NORTHWEST BIOTHERAPEUTICS INC - Quarter Report: 2021 March (Form 10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q


	☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2021


	☐	TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______to _______

Commission File Number: 001-35737

NORTHWEST BIOTHERAPEUTICS, INC.

(Exact name of registrant as specified in its charter)


Delaware	94-3306718
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)

4800 Montgomery Lane, Suite 800, Bethesda, MD 20814

(Address of principal executive offices) (Zip Code)

(240) 497-9024

(Registrant’s telephone number)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	◻
Non-accelerated filer	⌧	Smaller reporting company	☒
		Emerging growth company	☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐


Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, par value $0.001 per share	NWBO	OTCQB

As of May 14, 2021, the total number of shares of common stock, par value $0.001 per share, outstanding was 851,564,728.

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NORTHWEST BIOTHERAPEUTICS, INC.

FORM 10-Q

TABLE OF CONTENTS


PART I - FINANCIAL INFORMATION		3

Item 1.	Condensed Consolidated Interim Financial Statements (Unaudited)	3

	Condensed Consolidated Balance Sheets as of March 31, 2021 and December 31, 2020	3

	Condensed Consolidated Statements of Operations and Comprehensive Loss for the three months ended March 31, 2021 and 2020	4

	Condensed Consolidated Statements of Stockholders’ Deficit for the three months ended March 31, 2021 and 2020	5

	Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2021 and 2020	6

	Notes to Condensed Consolidated Financial Statements	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	23

Item 4.	Controls and Procedures	23

PART II - OTHER INFORMATION		24

Item 1.	Legal Proceedings	24

Item 1A.	Risk Factors	24

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	24

Item 3.	Defaults Upon Senior Securities	24

Item 4.	Mine Safety Disclosures	24

Item 5.	Other Information	24

Item 6.	Exhibits	25

SIGNATURES		26

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PART I - FINANCIAL INFORMATION

NORTHWEST BIOTHERAPEUTICS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share amounts)


	March 31,		December 31,
	2021		2020
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	7,468	$	9,983
Prepaid expenses and other current assets		5,749		5,528
Total current assets		13,217		15,511

Non-current assets:
Property, plant and equipment, net		1,234		1,040
Construction in progress		9,881		9,074
Right-of-use asset, net		5,140		4,489
Indefinite-lived intangible asset		1,292		1,292
Goodwill		626		626
Other assets		1,070		867
Total non-current assets		19,243		17,388

TOTAL ASSETS	$	32,460	$	32,899

LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Accounts payable and accrued expenses	$	7,471	$	7,380
Accounts payable and accrued expenses to related parties and affiliates		2,973		5,363
Convertible notes, net		135		3,830
Notes payable, net		2,239		2,437
Contingent payable derivative liability		8,554		8,275
Warrant liability		341,867		354,972
Lease liabilities		170		167
Total current liabilities		363,409		382,424

Non-current liabilities:
Notes payable, net of current portion, net		16,691		8,507
Lease liabilities, net of current portion		5,560		4,916
Total non-current liabilities		22,251		13,423

Total liabilities		385,660		395,847

COMMITMENTS AND CONTINGENCIES (Note 10)

Stockholders’ deficit:
Preferred stock ($0.001 par value); 100,000,000 shares authorized as of March 31, 2021 and December 31, 2020, respectively		—		—
Common stock ($0.001 par value); 1,200,000,000 shares authorized; 842.4 million and 829.6 million shares issued and outstanding as of March 31, 2021 and December 31, 2020, respectively		842		830
Additional paid-in capital		1,021,900		1,008,665
Stock subscription receivable		(79)		(79)
Accumulated deficit		(1,375,339)		(1,371,216)
Accumulated other comprehensive loss		(524)		(1,148)
Total stockholders’ deficit		(353,200)		(362,948)

TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT	$	32,460	$	32,899

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements

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NORTHWEST BIOTHERAPEUTICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(in thousands, except per share amounts)

(Unaudited)


	For the three months ended
	March 31,
	2021		2020
			(As revised)
Revenues:
Research and other	$	239	$	570
Total revenues		239		570
Operating costs and expenses:
Research and development		6,923		3,857
General and administrative		12,886		4,546
Total operating costs and expenses		19,809		8,403
Loss from operations		(19,570)		(7,833)
Other income (expense):
Change in fair value of derivative liabilities		17,563		12,927
Loss from extinguishment of debt		(8)		(715)
Interest expense		(1,447)		(625)
Foreign currency transaction loss		(661)		(1,128)
Total other income		15,447		10,459
Net (loss) income	$	(4,123)	$	2,626

Other comprehensive income
Foreign currency translation adjustment		624		1,041
Total comprehensive (loss) income	$	(3,499)	$	3,667

Net earnings (loss) per share applicable to common stockholders
Basic	$	(0.00)	$	0.00
Diluted	$	(0.00)	$	0.00

Weighted average shares used in computing basic earnings (loss) per share		834,605		640,390
Weighted average shares used in computing diluted earnings (loss) per share		834,605		648,858

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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NORTHWEST BIOTHERAPEUTICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT

(in thousands)

(Unaudited)

For the Three Months Ended March 31, 2021


				Additional						Accumulated		Total
	Common Stock			Paid-in		Subscription		Accumulated		Other Comprehensive		Stockholders’
	Shares	Par value		Capital		Receivable		Deficit		Income (Loss)		Deficit
Balance at January 1, 2021	829,631	$	830	$	1,008,665	$	(79)	$	(1,371,216)	$	(1,148)	$	(362,948)
Issuance of common stock for cash	69		—		16		—		—		—		16
Issuance of common stock and warrants for conversion of debt and accrued interest	4,533		4		6,615		—		—		—		6,619
Warrants and stock options exercised for cash	2,872		3		742		—		—		—		745
Reclassification of warrant liabilities related to warrants exercised for cash	—		—		2,935		—		—		—		2,935
Cashless warrants and stock options exercise	5,205		5		(5)		—		—		—		—
Reclassification of warrant liabilities related to cashless warrants exercise	—		—		146		—		—		—		146
Stock-based compensation	48		—		9,891		—		—		—		9,891
Reclassification of warrant liabilities related to sequencing policy	—		—		(7,105)		—		—		—		(7,105)
Net loss	—		—		—		—		(4,123)		—		(4,123)
Cumulative translation adjustment	—		—		—		—		—		624		624
Balance at March 31, 2021	842,358	$	842	$	1,021,900	$	(79)	$	(1,375,339)	$	(524)	$	(353,200)

