United States District Court, D. Maryland, Southern Division
CHAD A. LERNER, Plaintiff,
NORTHWEST BIOTHERAPEUTICS, et al., Defendants.
J. HAZEL DISTRICT JUDGE
a securities fraud case arising from Defendants"
statements regarding the clinical trials of their cancer
treatment products. "DCVax®." Lead Plaintiffs
Neil Pastel and Franklin Greer ("Plaintiffs") bring
this putative class action against Defendants Northwest
Biotherapeutics. Inc. ("NW Bio" or "the
Company") and CEO Linda F. Powers ("Powers")
(collectively. "Defendants"), for purported
violations of Sections 10(b) and 20(a) of the Securities
Exchange Act of 1934 ("the Exchange Act"). 15
U.S.C. §§ 78j(b). 78t, and SFC Rule I Ob -5. 17
C.F.R. § 240, 10b-5. Presently pending before the Court
is Defendants" Motion to Dismiss, ECF No. 26. No hearing
is necessary. See Loc. R. 105.6. For the following
reasons. Defendants' Motion to Dismiss is granted.
this case on a motion to dismiss, the Court takes
Plaintiffs" factual allegations in the Complaint as
true. Northwest Biotherapeutics is a
developmental-stage biopharmaceutical company traded on the
NASDAQ under the symbol "NWBO." ECF No. 22 ¶
2.Since the Company went public in 2001. N.W.
Bio has "focused on developing dendritic cell cancer
immunotherapies." Id. Dendritic cell
immunotherapies work by using human dendritic
cells to activate the body's immune response
against cancerous tumors. Plaintiffs are two individuals who
purchased common stock in N.W. Bio between January 13, 2014
and August 21, 2015 (the "Class Period").
Id. ¶ 1
The Drug Approval Process
the Federal Food. Drug, and Cosmetic Act (FDCA). persons or
"sponsors" seeking to introduce a new
into interstate commerce must first obtain approval of an
application filed with the Food and Drug Administration
(FDA), 21 U.S.C. § 355(a). As part of this approval
process, the sponsor of the drug submits evidence and
"full reports of investigations" to the FDA.
§35 5(b)(1). The Commissioner of the Secretary
"shall issue an order refusing to approve the
application" if "there is a lack of substantial
evidence that the drug will have the effect it purports or is
represented to have under the conditions of use prescribed,
recommended, or suggested in the proposed labeling
thereof." § 355(d). Under this test,
"substantial evidence" is defined as "evidence
consisting of adequate and well-controlled investigations,
including clinical investigations, by experts qualified by
scientific training and experience to evaluate the
effectiveness of the drug involved, on the basis of which it
could fairly and responsibly be concluded by such experts
that the drug will have the effect it purports ..."
sponsor, rather than the FDA. is responsible for designing
the clinical trials. ECF No. 22 ¶ 24. A sponsor
generally conducts clinical trials in three phases. Phase I
"includes the initial introduction of an investigational
drug into humans" and determines "the metabolism
and pharmacologic actions of the drug in humans." 21
C.F.R. § 312.21(a). Phase II involves studies that are
"typically well-control led." to determine the
effectiveness of the drug on "patients with the disease
or condition under study." § 312.21(b). Phase III
includes "expanded controlled and uncontrolled
trials" intended to "gather additional information
about effectiveness and safety" and "evaluate the
overall benefit-risk relationship." § 312.21(c).
Summary of Events During the Class Period
Bio's principal products are "DCVax®-L." an
immunotherapy primarily for operable glioblastoma brain (and
to a lesser extent, ovarian) cancer tumors, and
"DCVax®-Direct" a newer immunotherapy for a
broad array of inoperable tumors. ECF No. 22 ¶ 3.
DCVax-L. N.W. Bio's lead product, began testing in 2005
"as an open label. non-randomized Phase II study without
placebo controls." ECF No. 22 ¶ 42. By May 2012,
DCVax-E had reached Phase III in clinical trials.
Id. ¶ 43. On December 13. 2013. N.W. Bio
announced that it had registered 66
"events" with the DCVax-L trial, triggering an
interim review by an independent data monitoring
committee. Id. ¶ 46; ECF No. 26-6 at
The data monitoring committee would first review "safety
data." and subsequently review '"efficacy data,
" once additional "events" had been
registered. See id.: ECF No. 26-6 at 45. On March 7,
2014. N.W. Bio announced that "the Data Safety
Monitoring Board (DSMB) has made an unblinded review of the
safety data for the Company's ongoing international Phase
II GBM trial, and has recommended that the trial continue as
planned. The DSMB's review of the efficacy data is still
pending.” ECF No. 26-6 at 32.
second half of 2013. N.W. Bio also "began a 60-patient
Phase I/II clinical trial with DCVax-Direct."
