Monday, July 23, 2007

Confused Communications

I suppose it’s tempting to try to spice up the news during slow summer months. But Northwest Biotherapeutics should have known better than to issue a press release earlier this month declaring its delight in being “the first company to reach the market with a personalized therapeutic vaccine for brain cancer.”

The release stated that Switzerland’s Institute of Public Health had issued an Authorization for Use for the product. Exciting news, it seemed. The wires and papers picked it up. Even VCs and analysts were fooled--London-based house brokers Collins Stewart issued a report that talked about “history in the making”, with this first approval for “a new class of product called personalized vaccines.” This, the analyst said, was a “high value event.”

So in flocked the investors—Northwest’s stock, listed on the OTC bulletin board in the US and on London’s AIM since June this year, more than tripled.

Trouble is, it wasn’t an approval at all. The ‘news’ was an import-export authorization for the product in Switzerland, and one with conditions attached, which the company is still fulfilling. Northwest won’t seek product approvals in the US and EU before 2009.

All of this was clarified in a release issued a week later (why not clarify it properly in the first one?) prompting the stock to fall back to where it started.

Now, we’re not saying Northwest set out to deceive or confuse—you can judge that one for yourself. But we are saying that positioning an import-export order as equivalent to “reaching the market”—which is what Northwest did—is just silly. And suggesting, as the second release did, that the media is to blame isn’t very clever either.

Yes, cancer vaccines are indeed an exciting, promising area where a handful of companies may be on the cusp of a breakthrough. (Dendreon’s Phase III Provenge, an active cellular immunotherapy treatment for prostate cancer, received an approvable letter from FDA in May 2007.)

But the sector already has to battle with the disappointment caused by over-optimistic mainstream press reports about cures for cancer and Parkinson’s disease being around the corner. It doesn’t need its own members fuelling that fire. Nor does it need another report of misleading behavior, whether in promotional activities or in corporate communications.

Northwest has come back from the edge once already—it was saved by VC fund Toucan Capital after bombing out following its December 2001 Nasdaq listing. This episode won’t reassure its new investors. It wouldn't be surprising at all if the SEC took a long look at the announcements, given the share price movements. Nor will it help anyone else in the space, either—least of all the brain cancer patients with only a handful of inadequate treatments currently available to them.

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