For the Three Months Ended March 31, 2020


				Additional						Accumulated		Total
	Common Stock			Paid-in		Subscription		Accumulated		Other Comprehensive		Stockholders’
	Shares	Par value		Capital		Receivable		Deficit		Income		Deficit
Balance at January 1, 2020	614,292	$	614	$	794,900	$	(10)	$	(841,395)	$	836	$	(45,055)
Issuance of common stock and warrants for cash in a registered direct offering (net of $3.6 million warrant liability and $0.4 million cash offering cost)	34,466		34		2,011		—		—		—		2,045
Issuance of common stock and warrants for conversion of debt and accrued interest	12,417		13		2,386		—		—		—		2,399
Stock-based compensation	973		1		363		—		—		—		364
Net income (as revised)	—		—		—		—		2,626		—		2,626
Cumulative translation adjustment	—		—		—		—		—		1,041		1,041
Balance at March 31, 2020	662,148	$	662	$	799,660	$	(10)	$	(838,769)	$	1,877	$	(36,580)

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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NORTHWEST BIOTHERAPEUTICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(Unaudited)


	For the three months ended
	March 31,
	2021		2020
			(As revised)
Cash Flows from Operating Activities:
Net (loss) income	$	(4,123)	$	2,626
Reconciliation of net loss to net cash used in operating activities:
Depreciation and amortization		68		14
Amortization of debt discount		1,126		343
Change in fair value of derivatives		(17,563)		(12,927)
Loss from extinguishment of debt		8		715
Amortization of operating lease right-of-use asset		93		80
Stock-based compensation for services		9,818		364
Subtotal of non-cash charges		(6,450)		(11,411)
Changes in operating assets and liabilities:
Prepaid expenses and other current assets		(286)		(78)
Other non-current assets		(198)		—
Accounts payable and accrued expenses		876		1,208
Related party accounts payable and accrued expenses		(3,128)		81
Lease liabilities		61		35
Net cash used in operating activities		(13,248)		(7,539)
Cash Flows from Investing Activities:
Purchase of equipment and construction in progress		(264)		(62)
Net cash used in investing activities		(264)		(62)
Cash Flows from Financing Activities:
Proceeds from issuance of common stock and warrants in a registered direct offering, net		16		5,671
Proceeds from exercise of warrants and stock options		745		—
Proceeds from issuance of notes payable, net		10,000		—
Proceeds from issuance of convertible notes payable, net		—		1,000
Proceeds from issuance of convertible notes payable to related party		—		240
Proceeds from investor advance		—		178
Repayment of notes payable to related parties		—		(64)
Net cash provided by financing activities		10,761		7,025
Effect of exchange rate changes on cash and cash equivalents		236		968
Net (decrease) increase in cash and cash equivalents		(2,515)		392

Cash and cash equivalents, beginning of the year		9,983		372
Cash and cash equivalents, end of the year	$	7,468	$	764

Supplemental disclosure of cash flow information
Interest payments on notes payable to related party	$	—	$	(9)

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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NORTHWEST BIOTHERAPEUTICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(Unaudited)


	For the three months ended
	March 31,
	2021		2020
			(As revised)
Supplemental schedule of non-cash investing and financing activities:
Cashless warrants and stock options exercise	$	5	$	—
Reclassification of warrant liabilities related to warrants exercised for cash	$	2,935	$	—
Reclassification of warrant liabilities related to cashless warrants exercise	$	146	$	—
Reclassification of warrant liabilities related to sequencing policy	$	7,105	$	—
Issuance of common stock and warrants for conversion of debt and accrued interest	$	6,742	$	1,789
Offering cost related to warrant liability	$	—	$	2,606
Capital expenditures included in accounts payable	$	753	$	405
Issuance of warrants in conjunction with convertible note payable	$	—	$	79
Issuance of warrants in connection with debt modification	$	—	$	315

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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NORTHWEST BIOTHERAPEUTICS, INC.

NOTES TO CONDENSED CONSOLIDATED STATEMENTS

1. Organization and Description of Business

Northwest Biotherapeutics, Inc. and its wholly owned subsidiaries Flaskworks L.L.C., NW Bio GmbH, Aracaris Ltd, Aracaris Capital, Ltd, and Northwest Biotherapeutics B.V. (collectively, the “Company”, “we”, “us” and “our”) were organized to discover and develop innovative immunotherapies for cancer. The Company has developed DCVax® platform technologies for both operable and inoperable solid tumor cancers. The Company has wholly owned subsidiaries in the U.K., in the Netherlands, where the European Medicines Agency is relocating, and in Boston, Massachusetts.

The Company relies upon contract manufacturers for production of its DCVax products, research and development services, distribution and logistics, and related services, in compliance with the Company’s specifications and the applicable regulatory requirements.

2. Financial Condition, Going Concern and Management Plans

The Company has incurred annual net operating losses since its inception. The Company had a net loss of $4.1 million for the three months ended March 31, 2021. The Company used approximately $13.2 million of cash in its operating activities for the three months ended March 31, 2021.Management believes that the Company has access to capital resources through the sale of equity and debt financing arrangements. However, the Company has not secured any commitments for new financing for this specific purpose at this time.

The Company does not expect to generate material revenue in the near future from the sale of products and is subject to all of the risks and uncertainties that are typically faced by biotechnology companies that devote substantially all of their efforts to R&D and clinical trials and do not yet have commercial products. The Company expects to continue incurring annual losses for the foreseeable future. The Company’s existing liquidity is not sufficient to fund its operations, anticipated capital expenditures, working capital and other financing requirements until the Company reaches significant revenues. Until that time, the Company will need to obtain additional equity and/or debt financing, especially if the Company experiences downturns in its business that are more severe or longer than anticipated, or if the Company experiences significant increases in expense levels resulting from being a publicly-traded company or from expansion of operations. If the Company attempts to obtain additional equity or debt financing, the Company cannot assume that such financing will be available to the Company on favorable terms, or at all.

Because of recurring operating losses and operating cash flow deficits, there is substantial doubt about the Company’s ability to continue as a going concern within one year from the date of this filing. The condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern, and do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets, or the amounts and classification of liabilities that may result from the outcome of this uncertainty.

