nwbo week3.revised
TRANSCRIPT
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Gazelle Hunting Meeting #3
Northwest Biotherapeutics, Inc (NWBO)
Product Portfolio: Customized Cancer Therapies
Jocelyn Bao, Product Analyst
Hao Liu, Financial Analyst
Yi (Shirley) Shen, Market Analyst
Mark Verdecia, Scientific Advisor
Haohan Xu, Team Leader
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AgendaCompany Overview
Financial Highlights
Company Management
Comparison of Treatment
Valuation, Price, and Costs
Germany Market
Financial Forecast
Investment Thesis
Sensitivity Analysis
Risk Factors
(Supporting Slides)
(Appendix: financial and valuation models)
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Company Overview• Northwest Biotherapeutics., is a biotech company that aims at developing more
effective vaccines to treat solid tumor cancers.
• Headquartered in Bethesda, MD
• Products:
DCVax-L, DCVax-Direct, DCVax-Prostate
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Investment Thesis- BUY
Current market price: $6.07 as of 4/22/2014
Recommend to buyat $12 or lower
Recommend to sellat $25 or higher
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Financial HighlightsMarket Cap: 326.19 M
Shares outstanding: 53.74 M
52wk range: $3.10- $10.64
EPS: -2.00
Debt structure: No outstanding debt
Funding: $36 M
Additional funds available: $5.5 M grant from German government
Monthly burn rate: $2.7 million
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Company ManagementLinda F Powers (CEO)
Harvard Law School, JD; Princeton, BA in economics
Holdings: $1.02 million/ 0.3% of NWBO (as of 4/11/2014)
Date Organization Title
6/2011- Present NWBO Chairman/CEO
2001- Present Toucan Capital Corp Managing Director
Present Toucan Partners Managing Member
Present Moffitt Technology Corp Board Member
Present M2gen Board Member
Source: Morningstar, Business Week
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Company ManagementDr. Alton Boynton
University of Iowa, PhD in Radiation Biology
Holdings: $50 million/ 5.8 % in stock, 7.6% in options of NWBO (as of 4/11/2014)
Date Organization Title
Present NWBO Chief Scientific Officer
1998- Present NWBO Board Member
Source: Morningstar, Business Week
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Comparison of Treatment
DCVax-L Avastin Standard
Of Care
(SOC)
Average
Overall
Survival
(OS)
36
months
15.7
months
14.6
months
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DCVax-L vs. Avastin
AVASTIN
• Produced in an engineered cell line.• Generic product, fewer
manufacturing steps.• IP is the engineered product.• Economies of scale decrease
COGS.• Significant patient burden from
treatment course.
DCVAX-L
• Directly made from an individual patient.• Custom product, more
manufacturing steps.
• IP is the manufacturing process.
• Cannot be scaled.
• Lessened patient burden.
• Both are biologics. Expensive technical expertise& high manufacturing costs
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Valuation-Price and Cost
Provenge DCVax-L
Technology Platform Immune/DC cellsImmune/DC cells/Patient specific
antigen
Cost of Production Relatively lowerMore extraction process, relatively
higher
Efficiency Relatively low High
Dose Less More
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Pricing
$93,000
$120,000
$-
$20,000
$40,000
$60,000
$80,000
$100,000
$120,000
$140,000
Provenge DCVax-L
Price
TreatmentYear 1: 7 dosesYear 2: 3 dosesYear 3: 1 dose
Revenue: front-loaded
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Addressable Market
Launch year 2016
Population of EU in 2013
733 M
Population of US in 2013
317 M
Population of Germany in
201382 M
Annual GBM incidence
2/100,000
Market Penetration
From 10% to 50%
300 450
6,820
11,698
18,433 20,822
25,516 28,391 29,431 29,549
0
5000
10000
15000
20000
25000
30000
35000
2014E 2015E 2016E 2017E 2018E 2019E 2020E 2021E 2022E 2023E
# of GBM patients under DCVax-L
# of patients in EU # of patients in US # of patients in Germany
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Milestones-DCVax-LEvent Date
Early access program in Germany 03/2014
Enroll patients (outside of trial) in Germany Q2 2014
Phase III results 2015
Approval and commercialization globally 2016-2017
Source: Clinicaltrials.gov, Company press releases
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Pre-approval in GermanyApproval Renewable 5 year exemption from the Paul Ehrlich Institute (FDA equivalent)
DCVax-L to patients with any type of glioma brain cancers
7,000 new cases/ year at full price
Eligible for reimbursement from Sickness Funds
Source: Company Press Release
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Germany MarketNew patients enrollment
2014: 300, 2015: 450
Partnership: 6 major hospitals
–
5,000,000.0
10,000,000.0
15,000,000.0
20,000,000.0
25,000,000.0
30,000,000.0
35,000,000.0
40,000,000.0
45,000,000.0
50,000,000.0
2014E 2015E
Germany
Revenue
Net Income
Source: Company Press Release
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Financial Forecast
–
200,000,000.0
400,000,000.0
600,000,000.0
800,000,000.0
1,000,000,000.0
1,200,000,000.0
1,400,000,000.0
2014E 2015E 2016E 2017E 2018E 2019E 2020E 2021E 2022E 2023E
Revenue Projection (Worldwide)
Revenue
Net Income
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Sensitivity Analysis
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Risk FactorsRegulatory risks: product approval
Operational risks: market penetration
Financial risks: funding; cash outflow
Third party risks: reimbursement from insurance companies
Industry risks: Roche and Novartis
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Q&AThank you!
Any questions?
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ReferenceSummer Street Research Partners
http://www.bizjournals.com/washington/news/2011/06/06/northwest-biotherapeutics.html
Clinicaltrials.gov
Crunchbase
Morningstar
Bloomberg
Business week
Company reports and news releases
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Rationale
Discount rate
- VC hurdle rate: 30-50%
- A Survey by 300+ biotech stakeholders
80% range: 12%-40% for Mid-stage
P/E multiple
- Based on the median and average.
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Risks in biotech
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Waxman’s Impact on U.S. Drug Pricing: Hype or hard times ahead?
US Senate NO regulatory power over drugs
Physicians expensive biotech drugs
Generic manufacturers expensive drugs less competition
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Financials- Assumption
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Financials- Revenue and NI
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Valuation- DCF