Northwest Biotherapeutics (NWBO) finally filed its 10-K for 2016. Imagine a derailed freight train carrying dumpsters on fire. That's an accurate description of the Northwest Bio 10-K.
Ten awful truth bombs from the filing:
1. The SEC issued a subpoena to Northwest Bio as part of a broad investigation into the company's business practices dating back to January 2013. Last December, the company disclosed receiving a "formal information request" from the SEC, but the new 10-K is the first time "subpoena" and "investigation" are mentioned.
2. Northwest Bio's accounting firm issued a "going concern" letter expressing "substantial doubt" about the company's ability to remain in business.
3. Northwest Bio now admits FDA only lifted the long clinical hold on its phase III study of the DCVax-L (the brain tumor vaccine) after the company agreed to stop enrolling patients short of its full enrollment target. A "self-imposed" hold on patient screening outside the U.S. remains in place.
4. The company still refuses to explain the reason (or reasons) for the FDA clinical hold on the DCVax-L phase III study.
5. Northwest Bio closed out 2016 with $6.2 million in cash after using $56 million in cash for operations during the year.
6. In 2016, Northwest Bio paid $14.2 million in cash to Cognate BioServices for DCVax-L manufacturing and other services. Cognate is owned by an investment fund controlled by Northwest Bio CEO Linda Powers. Northwest Bio still owes Cognate $23.4 million for unpaid invoices.
6a. It's worth repeating this one: $14 million of Northwest Bio's cash in 2016 -- that's 25% of all the cash used by the company during the year -- was funnelled to a private company controlled by its CEO Linda Powers. Northwest Bio paid Cognate $14 million in 2016 even though the DCVax-L phase III study was on clinical hold for the entire year. Northwest Bio still owes that private company controlled by its CEO more than $23 million.
7. Did I mention that the SEC is investigating Northwest Bio's business practices? Oh yes, I did. Well, in case you forgot...
8. In November, Les Goldman, Northwest Bio's vice president of business development, loaned the company $260,000 at 12% (!!) interest. This was the second time Northwest Bio had to take out an emergency loan from Goldman.
9. Northwest Bio's fully diluted share count grew to 157 million during 2016, a 64% increase over the prior year. The company's stock price fell from $3.20 per share to 35 cents per share during 2016 -- a decline of 89%.
10. Through the first three and a half months of 2017, Northwest Bio's share count has increased by another 21% to 189.5 million. The company still lives hand to mouth, raising tiny increments of cash in hugely dilutive offerings just to keep the lights on.
Adam Feuerstein writes regularly for TheStreet. In keeping with company editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet. He also doesn't invest in hedge funds or other private investment partnerships. Feuerstein appreciates your feedback; click here to send him an email.