As also previously reported, coronavirus-related difficulties have impacted most aspects of the database lock and process of analyzing the Phase III trial results, especially with the successive waves of COVID cases in many areas. The independent service firms have had limited capacity, and restrictions on operations. Key experts at certain specialized service providers have been unavailable for periods of time due to illness in their family. Other experts have gone on extended leave due to restrictions on operations. Clinical trial site personnel have been unavailable due to being reassigned for COVID, and the limited site personnel have had to work under restrictions. Committee processes and regulatory processes have been similarly focused on COVID matters and delayed on other matters. Firms such as the ones storing the Phase III trial tissue samples that are needed for certain analyses, and the firms conducting the analyses, continue to have had only limited operations. Even logistical matters such as the shipping of materials have been subjected to substantial restrictions and delays.

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NORTHWEST BIOTHERAPEUTICS, INC.

NOTES TO CONDENSED CONSOLIDATED STATEMENTS

3. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited condensed consolidated interim financial statements include the accounts of the Company and its subsidiaries. All material intercompany balances and transactions have been eliminated. Certain immaterial reclassifications have been made to prior period amounts to conform to the current period presentation.

The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with the accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and pursuant to the instructions to Form 10-Q and Article 8 of Regulation S-X of the Securities and Exchange Commission (“SEC”) and on the same basis as the Company prepares its annual audited consolidated financial statements. The condensed consolidated balance sheet as of March 31, 2021, condensed consolidated statements of operations and comprehensive loss, condensed consolidated statement of stockholders’ deficit for the three months ended March 31, 2021 and 2020, and the condensed consolidated statements of cash flows for the three months ended March 31, 2021 and 2020 are unaudited, but include all adjustments, consisting only of normal recurring adjustments, which the Company considers necessary for a fair presentation of the financial position, operating results and cash flows for the periods presented. The results for the three months ended March 31, 2021 are not necessarily indicative of results to be expected for the year ending December 31, 2021 or for any future interim period. The condensed consolidated balance sheet at December 31, 2020 has been derived from audited financial statements; however, it does not include all of the information and notes required by U.S. GAAP for complete financial statements. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements for the year ended December 31, 2020 and notes thereto included in the Company’s annual report on Form 10-K (the “2020 Annual Report”), which was filed with the SEC on March 31, 2021.

Use of Estimates

In preparing condensed consolidated financial statements in conformity with U.S. GAAP, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of expenses during the reporting period. Due to inherent uncertainty involved in making estimates, actual results reported in future periods may be affected by changes in these estimates. On an ongoing basis, the Company evaluates its estimates and assumptions. These estimates and assumptions include recoverability and useful lives (indefinite) of intangible asset, assessment of impairment of goodwill, valuing equity securities in share-based payment arrangements, estimating the fair value of financial instruments recorded as derivative liabilities, useful lives of depreciable assets and whether impairment charges may apply.

Significant Accounting Policies

There have been no material changes in the Company’s significant accounting policies to those previously disclosed in the 2020 Annual Report.

Recently Adopted Accounting Standards

Income Taxes

In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”), which is intended to simplify various aspects related to accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020, with early adoption permitted. On January 1, 2021, the Company adopted this standard without any material impact on its condensed consolidated financial statements and related disclosures.

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NORTHWEST BIOTHERAPEUTICS, INC.

NOTES TO CONDENSED CONSOLIDATED STATEMENTS

Debt

In August 2020, the FASB issued ASU No. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, which simplifies accounting for convertible instruments by removing major separation models required under current GAAP. The ASU removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception and it also simplifies the diluted earnings per share calculation in certain areas. This ASU is effective for annual reporting periods beginning after December 15, 2021, including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020. This update permits the use of either the modified retrospective or fully retrospective method of transition. The Company has adopted the new standard as of January 1, 2021 and determined the impact of the adoption to the condensed consolidated financial statements and related disclosures is immaterial as of March 31, 2021.

4. Fair Value Measurements

In accordance with ASC 820 (Fair Value Measurements and Disclosures), the Company uses various inputs to measure the outstanding warrants and certain embedded conversion feature associated with convertible debt on a recurring basis to determine the fair value of the liability. ASC 820 also establishes a hierarchy categorizing inputs into three levels used to measure and disclose fair value. The hierarchy gives the highest priority to quoted prices available in active markets and the lowest priority to unobservable inputs. An explanation of each level in the hierarchy is described below:

Level 1 - Unadjusted quoted prices in active markets for identical instruments that are accessible by the Company on the measurement date

Level 2 - Quoted prices in markets that are not active or inputs which are either directly or indirectly observable

Level 3 - Unobservable inputs for the instrument requiring the development of assumptions by the Company

The following table classifies the Company’s liabilities measured at fair value on a recurring basis into the fair value hierarchy as of March 31, 2021 and December 31, 2020 (in thousands):


	Fair value measured at March 31, 2021
			Quoted prices in active		Significant other		Significant
	Fair value at		markets		observable inputs		unobservable inputs
	March 31, 2021		(Level 1)		(Level 2)		(Level 3)
Warrant liability	$	341,867	$	—	$	—	$	341,867
Contingent payable derivative liability		8,554		—		—		8,554
Total fair value	$	350,421	$	—	$	—	$	350,421


	Fair value measured at December 31, 2020
			Quoted prices in active		Significant other		Significant
	Fair value at		markets		observable inputs		unobservable inputs
	December 31, 2020		(Level 1)		(Level 2)		(Level 3)
Warrant liability	$	354,972	$	—	$	—	$	354,972
Embedded conversion option		2,507		—		—		2,507
Contingent payable derivative liability		8,275		—		—		8,275
Total fair value	$	365,754	$	—	$	—	$	365,754

There were no transfers between Level 1, 2 or 3 during the three-month period ended March 31, 2021.

The following table presents changes in Level 3 liabilities measured at fair value for the three-month period ended March 31, 2021. Both observable and unobservable inputs were used to determine the fair value of positions that the Company has classified within the Level 3 category. Unrealized gains and losses associated with liabilities within the Level 3

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NORTHWEST BIOTHERAPEUTICS, INC.

NOTES TO CONDENSED CONSOLIDATED STATEMENTS

category include changes in fair value that were attributable to both observable (e.g., changes in market interest rates) and unobservable (e.g., changes in unobservable long- dated volatilities) inputs (in thousands).


