Major investor probes ‘financial improprieties’ allegations at Northwest Bio

A major shareholder of Northwest Biotherapeutics is calling for allegations of dubious financial and management practices at the company to be investigated.

Well-known UK fund manager Neil Woodford has invested $95 million in the company, which specialises in personalised vaccine treatments for cancer, but now Woodford wants to clear up long-standing allegations of dubious dealings at the firm.

He has now written to the company’s chairman and chief executive Linda Powers and her board, proposing the hiring of Elliott Leary, an investigator specialising in business integrity, compliance and investigations.

Woodford proposes that Leary would be appointed as a new independent non-executive to the Northwest Bio board to undertake the probe, and asked them to “seriously and urgently address” the proposal.

The allegations centre on payments to contract research company Cognate BioServices, which was formed by Toucan Capital venture group – of which Linda Powers is co-founder and managing director.

The allegations have emerged from Phase V Research, chiming in with several years of public criticism of Northwest Bio’s governance by biopharma markets journalist Adam Feuerstein.

Serious questions have also been raised about the Northwest Bio’s relations with Navid Malik, an analyst at Cenkos Securities. Malik has just been suspended pending an inquiry into allegations that he has received $5 million in Northwest stock after writing a bullish report on the firm’s future.

Malik is now a non-executive director at Northwest – a worrying development which has clearly spurred Woodford’s demand for an independent voice on the board.

Speaking to the Wall Street Journal on Friday and Saturday, Linda Powers denied any financial irregularities, saying the claims were “baloney”.

She said payments for services to third parties had been cleared by the Northwest board, independently audited and, where necessary, filed with regulators.

Northwest’s lead candidate is DCVax, a therapeutic cancer vaccine designed to use a refined dendritic cell (DC) platform to fight cancer. The drug’s lead indication is in GBM brain cancer, now in phase III trials.

Powers is a well-known face in the media, often seen talking up the firm’s prospects, but this approach has undermined investor confidence in the firm and its as-yet unproven technology. This has attracted the attention of short sellers, interested in betting against the success of the firm.

Powers says the company has discussed the proposal of Leary undertaking an independent inquiry, but says a final decision has not yet been made.

Read Neil Woodford’s letter here

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