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

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)

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

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

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

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

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

Comparison of Treatment

DCVax-L Avastin Standard

Of Care

(SOC)

Average

Overall

Survival

(OS)

36

months

15.7

months

14.6

months

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

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

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

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

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

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

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

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

Sensitivity Analysis

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

Q&AThank you!

Any questions?

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

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.

Risks in biotech

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

Financials- Assumption

Financials- Revenue and NI

Valuation- DCF