					Contingent
			Embedded		Payable
	Warrant		Conversion		Derivative
	Liability		Option		Liability		Total
Balance - January 1, 2021	$	354,972	$	2,507	$	8,275	$	365,754
Additional warrant liability		131		—		—		131
Reclassification of warrant liabilities		4,024		—		—		4,024
Debt conversion		—		(1,925)		—		(1,925)
Change in fair value		(17,260)		(582)		279		(17,563)
Balance - March 31, 2021	$	341,867	$	—	$	8,554	$	350,421

A summary of the weighted average (in aggregate) significant unobservable inputs (Level 3 inputs) used in measuring the Company’s warrant liabilities and embedded conversion feature that are categorized within Level 3 of the fair value hierarchy as of March 31, 2021 and December 31, 2020 is as follows:


	As of March 31, 2021
	Warrant			Contingent Payable
	Liability			Derivative Liability
Strike price	$	0.25		$	1.49
Contractual term (years)		1.2			1.4
Volatility (annual)		95	%		119	%
Risk-free rate		0.1	%		0.1	%
Dividend yield (per share)		0	%		0	%

*Contingent based on stock price as of March 31, 2021


	As of December 31, 2020
	Warrant			Embedded			Contingent Payable
	Liability			Conversion Option			Derivative Liability
Strike price	$	0.28		$	0.59		$	1.53	*
Contractual term (years)		1.6			0.9			1.4
Volatility (annual)		116	%		106	%		126	%
Risk-free rate		0.2	%		0.1	%		0.1	%
Dividend yield (per share)		0	%		0	%		0	%

*	Contingent based on stock price as of December 31, 2020

5. Stock-based Compensation

The following table summarizes total stock-based compensation expense for the three months ended March 31, 2021 and 2020 (in thousands). The general and administrative expense during the three months ended March 31, 2021 and 2020

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NORTHWEST BIOTHERAPEUTICS, INC.

NOTES TO CONDENSED CONSOLIDATED STATEMENTS

relate to the applicable portion vesting during this period of stock option awards made in the past to directors and employees.


	For the three months ended
	March 31, 2021
	2021		2020
Research and development	$	3,689	$	(23)
General and administrative		6,129		387
Total stock-based compensation expense	$	9,818	$	364

The total unrecognized compensation cost was approximately $7.4 million as of March 31, 2021, and will be recognized over the next 1.6 years.

Stock Options

The following table summarizes stock option activity for the Company’s option plans during the three months ended March 31, 2021 (amount in thousands, except per share number):


				Weighted
				Average
		Weighted		Remaining
	Number of	Average Exercise		Contractual Life	Total Intrinsic
	Shares	Price		(in years)	Value
Outstanding as of January 1, 2021	308,840	$	0.33	8.9	$	372,219
Cash exercised	(183)		0.25	—		—
Cashless exercise	(3,695)		0.25	—		—
Forfeited/expired	—		—	—		—
Outstanding as of March 31, 2021	304,962	$	0.33	8.7	$	354,723
Options vested ⁽¹⁾	254,385	$	0.30	8.7	$	276,262

(1)	Approximately 244 million options are not exercisable until May 31, 2021.

Ms. Linda Powers, the Company's Chief Executive Officer, and Mr. Leslie Goldman, the Company's Senior Vice President, are subject to an agreement under which they cannot exercise any options or warrants except upon at least 61 days' prior notice.

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NORTHWEST BIOTHERAPEUTICS, INC.

NOTES TO CONDENSED CONSOLIDATED STATEMENTS

6. Outstanding Debt

The following two tables summarize outstanding debt as of March 31, 2021 and December 31, 2020, respectively (amount in thousands):


		Stated
		Interest			Conversion				Remaining		Carrying
	Maturity Date	Rate			Price		Face Value		Debt Discount		Value
Short term convertible notes payable
6% unsecured	Due		6	%	$	3.09	$	135	$	—	$	135
								135		—		135
Short term notes payable
8% unsecured	Various		8	%		N/A		1,615		(79)		1,536
10% unsecured	On Demand		10	%		N/A		263		—		263
12% unsecured	On Demand		12	%		N/A		440		—		440
								2,318		(79)		2,239
Long term notes payable
8% unsecured	Various		8	%		N/A		16,117		(1,284)		14,833
6% secured	3/25/2025		6	%		N/A		1,858		—		1,858
								17,975		(1,284)		16,691

Ending balance as of March 31, 2021							$	20,428	$	(1,363)	$	19,065


		Stated									Embedded
		Interest			Conversion				Remaining		Conversion		Carrying
	Maturity Date	Rate			Price		Face Value		Debt Discount		Option		Value
Short term convertible notes payable
6% unsecured	Due		6	%	$	3.09	$	135	$	—	$	—	$	135
8% unsecured	4/30/2021		8	%	$	0.85		2,125		(937)		2,507		3,695
								2,260		(937)		2,507		3,830
Short term notes payable
8% unsecured	Various		8	%		N/A		1,785		(51)		—		1,734
10% unsecured	Various		10	%		N/A		263		—		—		263
12% unsecured	On Demand		12	%		N/A		440		—		—		440
								2,488		(51)		—		2,437

Long term notes payable
8% unsecured	Various		8	%		N/A		7,160		(496)		—		6,664
6% secured	3/25/2025		6	%		N/A		1,843		—		—		1,843
								9,003		(496)		—		8,507

Ending balance as of December 31, 2020							$	13,751	$	(1,484)	$	2,507	$	14,774

On March 1, 2021, the Company entered into a Commercial Loan Agreement (the “Note”) with a commercial lender for an aggregate principal amount of $10 million. The Note bears interest at 8% per annum with a 22-month term. There are no principal repayments during the first 8 months of the term. The note is amortized in 14 installments starting on November 1, 2021. The Note carries an original issue discount of $1 million.

During the three months ended March 31, 2021, $4.8 million of debt and interest was converted into 4.5 million shares of common stock and 0.8 million warrants. The fair value of common stock and warrants for these conversions were

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NORTHWEST BIOTHERAPEUTICS, INC.

NOTES TO CONDENSED CONSOLIDATED STATEMENTS

approximately $6.7 million. The Company also extinguished approximately $1.9 embedded derivative liability from the note conversion.

For the three months ended March 31, 2021 and 2020, interest expense related to notes payable totaled approximately $1.4 million and $0.6 million including amortization of debt discounts totaling $1.1 million and $0.3 million, respectively.

