On Sept. 27, the Washington Post published a column attacking the integrity of TheStreet's biotech coverage and reporter, Adam Feuerstein. TheStreet has requested a retraction. Below is our letter to the Post's editor:

To the editor,

In Northwest Biotherapeutics Stock Woes Highlight the Harm of Short Sales, Steven Pearlstein insinuates that one of TheStreet's veteran reporters is conspiring with "Wall Street wise guys to use sleazy tactics to manipulate share prices for short-term profit." Mr. Pearlstein thus plainly and falsely implies that our reporter is guilty of securities fraud. Yet he intentionally fails to mention any of the information we provided him or otherwise available to him before the story was published that would have caused a reasonable reader to doubt his damning article. You should immediately retract this defamatory story.

Five days before the story ran, Mr. Pearlstein contacted TheStreet to provide a "heads up" that he was writing about our reporter Adam Feuerstein's purportedly "very hostile" campaign against Northwest Biotherapeutics ( (NWBO ), a biotech company that Mr. Feuerstein has long covered for TheStreet. Mr. Pearlstein -- who said he knew nothing about biotech or medicine and that he already had spoken extensively to NWBO -- asked whether Mr. Feuerstein was "working with the shorts" to drive down NWBO's stock price, whether it was true (as NWBO's executives had told him) that Mr. Feuerstein had not contacted NWBO for comment in the last seven years, and noted that an advocacy group, which he did not identify, had written a letter to the SEC that criticized Mr. Feuerstein's coverage of NWBO.

We responded to Mr. Pearlstein in writing and orally. (Mr. Pearlstein's assertion that Mr. Feuerstein "declined to speak" to him is false; Mr. Pearlstein first contacted our PR department, and I then communicated with him as editor-in-chief.) I informed Mr. Pearlstein that Mr. Feuerstein was not "working with the shorts" and that Mr. Feuerstein fully complies with TheStreet's policy prohibiting any staff reporter from owning any financial stake (long or short) in any public company (other than TheStreet). I told him clearly we had no questions about Adam's integrity nor was he part of the alleged "conspiracy" that Mr. Pearlstein repeatedly referred to. Yet, the story falsely states that I offered only the vague reply that Mr. Feuerstein was "in touch with a wide range of investors."

Second, in response to Mr. Pearlstein's statement that NWBO claimed that Mr. Feuerstein had not contacted NWBO in seven years, I asked Mr. Feuerstein who promptly showed me his email correspondence with NWBO and its PR firm as recently as February; after I emailed Mr. Pearlstein the facts, he admitted that NWBO had given him false information. But your readers wouldn't know that because his pro-NWBO story does not mention it. Third, the advocacy group that Mr. Pearlstein mentioned to us, and which he highlights in the story -- CREW -- expressly acknowledged in its letter that it has no evidence that Mr. Feuerstein has any financial interest in how NWBO's stock performs. But Mr. Pearlstein also chose to conceal that fact from readers: he never mentions it, despite citing CREW's letter four times (without linking to it). And fourth, I alerted Mr. Pearlstein that published reports alleged that NWBO has paid journalists to provide favorable "news" coverage. If your reporter had looked, he surely would have found this Web site -- http://moxreports.com/tag/northwest-biotherapeutics/ -- with its detailed set of allegations that NWBO pays for favorable media coverage (an allegation that also has been sent to the SEC).

Even though we had shown Mr. Pearlstein that NWBO had given him false information about Mr. Feuerstein, and even though we had urged him to investigate claims that NWBO paid consultants to create favorable media coverage, he dismissed our suggestion that he engage in greater diligence, breezily seeming to assume that the fact that NWBO's CEO is married to a prominent local entrepreneur and that NWBO was on his "radar screen" sufficed to support his conclusion, expressed by email to me, that he "check[s] things out a lot more carefully and with a more open mind than your man." Yet Mr. Pearlstein either did not conduct due diligence or intentionally concealed negative information about NWBO from your readers in order to bolster his defamatory accusation that Mr. Feuerstein is corrupt.

This attack on TheStreet's and Mr. Feuerstein's journalistic integrity is baseless. As anyone who has done even superficial research knows, NWBO is a small biotech firm with no revenue, no approved drugs, and whose SEC filings warn that its auditors recently issued a "going concern" audit opinion. It has many critics. Mr. Feuerstein, who has been writing about biotech since 2001, has every right to criticize NWBO, and doing so provides no basis for Mr. Pearlstein's insinuation that Mr. Feuerstein is conspiring with allegedly nefarious short-sellers.

