites which may result in a more significant systemic effect.

Also note that DCVax has shown to be very safe and easily tolerated in all testing to date, whereas the current Standard of Care for GBM patients (radiation plus chemo) can have very unpleasant side effects.

Regarding the high risk comparison to Dendreon, which filed for bankruptcy, there are many differences. For one, NWBO has a much lower cost structure for producing DCVax versus the high cost to produce Provenge. Secondly, DCVax is much easier to administer. Thirdly, the per-patient cost of Provenge treatment was far higher than was DCVax has been estimated to be. Finally, Provenge was almost immediately faced with a lower cost competitor after it achieved market access.

Interesting to note that if NWBO winds up with a market cap of $50 billion to $100 billion, that this would would represent an increase in stock price by 15000% to 30000% which is mind boggling.

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Andy W

Nov 27, 2014 at 11:03

"fell flat on its face' ?

- fallen

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Chrisyopher Green

Nov 28, 2014 at 18:35

I am very happy with Worldwide Healthcare Investment Trust which holds around 70% of American biggies with the rest spread around Europe , Asia,

Global:I shall certainly take a look at Woodfords fund as and when it is launched.: he has a reputation to to protect and an ability to research in depth

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SJB

Dec 05, 2014 at 12:34

If anyone is interested, this is a link to a recent Oxford Biomedical presentation. As Mike88 commented, why doesn't Woodford invest in UK.

http://www.youtube.com/watch?v=Pdb-qRxMctc

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