7. Net Loss per Share Applicable to Common Stockholders

Basic earnings (loss) per common share is computed by dividing net earnings (loss) by the weighted average number of common shares outstanding during the reporting period. Diluted earnings (loss) per common share is computed similar to basic earnings (loss) per common share except that it reflects the potential dilution that could occur if dilutive securities or other obligations to issue common stock were exercised or converted into common stock. Diluted weighted average common shares include common stock potentially issuable under the Company's convertible notes, warrants and vested and unvested stock options.

The following table sets forth the computation of earnings ( loss) per share (amounts in thousands):


	For the three months ended
	March 31,
	2021		2020
			(As revised)
Net earnings (loss) - basic	$	(4,123)	$	2,626
Interest on convertible notes		—		173
Net earnings (loss) - diluted		(4,123)		2,799

Weighted average shares outstanding - basic		834,605		640,390
Convertible notes and accrued interest		—		8,468
Weighted average shares outstanding - diluted		834,605		648,858

For the three months ended March 31, 2021 and 2020, approximately 0.6 million and 0.5 million securities were not included, respectively, because effect was anti-dilutive.

8. Related Party Transactions

Advent BioServices Agreement

The Company has a Manufacturing Services Agreement with Advent BioServices for manufacture of DCVax-L products at an existing facility in London, as previously reported. The Company also has an Ancillary Services Agreement with Advent, which establishes a structure under which Advent submits Statements of Work (“SOWs”) for activities related to the development of the Sawston facility and the compassionate use activities in the UK, as previously reported. The Ancillary Services Agreement had an original term of 8 months, which ended in July 2020. The Company extended the term by 12 months, and did not make any other changes.

Related Party Expenses and Accounts Payable

During the three months ended March 31, 2021 and 2020, the Company recognized approximately $1.7 million and $1.4 million, respectively, in research and development costs from a related party. Additionally, during the three months ended March 31, 2021 and 2020, the Company capitalized $0.7 million and $0.4 million costs related to Sawston buildout. Some of these amounts have been paid and some have not been paid.

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NORTHWEST BIOTHERAPEUTICS, INC.

NOTES TO CONDENSED CONSOLIDATED STATEMENTS

The following table summarizes outstanding unpaid accounts payable held by related parties as of March 31, 2021 and December 31, 2020 (amount in thousands). These unpaid amounts include part of the expenses reported in the table above and also certain expenses incurred in prior periods.


	March 31, 2021		December 31, 2020
Advent BioServices – amount invoiced	$	339	$	3,734
Advent BioServices – amount accrued		2,634		1,629
Accounts payable and accrued expenses to Advent BioServices	$	2,973	$	5,363

9. Stockholders’ Deficit

Common Stock

Warrants and Stock Options Exercised for Cash

During the three months ended March 31, 2021, the Company received $0.7 million from the exercise of warrants and stock options issued in the past with an exercise price between $0.175 and $0.34. The Company issued approximately 2.9 million shares of common stock upon these warrant and stock option exercises.

Warrants and Stock Options Cashless Exercise

During the three months ended March 31, 2021, certain warrant and stock option holders elected to cashless exercise their warrants and stock options, with exercise prices between $0.22 and $0.52. The Company issued approximately 5.2 million shares of common stock upon 5.8 million warrants and stock options exercises.

Stock Purchase Warrants

The following is a summary of warrant activity for the three months ended March 31, 2021 (dollars in thousands, except per share data):


	Number of	Weighted Average		Remaining
	Warrants	Exercise Price		Contractual Term
Outstanding as of January 1, 2021	331,753	$	0.28	1.61
Warrants granted	774		2.00
Warrants exercised for cash	(2,688)		0.26
Cashless warrants exercise	(2,552)		0.23
Warrants expired and cancellation	(885)		3.37
Outstanding as of March 31, 2021	326,402	$	0.28	1.38

Warrants and Options Suspension

On January 15, 2021, the Company extended the suspension of approximately 256 million warrants and options held by certain officers and directors of the Company until February 28, 2021.

On February 28, 2021, the Company further extended the suspension of approximately 262 million warrants and options held by certain officers and directors of the Company until April 30, 2021.

On March 25, 2021, the options and warrants held by Ms. Powers and Mr. Goldman were subjected to an ongoing suspension on a rolling basis pursuant to the Blocker Letter. In addition, other executive officers and directors extended their suspensions from April 30, 2021 until May 31, 2021, accounting for approximately another 81 million in underlying warrants and options.

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NORTHWEST BIOTHERAPEUTICS, INC.

NOTES TO CONDENSED CONSOLIDATED STATEMENTS

10. Commitments and Contingencies

Operating Lease

The Company has operating leases for corporate offices in the U.S., U.K., Germany and the Netherlands, and for manufacturing facilities in the U.K. Leases with an initial term of 12 months or less are not recorded in the balance sheet. The Company has elected the practical expedient to account for each separate lease component of a contract and its associated non-lease components as a single lease component, thus causing all fixed payments to be capitalized. The Company also elected the package of practical expedients permitted within the new standard, which among other things, allows the Company to carry forward historical lease classification. The lease renewal options have not been included in the calculation of the lease liabilities and right-of-use (“ROU”) assets as the Company has not yet determined whether to exercise the options. Variable lease payment amounts that cannot be determined at the commencement of the lease such as increases in lease payments based on changes in index rates or usage, are not included in the ROU assets or liabilities. These are expensed as incurred and recorded as variable lease expense.

On March 8, 2021, the Company extended its office lease in the U.S for additional 3 years and 5 months under an amended agreement. The Company recognized additional $0.7 million ROU assets and lease liabilities for its amended office lease in the U.S.

At March 31, 2021, the Company had operating lease liabilities of approximately $5.7 million for both the 20-year lease of the building for the manufacturing facility in Sawston, U.K., and the current office lease in the U.S. ROU assets of approximately $5.1 million for the Sawston lease and US office lease are included in the condensed consolidated balance sheet.

The following summarizes quantitative information about the Company’s operating leases (amount in thousands):


	For the three months ended
	March 31,
	2021			2020
Lease cost
Operating lease cost	$	246		$	234
Short-term lease cost		12			12
Variable lease cost		53			49
Total	$	311		$	295

Other information
Operating cash flows from operating leases	$	(255)		$	(244)
Weighted-average remaining lease term - operating leases		2.4-8.9			0.9-10.0
Weighted-average discount rate - operating leases		12.0	%		12.0	%

The Company recorded lease costs as a component of general and administrative expense during the three months ended March 31, 2021 and 2020, respectively.

