By Ransdell Pierson
NEW YORK Feb 26 (Reuters) - Ten years ago, cash-strapped biotechnology company Northwest Biotherapeutics Inc was down to three employees and one week from closing its doors when a financial backer came forward at the annual JP Morgan Healthcare Conference.
By 2007, that backer, Linda Powers, had become chairman of the Maryland-based company. A venture capitalist, Powers remains one of its largest shareholders and has invested more than $20 million in the company and its experimental drugs for brain cancer and inoperable tumors.
"Biotech is not for the faint of heart," Powers said in an interview. "Through two major recessions and pummeling in the capital markets, we've chosen to keep our focus."
Now worth close to $300 million, Northwest's stock has jumped 75 percent this year to the $7 range. Institutional investors include Goldman Sachs and Franklin Advisers Inc, and more industry analysts are taking notice.
But many other investors are betting against the company, highlighting the uncertain, high-risk nature of developing drugs for hard-to-treat diseases.
The key to Northwest's survival has been delivering strong trial results in a tiny cadre of patients for its brain-cancer drug, called DCVax-L. A similar drug called DCVax-Direct has begun testing for a wide array of solid tumors that cannot be removed by surgery, including cancers of the colon, pancreas, breast and melanoma.
They are among an emerging new crop of drugs that coax the body's own immune system into tracking down and killing cancer cells. More specifically they harness dendritic cells, master cells of the immune system that give marching orders to its soldiers, including t-cells and b-cells, which make antibodies.
Northwest Biotherapeutics' entry into the high-stakes field follows two high-profile disappointments of dendritic cell-based therapies from ImmunoCellular Therapeutics Ltd and Dendreon Corp .
Powers, chief executive since 2011, is making the case to investors that the future of its drugs looks far different.
"If (DCVax-L) has a positive result, it could be the new standard of care for brain cancer and have potential for hundreds of millions of dollars in sales for newly diagnosed patients," said Carol Werther, a biotech analyst for Summer Street Research. "And if it works against other solid tumors, it could be a multibillion-dollar product."
The company points to early-stage trial data that shows two brain-cancer patients surviving the disease for a decade after taking DCVax-L. Others have remained alive for five years or longer, with virtually no significant side effects.
But Werther cautioned that DCVax-L is a financially "high risk and speculative product," as investors await data from a late-stage clinical trial of the drug that involves far more patients and represents the first formal randomized trial of the medicine.
BOOST FROM A LAB DISH BREW
A graduate of Harvard Law School who was a lead negotiator for the United States on the NAFTA trade agreement, Powers has become a self-taught expert in promising new cell-based drugs. She holds major stakes in more than a dozen biotech companies through several venture capital funds, including Toucan Partners LLC. But DCVax-L is her main focus.
The treatment consists of an individual patient's immature dendritic cells, which are drawn from the blood and mingled in a laboratory dish with dozens of antigens, or proteins, from brain tumor tissue of the patient obtained in surgery.
When purified and injected back into the patient, DCVax-L is meant to prompt t-cells and b-cells to leave the lymph nodes and fan out through the body, seeking and attacking cells having the target antigens.
In small early trials involving 20 newly diagnosed brain-cancer patients, those taking DCVax-L lived three years on average, more than twice the 14.6 months such patients typically live on average with standard treatment.
Data from the company's far-larger Phase III brain cancer trial is due in the first half of 2015. Treatment with the drug will be on top of standard care, and the main goal is to assess whether DCVax-L can delay regrowth of the tumor.
But the industry is littered with drugs that crashed after initially looking like winners. A promising brain-cancer drug from ImmunoCellular failed its primary goal of significantly prolonging survival in a midstage trial. Company shares plunged 63 percent on the setback in December.
"Nobody knows what will happen to them as a company," Powers said of ImmunoCellular. Northwest's early trials show a more impressive survival benefit for DCVax-L, she said, which she believes will bode well for its larger studies.
Northwest Biotherapeutics has also attracted the attention of investors taking short positions in the stock, betting it will suffer like other companies that have used dendritic cell technology. As of Jan. 31, 4.4 million shares were held short, almost 9 percent of company stock.
Boris Peaker, an analyst with Oppenheimer & Co, noted the ongoing Phase III trial has the involvement of many more doctors and a more genetically diverse population of patients.
"If the drug holds up in Phase III, it will be a very big win for the company because there aren't many good options now for patients, and DCVax is certainly better tolerated than any chemotherapy," Peaker said. "And if it works in brain cancer, it should work in other solid tumors."
DATA IN MAY?
Early-stage trials of a sister drug, DCVax-Direct, are targeting a wide range of other solid tumors so advanced or inaccessible that they are deemed inoperable.
The trials of DCVax-Direct involve 60 U.S. patients. The Phase 1 stage will focus primarily on safety, although hints of efficacy could emerge. The primary goal of the Phase II part of the study is to shrink or eliminate tumors.
Dr. Vivek Subbiah, an oncologist at M.D. Anderson Cancer Center in Houston who is leading the DCVax-Direct trials, said he may present initial data at the annual meeting of the American Society of Clinical Oncology that begins May 30.
Subbiah and his colleagues test scores of experimental cancer drugs, many having new mechanisms of action.
"This is not a 'me-too' trial," Subbiah said. "It is one of the interesting technologies. Twenty years ago it was chemo, 10 years ago it was targeted therapies, and for this decade it will be drugs that boost the immune system."