Yet Mr. Pearlstein plainly implies to the Post's wide, influential audience that Mr. Feuerstein is not just biased, but a criminal. This defamatory attack is premised on what Mr. Pearlstein's article reports as undisputed fact: that NWBO stock is shorted to an "unusual" extent. But Mr. Pearlstein either ignored or concealed the fact that, according to Nasdaq (the exchange in which NWBO shares trade) and data compiled by Bloomberg, there were 7,984,135 shares short in NWBO on Sept. 15, 2014 (the most recent figures available), which amounts to 17.71% of NWBO's outstanding shares, making NWBO merely the 46th-most-shorted stock among biotech companies traded on Nasdaq, according to data compiled by Bloomberg. NWBO's level of short interest is not particularly "unusual."

Moving on, Mr. Pearlstein then accuses Mr. Feuerstein of timing an article to aid short sellers. The facts -- concealed from your readers -- show the accusation is false. In late February 2014, a German regulatory agency decided to allow an NWBO drug to be used in limited circumstances even though the drug has not been approved as safe and effective. On March 10, 2014, NWBO issued a press release about this approval. On March 11, 2014, NWBO's stock price increased. Mr. Pearlstein alleges that, in order to harm NWBO's stock price, Mr. Feuerstein "was quick to weigh in with a story that the company had withheld the news for two weeks" and was releasing it at that time to "divert attention from the fact that" NWBO had not delivered an "interim report on the results of its [US] Phase III trial."

But Mr. Feuerstein's March 11th article correctly notes that NWBO did wait two weeks to announce news of the German regulatory approval; and he cited accurate facts to support the story's thesis that NWBO chose to release news regarding the German approval to distract attention from its failure to release an interim analysis of a critical U.S. clinical trial. The facts in Mr. Feuerstein's article are true, while those in Mr. Pearlstein's are false. NWBO told investors on Dec. 13, 2013 that it expected to release an "interim analysis" of the study in "six to eight weeks" (http://www.nwbio.com/first-interim-analysis-of-nw-bios-phase-iii-gbm-trial-triggered-by-reaching-required-number-of-events/), and, more than eight weeks later, on March 7, 2014, it issued a press release describing interim findings regarding safety data but noting that review of the efficacy data was not yet complete but "still pending" (http://finance.yahoo.com/news/nw-bio-receives-recommendation-continue-130000641.html). Mr. Feuerstein never wrote about an "interim study," but an "interim analysis" promised by NWBO. The facts stated in Mr. Feuerstein's article were and are true.

Worse is Mr. Pearlstein's assertion that Mr. Feuerstein falsely overstated the significance of NWBO's description of a regulatory risk that could result in disapproval of its only drug. Mr. Pearlstein accuses Mr. Feuerstein of using a misleading headline -- "Northwest Bio acknowledged that the FDA might throw out results of its Phase III study" -- to portray as "ominous" what was "really" just the innocuous fact that NWBO "in its annual report filed with the SEC, included that possibility in the long list of risks that investors should take into consideration, just as any company in the midst of a Phase II trial would have to do." Mr. Pearlstein must have known this was false when he wrote it.

Mr. Feuerstein's April 3, 2014 article that Mr. Pearlstein attacks discusses a change that NWBO made from its prior annual report: an additional, specific disclosure of the risk that regulators might not accept progression-free survival as a valid approval criterion, and indeed that regulators in the past had not accepted that endpoint as the basis for approval (http://www.thestreet.com/story/12613007/1/northwest-bio-warns-fda-may-throw-out-phase-iii-brain-cancer-study.html). Any investor would view NWBO's revised risk disclosure as material. But Mr. Pearlstein -- an experienced business journalist who plainly knows better -- treats it as mere boilerplate, which is how he characterized it to me by email before he wrote the story. (That email mistakenly referred to this NWBO filing as a "quarterly" report, but by the time Mr. Pearlstein's story was published he correctly identified it as an annual filing, which means he read it. If he did not compare it to the prior year's report, as Mr. Feuerstein's article expressly did, he was either recklessly or intentionally indifferent to the truth.)

I could go on. But I hope the point is clear: this story is a hatchet job, unworthy of the Pulitzer-prize-winning Mr. Pearlstein, and unworthy of this venerable newspaper. We demand a retraction.

Janet Guyon




This article was written by a staff member of TheStreet.