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NORTHWEST BIOTHERAPEUTICS, INC.

NOTES TO CONDENSED CONSOLIDATED STATEMENTS

Maturities of the operating leases, excluding short-term leases, are as follows:


Nine months ended December 31, 2021	$	611
Year ended December 31, 2022		978
Year ended December 31, 2023		987
Year ended December 31, 2024		893
Thereafter		9,615
Total		13,084
Less present value discount		(7,354)
Operating lease liabilities included in the Condensed Consolidated Balance Sheet at March 31, 2021	$	5,730

Manufacturing Services Agreements

Advent BioServices

On May 14, 2018, the Company entered into a DCVax®-L Manufacturing and Services Agreement (“MSA”) with Advent BioServices, a related party which was formerly part of Cognate BioServices and was spun off separately as part of an institutional financing of Cognate. The Advent Agreement provides for manufacturing of DCVax-L products at an existing facility in London. The Agreement is structured in the same manner as the Company’s prior agreements with Cognate BioServices. The Advent Agreement provides for certain payments for achievement of milestones and, as was the case under the prior agreement with Cognate BioServices, the Company is required to pay certain fees for dedicated production capacity reserved exclusively for DCVax production, and pay for manufacturing of DCVax-L products for a certain minimum number of patients, whether or not the Company fully utilizes the dedicated capacity and number of patients. Either party may terminate the MSA on twelve months’ notice, to allow for transition arrangements by both parties.

On November 8, 2019, the Company and Advent entered into an Ancillary Services Agreement with an 8-month Term for U.K. Facility Development Activities and Compassionate Use Program Activities. The Ancillary Services Agreement establishes a structure under which Advent develops Statements of Work (“SOWs”) for the U.K. Facility Development Activities and Compassionate Use Program Activities, and delivers those SOWs to the Company for review and approval. After an SOW is approved by the Company, Advent will proceed with or continue the applicable services and will invoice the Company pursuant to the SOW. Since both the U.K. Facility Development and the Compassionate Use Program involve pioneering and uncertainties in most aspects, the invoicing under the Ancillary Services Agreement is on the basis of costs incurred plus fifteen percent. The Ancillary Services Agreement had an original term of 8 months, which ended in July 2020. The Company extended the term by 12 months, and did not make any other changes.

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NOTES TO CONDENSED CONSOLIDATED STATEMENTS

German Tax Matter

The German tax authorities have audited our wholly owned subsidiary, NW Bio GmbH, for 2013-2015. During those years, NWBio, Inc. sent funds to NWBio GmbH to pay for operating expenses and costs associated with the Phase III clinical trial. The German tax authorities have asserted that the subsidiary should have charged NWBio parent company a profit margin on top of these costs, that they will deem that such a profit margin was charged by the subsidiary (even though it was not) and that they will tax this deemed profit margin, although neither NW Bio, Inc. nor NW Bio GmbH made any profit during the period in question (or at any other time), and even though the funds provided by NW Bio, Inc. were used by NW Bio GmbH entirely for operating expenses and clinical trial costs. They have also made claims for other taxes including penalties and interest.

The NW Bio GmbH submitted substantial documentation to refute certain aspects of the assessments and the German tax authorities agreed in principle with the Company’s proposed revised approach and settlement offer. The Company has provided and accrued for the following proposed settlement and is awaiting formal acceptance. The proposed tax settlement offer includes €346,000 (approximately $406,000 as of December 31, 2020) for the years under audit, with an addition of €101,000 (approximately $118,000) for the more recent years to date. Penalties and interest on the proposed amounts are still under negotiation. After considering further negotiations, under its evaluation under ASC 740, it is the view of the Company currently that it is not more likely than not that the resolution of these tax matters will ultimately result in a net material charge to the Company.

11. Revision to Prior Period Financial Statements

During the course of preparing the quarterly report on Form 10-Q for the three and nine months ended September 30, 2020 and 2019, the Company identified an error in its accrual and capitalization related to the Sawston Facility and research and development costs under the Advent Ancillary Services Agreement. The Company concluded that the error was not material to any prior annual period and the error had no material impact to any prior interim period. Nevertheless, the Company has revised its historical consolidated financial statements to properly reflect research and development expenses, capitalization of construction in progress and accrued liabilities in the prior periods. The effect of these revisions to the consolidated financial statements on the March 31, 2020 period was an overstatement of net income of $100,000 for research and development expenses related to services provided during the period and an understatement of $405,000 in accrued liabilities related to capital expenditures on the balance sheet.

12. Subsequent Events

In April 2021, 8.7 million shares of common stock were issued upon warrant exercises of $1.7 million and the conversion of debt and interest of $0.8 million.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and the notes to those statements included with this report. In addition to historical information, this report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Such forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those projected. The words “believe,” “expect,” “intend,” “anticipate,” and similar expressions are used to identify forward-looking statements, but some forward-looking statements are expressed differently. Many factors could affect our actual results, including those factors described under “Risk Factors” in our Form 10-K for the year ended December 31, 2020 and in Part II Item 1A of this report. These factors, among others, could cause results to differ materially from those presently anticipated by us. You should not place undue reliance on these forward-looking statements.

Overview

We are a biotechnology company focused on developing personalized immune therapies for cancer. We have developed a platform technology, DCVax®, which uses activated dendritic cells to mobilize a patient's own immune system to attack their cancer.

Our lead product, DCVax®-L, is designed to treat solid tumor cancers in which the tumor can be surgically removed. We have completed a 331-patient international Phase III trial of DCVax-L for Glioblastoma multiforme brain cancer (GBM). As previously reported, the data collection and confirmation process was conducted by the independent contract research organization (CRO) who managed the trial and by other independent service firms. On October 5, 2020, the Company announced that Data Lock for the Phase III trial had been reached, and that a series of steps and processes would follow. These processes included data validation, analyses of the data by independent statisticians, preparations by the statisticians of summaries of the Trial results for review by the Company, the Principal Investigator, the Steering Committee of the Trial, the Scientific Advisory Board, and a panel of independent brain cancer experts, in preparation for publication in a scientific journal and public announcement. This series of processes is under way. It is anticipated that public announcement will follow these processes.