Id. ¶ 49. The DCVax-Direct trial took place at
MD Anderson Cancer Center in Houston. Texas, and Orlando
Health in Orlando. Florida. Id. On May 15, 2014,
N.W. Bio issued a press release entitled "NW Bio
Announces First Data From Ongoing DCVax-Direct Trial."
FCF No. 26-7 at 2. This press release described
"encouraging results" from a "specific case
study" involving "a sarcoma patient with a large
tumor mass and multiple inoperable metastatic tumors in the
lung." Id. The press release reported that this
particular patient had received injections of DCVax-Direct.
and subsequent MRI scans showed shrinkage of his tumors. N.W.
Bio reported additional positive results about DCVax-Direct
on June 11. 2014, stating that "3 case studies show no
live tumor cells in injected tumors." ECF No. 26-7 at
August 2014, N.W. Bio reported an update on the testing of
DCVax-L. N.W. Bio stated that "55 patients who were not
eligible to enroll in the trial due to unusually rapid tumor
recurrence were included in a compassionate use
'Information Arm' and are showing encouraging survival
times." On March 27. 2015. the Company reported that
these Information Arm patients were demonstrating
"promising survival data." ECF No. 26-8 al 2. The
Company stated, "[a]s reflected in these data, both
Rapid-Progressor Patients and Indeterminate Patients (as well
as the Pseudo-Progressor Patient) treated with DCVax-L in the
Company's Information Arm are surviving substantially
longer than would be expected . . ." Id. Also
during this time period. N.W. Bio made several statements
about modifications to the primary DCVax-L Phase
III trial, including the addition of 36 more
patients and increasing the number of events that would be
counted in the statistical analysis from 110 to 248. which
would strengthen the statistical basis of the trial. ECF No.
26-7 at 18-19.
N.W. Bio's Public Statements
allege Defendants made false and misleading representations
and omissions in thirteen statements about
DCVax over the Class Period (January 13.
2014-August 21. 2015) (the ""Class
Period'"). They are, in relevant part, as follows:
Bio presented a "'Corporate Overview'' at
the Biotech Showcase conference. In the presentation. N.W.
Bin represented that DCVax had a ">80% response
rate" and showed "Median PFS [progression free
survival] & OS [overall survival] extended by 1-1/2 years
or more beyond results with SOC [standard of
care]."' ECF No. 22 ¶ 50.
March 7. 2014. N.W. Bio issued a press release titled.
"NW Bio Receives Recommendation to Continue With Phase
III GBM Brain Cancer Trial Based On Data Safety Monitoring
Board's Safety Review." which stated that the Data
Safety Monitoring Board had made an "unblinded review of
the safety data ... and recommended that the trial continue
as planned. The DSMB's review of the efficacy data is
still pending."" Id. ¶ 51.
March 28. 2014. N.W. Bio issued a press release addressing
its Phase HI trial for DCVax- L. The press release stated:
The Company has created a significant cushion or buffer for
achieving this p value of 0.05 by designing its trial to a
level of 0.02 rather than designing to the exact 0.05 level.
Having this cushion makes the Company's trial design more
likely for the trial to succeed. . . . .The Company has
consistently reported throughout the trial that it is
designed to the 0.02 level.
Id. ¶ 54.
April 1. 2014. N.W. Bio filed its 2013 annual report on Form
The interim analysis will be conducted by an independent Data
Monitoring Committee, or DMC, with assistance from the
independent clinical research organization ... As we also
announced the DMC's interim analysis of efficacy data
remains outstanding. ... In clinical trials to date, our
DCVax treatments have been achieving what we believe to be
Id. ¶ 56.
May 15. 2014. N.W. Bio issued a press release announcing
anecdotal data from a patient in the DCVax-Direct 1 rial. The
press release staled:
Northwest Biotherapeutics ... today provided an initial
patient case study, showing signs of tumor necrosis (tumor
death) and initial tumor regression . . . "We are
excited to see signs of DCVax-Direct mobilizing the immune
system to fight the tumors in these patients with advanced
metastatic cancer, even while we are still so early in this
ongoing trial and while patients are only part way through
their treatments." commented Linda F. Powers. CEO of
Id. ¶ 59.
