In our last article we covered the case of a small German company that claimed that the PLACEBO in their failed clinical trail was their new lead drug candidate. This company, Affiris AG thought their placebo might be an active drug because it wasn't just a saline injection. They had to use a cloudy substance as their placebo because the original drug they were testing in clinical trials was not see-through in the injection vial.
In this article we give you a head's up about a small U.S. based company that is running a phase 3 clinical trial RIGHT NOW that may be setting off a potential RED FLAG along the lines of Affiris.
Here’s an excerpt from this company’s annual report filed with the US Securities and Exchange Commission (SEC)
...Placebos to look indistinguishable from various kinds of pills can readily be made, but creating or selecting a placebo to be indistinguishable from living cells in a vial (such as the living immune cells that comprise [our lead drug candidate]) was a different and difficult challenge. Not only must the placebo look indistinguishable from [our lead drug] visually...
[emphasis added and drug name redacted]
Notice how, in their SEC filings, this company goes to great lengths to explain that, because the drug they are testing is a living cell product, they had to make special efforts to design a placebo? This is the SAME kind of language that Affiris used in their press conference when they explained why they thought their placebo could be an active treatment.
So which company is this?
It’s Northwest Biotherapeutics. NASDAQ:NWBO (this company is traded on the NASDAQ under the ticker symbol NWBO).
Now I'm NOT saying that NWBO is going to turn around and call their placebo an active drug. BUT, the excerpt above is pretty clear, NWBO is saying that they had to develop a special compound as a placebo because their active drug was not see-thru.
Are there other red flags with NWBO? Possibly. Here are some potential additional RED FLAGS:
- The company relies very heavily on a tiny (39 patients) open-label phase 1 trial as "proof" that its immune therapy for brain cancer works.
- The current phase 3 trial was originally a phase 2 trial that was stopped for 3 years, restarted and re-designated as phase 3.
- The company does not have a proper independent management team, the CEO and CFO are the same person and this person also controls the company.
- The CEO was the former Vice President for Global Finance for Enron.
On the first point, the company in their SEC filings, includes graphs that plot the survival of patients in their phase 1 trial against a "matched historical control". This is pure junk science. It is not scientifically valid to compare patients in a trial to the historical performance from patients who are not in the trial.
For the second point, while re-designating a clinical trial from phase 2 to phase 3 is not unheard of, it is very rare. More to the point, since the trial was halted for 3 years due to economic issues, one has to wonder whether the trial truly remained blinded and whether or not all the clinical sites preserved the patient medical records and lab samples that will be needed for review by the US Food and Drug Administration (FDA).
If NWBO's treatment works in a properly controlled phase 3 trial, that would be a huge win for patients who suffer from brain cancer. Unfortunately, there is very little to suggest that the therapy will actually work, and it is also questionable whether or not their phase 3 trial was "well-controlled" given the trial stoppage and change from phase 2 to phase 3.
Between now and when the phase 3 results are announced, NWBO's stock price will likely go up. Biotech investors tend to bid up shares of small companies that have long-shot odds at a big win. But keep the Affiris example in mind when NWBO does announce it’s results. If they say that their placebo showed any activity - RUN AWAY, RUN FAR AWAY and FAST! The best plan if investing in this company is to plan your exit well before the phase 3 data are announced. Owning a small amount of the stock when the data are announced may be fine, but don't bet the farm on this one.