As also previously reported, coronavirus-related difficulties have impacted most aspects of the process, especially with the waves of COVID cases in many areas. The independent service firms have had limited capacity, and restrictions on operations. Key experts at certain specialized service providers have been unavailable for periods of time due to illness in their family. Other experts have gone on extended leave due to restrictions on operations. Clinical trial site personnel have been unavailable due to being reassigned for COVID, and the limited site personnel have had to work under restrictions. Committee processes and regulatory processes have been similarly focused on COVID matters and delayed on other matters. Firms such as the ones storing the Phase III trial tissue samples that are needed for certain analyses, and the firms conducting the analyses have had only limited operations. Even logistical matters such as the shipping of materials have been subjected to substantial restrictions and delays.

On August 28, 2020, the Company acquired Flaskworks, LLC (“Flaskworks”), a company that has developed a system to close and automate the manufacturing of cell therapy products such as DCVax®. The Company acquired 100% of the ownership, and Flaskworks became a wholly-owned subsidiary of the Company. Flaskworks was previously owned by its technical founders and Corning Inc. The technical team from Flaskworks joined the Company as part of the Acquisition. It is anticipated that the Flaskworks system will enable substantial scale-up of production volumes of DCVax products and substantial reduction of production costs. The Company’s buildout of the Sawston, UK facility has been designed to proceed in phases, as modules, both for efficiency in the timing of capital costs and to allow flexibility in operations and usage. The Company anticipates that implementation of the Flaskworks system will enable certain phases of the buildout to be simplified and streamlined.

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Our second product, DCVax®-Direct, is designed to treat inoperable solid tumors. A 40-patient Phase I trial has been completed, and included treatment of a diverse range of more than a dozen types of cancers. The Company is working on preparations for Phase II trials of DCVax-Direct, as resources permit.

Critical Accounting Policies and Estimates

Our discussion and analysis of our financial condition and results of operations are based on our financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these financial statements requires us to make estimates and judgments that affect our reported amounts of assets, liabilities, revenues and expenses.

On an ongoing basis, we evaluate our estimates and judgments, including those related to derivative liabilities, accrued expenses and stock-based compensation. We based our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the reported amounts of revenues and expenses that are not readily apparent from other sources. Actual results could differ from those estimates, particularly given the significant social and economic disruptions and uncertainties associated with the ongoing coronavirus pandemic (“COVID-19”) and the COVID-19 control responses.

Our critical accounting policies and significant estimates are detailed in our Annual Report on Form 10-K for the year ended December 31, 2020. Our critical accounting policies and significant estimates have not changed substantially from those previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2020.

Results of Operations

Operating costs:

Operating costs and expenses consist primarily of research and development expenses, including clinical trial expenses, which increase when we are actively participating in clinical trials and especially when we are in a large ongoing international phase III trial or we are completing such a large international trial, and undertaking substantial one-time expenses such as for final site visits, query resolutions, statistical work for the Statistical Analysis Plan, preparations for data analyses and other activities related to completion and assessment of the trial and its results. The operating costs also include administrative expenses associated with trials, and increase as such operating activities grow.

In addition to clinical trial related costs, our operating costs may include ongoing work relating to our DCVax products, including R&D, product characterization, and related matters. Going forward, we are also incurring large amounts of costs to carry out and complete statistical analyses, process validation work, final data collection and validation, and other work associated with moving towards preparing for locking, unblinding and analyzing the trial results.

Following our acquisition of Flaskworks, our operating costs now include the costs for its ongoing operations and its intellectual property filings.

Our operating costs also include the costs of preparations for the launch of new or expanded clinical trial programs, such as our planned Phase II clinical trials. The preparation costs include payments to regulatory consultants, lawyers, statisticians, sites and others, evaluation of potential investigators, the clinical trial sites and the CROs managing the trials and other service providers, and expenses related to institutional approvals, clinical trial agreements (business contracts with sites), training of medical and other site personnel, trial supplies and other. Additional substantial costs relate to the maintenance and substantial expansion of manufacturing capacity, in both the US and Europe.

Our operating costs also include significant legal and accounting costs in operating the Company.

Research and development:

Discovery and preclinical research and development expenses include costs for substantial external scientific personnel, technical and regulatory advisers, and others, costs of laboratory supplies used in our internal research and development projects, travel, regulatory compliance, and expenditures for preclinical and clinical trial operation and management when we are actively engaged in clinical trials.

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Because we are a pre-revenue company, we do not allocate research and development costs on a project basis. We adopted this policy, in part, due to the unreasonable cost burden associated with accounting at such a level of detail and our limited number of financial and personnel resources.

General and administrative:

General and administrative expenses include personnel related salary and benefit expenses, cost of facilities, insurance, travel, legal services, property and equipment and amortization of stock options and warrants.

Three Months Ended March 31, 2021 and 2020

We recognized a net loss of $4.1 million and net income of $2.7 million for the three months ended March 31, 2021 and 2020, respectively.

Research and Development Expense

For the three months ended March 30, 2021 and 2020, research and development expense was $6.9 million and $3.9 million, respectively. The increase was mainly related to an increase of $3.7 million stock-based compensation that represented vesting of a portion of previously issued securities, and that was recognized in research and development expense.

We incurred approximately $1.7 million and $1.4 million in expenses from related parties during the three months ended March 31, 2021 and 2020, respectively.

General and Administrative Expense

General and administrative expenses were $12.9 million and $4.5 million for three months ended March 31, 2021 and 2020, respectively. The increase was mainly related to an increase of $5.7 million stock-based compensation that represented vesting of a portion of previously issued securities, and that was recognized in general and administrative expense

Change in fair value of derivatives

During the three months ended March 31, 2021 and 2020, we recognized a non-cash gain of $17.6 million and $12.9 million, respectively. The gain was primarily due to the decrease of our stock price as of March 31, 2021 ($1.49 per share) compared to December 31, 2020 ($1.53 per share), and decrease of our stock price as of March 31, 2020 ($0.15 per share) compared to December 31, 2019 ($0.21 per share)

Loss from extinguishment of debt

During the three months ended March 31, 2021, approximately $4.8 million debt and interest was converted into 4.5 million shares of common stock and 0.8 million warrants. The fair value of common stock and warrants were

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approximately $6.7 million. We also extinguished approximately $1.9 embedded derivative liability from the note conversion.