May 27, 2014, N.W. Bio issued a press release claiming a
positive initial response in the DCVax-Direct trial. The
press release stated:
Northwest Biotherapeutics ... today provided a summary of
initial data to date in its ongoing Phase I/II clinical trial
of DCVax-Direct for all types of inoperable solid tumors. The
Company reported that over 50% of the patients who have
completed at least half of the 6 treatments in the trial arc
already showing preliminary signs of cancer cell death, tumor
shrinkage and/or stabilization . . . [going on to report
various results from the trial].
June 11. 2014. N.W. Bio issued another press release touting
preliminary responses to the DCVax-Direct trial. The press
[I]n the ongoing Phase I/I I clinical trial of DCVax-Direct
for all types of inoperable solid tumors, all 9 out of 9
patients who have received 4 of the 6 planned injections are
showing tumor cell death, tumor shrinkage, substantial immune
cell accumulation in their tumors and/or stabilization . . .
"These early glimpses are indicating an increasingly
encouraging picture - especially the absence of any live
tumor cells in 3 of the patients who have received 4 of the 6
planned injections of DCVax-Direct, " commented Linda
Powers. CEO of N.W. Bio.
Id. ¶ 63.
August 11. 2014. N.W. Bio issued a press release entitled
"NW Bio Obtains Approvals for Enhancements of Phase III
Trial of DC Vax®-L for GBM Brain Cancer" indicating
that it was going to add 36 patients to the Phase III DCVax-L
trial for a total of 348. and would more than double the
events (disease progression or death) that the trial would
measure from 110 to 248. The press release stated:
[NW Bio] announced today that, following a 9-month process of
regulatory submissions and reviews by regulators in the US.
UK and Germany, it has obtained regulatory approvals to make
certain enhancements to its ongoing Phase III clinical trial
of DCVax-L Glioblastoma multiforme (GBM) brain cancer. The
enhancements will allow the statistical analysis of trial
results to take account of a major new variable which has
been identified in GBM research .,, By increasing the number
of "events" counted, the statistical basis of the
trial, which is already quite strong, will be further
Id. ¶ 69.
on August 11. 2014, N.W. Bio issued a press release
announcing an update on the DCVax-L "information
arm." The press release stated:
During 2011 and 2012. in addition to conducting the trial,
the Company also treated 55 GBM patients with DCVax-L on a
compassionate basis in an 'information Arm" outside
of the Phase III trial . . . The 55 patients were not
eligible for the Phase III trial because they were either
definitely or potentially "rapid progressors":
patients with such an aggressive form of GBM that their tumor
was already re-growing during the 6 weeks of daily radiation
. . . "Rapid progressors" have a much shorter life
expectancy, in the range of 7 to 10 months, and generally are
not expected to respond much to any treatments. ., .
According to initial analyses, the median Overall Survival
for all 55 patients is 18 months; the median Overall Survival
for the 43 patients is a little over 19 months. The Company
is in the process of further analyses of the data on these
Id. ¶ 71.
December 10, 2014. Defendant Powers spoke at the
Oppenheimer25th Annual Health Conference. At the conference.
Defendant Powers stated:
So our DCVax Phase III trial for brain cancer is our lead
program. It underwent a major expansion across the U.S. and
in Hurope. We had a safety-only evaluation . . . by the Data
Safety Monitoring Committee. Very importantly, in the latter
pail of the year we had some regulatory enhancements to the
trial, which allow us to add some factors to the statistical
analysis at the end of this trial. ..
Also very exciting in September we released information about
55 patients who had not been enrolled in the Phase III trial
because they were too sick to meet the eligibility criteria..
. . And that data when we released it. showed that these
patients who normally wouldn't be expected to only have
survival in the 7 to 10 month range had survival in the 18-19
months range. So the patients who are even too sick to be in
the trial really were getting a major benefit from the
treatment. That was a very encouraging set of additional data
Id. ¶ 76.
January 12, 2015, Defendant Powers made a verbal investor
presentation at the BioTech Showcase 2015 conference. She
In terms of efficacy, again, we are still in clinical trials,
we have to see how the further trials read out, there's
no guarantees, but we've seen up "til now has been
quite encouraging. These are extensions of the time to
disease progression, progression free survival, and
extensions of overall survival in the realm of years . . .
We will be sometime this year conducting the first interim
analysis for efficacy. That will be conducted by the ...