During the three months ended March 31, 2020, we converted debt of approximately $1.4 million principal and $0.4 million accrued interest into approximately 12.4 million shares of common stock at fair value of $2.4 million. We recorded an approximate $0.6 million debt extinguishment loss from the conversion.

Interest Expense

During the three months ended March 31, 2021 and 2020, we recorded interest expense of $1.4 million and $0.6 million, respectively.

Foreign currency transaction gain (loss)

During the three months ended March 31, 2021 and 2020, we recognized foreign currency transaction loss of $0.7 million and $1.1 million, respectively. The losses were due to the strengthening of the U.S. dollar relative to the British pound sterling.

Liquidity and Capital Resources

We have experienced recurring losses from operations since inception. We have not yet established an ongoing source of revenues and must cover our operating expenses through debt and equity financings to allow us to continue as a going concern. Our ability to continue as a going concern depends on the ability to obtain adequate capital to fund operating losses until we generate adequate cash flows from operations to fund our operating costs and obligations. If we are unable to obtain adequate capital, we could be forced to cease operations.

We depend upon our ability, and will continue to attempt, to secure equity and/or debt financing. We cannot be certain that additional funding will be available on acceptable terms, or at all. Our management determined that there was substantial doubt about our ability to continue as a going concern within one year after the consolidated financial statements were issued, and management’s concerns about our ability to continue as a going concern within the year following this report persist.

Cash Flow

Operating Activities

During the three months ended March 31, 2021 and 2020, net cash outflows from operations were $13.2 million and $7.5 million, respectively. The increase in cash used in operating activities was primarily attributable to an increase in clinical trial related expenditures.

Financing Activities

We received approximately $0.7 million cash from the exercise of warrants and options during the three months ended March 31, 2021.

We received approximately $5.7 million cash from the exercise of warrants and options during the three months ended March 31, 2020.

We received approximately $10 million cash proceeds from a loan from a commercial lender and $1 million from a third party, during the three months ended March 31, 2021 and 2020, respectively.

Our financial statements indicate there is substantial doubt about our ability to continue as a going concern as we are dependent on our ability to obtain ongoing financing and ultimately to generate sufficient cash flow to meet our obligations on a timely basis. We can give no assurance that our plans and efforts to achieve the above steps will be successful.

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Other factors affecting our ongoing funding requirements include the number of staff we employ, the number of sites, number of patients and amount of activity in our clinical trial programs, the costs of further product and process development work relating to our DCVax products, the costs of preparations for Phase II trials, the costs of expansion of manufacturing, and unanticipated developments. The extent of resources available to us will determine which programs can move forward and at what pace.

Off-Balance Sheet Arrangements

Since our inception, we have not engaged in any off-balance sheet arrangements, as defined in the rules and regulations of the SEC.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Market risk represents the risk of loss that may result from the change in value of financial instruments due to fluctuations in its market price. Market risk is inherent in all financial instruments. Market risk may be exacerbated in times of trading illiquidity when market participants refrain from transacting in normal quantities and/or at normal bid-offer spreads. Our exposure to market risk is directly related to derivatives, debt and equity linked instruments related to our financing activities.

Our assets and liabilities are overwhelmingly denominated in U.S. dollars. We do not use foreign currency contracts or other derivative instruments to manage changes in currency rates. We do not now, nor do we plan to, use derivative financial instruments for speculative or trading purposes. However, these circumstances might change.

The primary quantifiable market risk associated with our financial instruments is sensitivity to changes in interest rates. Interest rate risk represents the potential loss from adverse changes in market interest rates. We use an interest rate sensitivity simulation to assess our interest rate risk exposure. For purposes of presenting the possible earnings effect of a hypothetical, adverse change in interest rates over the 12-month period from our reporting date, we assume that all interest rate sensitive financial instruments will be impacted by a hypothetical, immediate 100 basis point increase in interest rates as of the beginning of the period. The sensitivity is based upon the hypothetical assumption that all relevant types of interest rates that affect our results would increase instantaneously, simultaneously and to the same degree. We do not believe that our cash and equivalents have significant risk of default or illiquidity.

The sensitivity analyses of the interest rate sensitive financial instruments are hypothetical and should be used with caution. Changes in fair value based on a 1% or 2% variation in an estimate generally cannot be extrapolated because the relationship of the change in the estimate to the change in fair value may not be linear. Also, the effect of a variation in a particular estimate on the fair value of financial instruments is calculated independent of changes in any other estimate; in practice, changes in one factor may result in changes in another factor, which might magnify or counteract the sensitivities. In addition, the sensitivity analyses do not consider any action that we may take to mitigate the impact of any adverse changes in the key estimates.

Based on our analysis, as of March 31, 2021, the effect of a 100+/- basis point change in interest rates on the value of our financial instruments and the resultant effect on our net loss are considered immaterial.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation as of March 31, 2021, of the design and operation of our disclosure controls and procedures, as such terms are defined in Exchange Act Rules 13a-15(e) and 15d-15(e). Based on this evaluation, management concluded that, as of such date, our disclosure controls and procedures effective to ensure that information required to be disclosed by us in our Exchange Act reports is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

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Changes in Internal Control over Financial Reporting

No change in internal control over financial reporting occurred during the most recent quarter with respect to our operations, which materially affected, or is reasonable likely to materially affect, our internal controls over financial reporting.

Part II - Other Information

Item 1. Legal Proceedings

Not Applicable.

Item 1A. Risk Factors

Applicable risk factors are set forth in the Company’s report on Form 10-K for 2020.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3. Defaults Upon Senior Securities

Not Applicable.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

Not Applicable

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Item 6. Exhibits


31.1		Certification of President (Principal Executive Officer and Principal Financial and Accounting Officer), Pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1		Certification of President, Chief Executive Officer and Principal Financial and Accounting Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS		XBRL Instance Document.

101.SCH		XBRL Schema Document.

101.CAL		XBRL Calculation Linkbase Document.

101.DEF		XBRL Definition Linkbase Document.

101.LAB		XBRL Label Linkbase Document.

101.PRE		XBRL Presentation Linkbase Document.

104		The cover page from the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2021, formatted in Inline XBRL (included as Exhibit 101).

* Filed herewith

** Furnished herewith

Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	NORTHWEST BIOTHERAPEUTICS, INC

Dated: May 17, 2021	By:	/s/ Linda F. Powers
		Name:	Linda F. Powers


		Title:	President and Chief Executive Officer

			Principal Executive Officer

			Principal Financial and Accounting Officer