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SECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549

FORM 10-Q

|(Mark One) |                                                                                           
|---------- | ------------------------------------------------------------------------------------------
|           |                                                                                           
|x          | QUARTERLY REPORT PURSUANT TO
  SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 
|           |                                                                                           
|           | For The Quarterly Period Ended September 30, 2004                                         
|           |                                                                                           
|           | OR                                                                                        
|           |                                                                                           
|o          | TRANSITION REPORT PURSUANT TO
  SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 0-26825

|NORTHWEST BIOTHERAPEUTICS, INC.                       
|------------------------------------------------------
|(Exact Name Of Registrant As Specified In Its Charter)

|DELAWARE                                                                        |  | 94-3306718                         
|------------------------------------------------------------------------------- |  | -----------------------------------
|(State or Other Jurisdiction ofIncorporation or Organization)                   |  | (I.R.S. Employer IdentificationNo.)
|                                                                                |  |                                    
|Canyon Park Building 8, 22322 20th Avenue S.E., Suite 150, Bothell,
  Wa. 98021
|(Address of Principal Executive Offices, Including Zip Code)                   
|                                                                               
|(425) 608-3000                                                                 
|(Registrants Telephone Number, Including Area Code)                           

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 x Noo

Indicate by
check mark whether the registrant is an accelerated filer (as defined in Rule
12b-2 of the Exchange Act). Yes o Nox

As of
November 14, 2004, the registrant had outstanding 19,028,779 shares of common
stock, $0.001 par value.

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TABLE OF CONTENTS

NORTHWEST BIOTHERAPEUTICS, INC.

TABLE OF CONTENTS

|                                                                                                | Page
|----------------------------------------------------------------------------------------------- | ----
|                                                                                                |     
|                                                                                                |     
|PART I  FINANCIAL INFORMATION                                                                  | 3   
|Item 1. Financial Statements (unaudited)                                                        | 3   
|Condensed Balance Sheets                                                                        | 3   
|Condensed Statements of Operations                                                              | 4   
|Condensed Statements of Cash Flows                                                              | 5   
|Notes to Condensed Financial Statements                                                         | 7   
|Item 2. Managements Discussion and Analysis of Financial Condition
  and Results of Operations | 12  
|Item 3. Quantitative and Qualitative Disclosures About Market Risk                              | 27  
|Item 4. Controls and Procedures                                                                 | 27  
|PART II  OTHER INFORMATION                                                                     | 28  
|Item 1. Legal Proceedings                                                                       | 28  
|Item 2. Unregistered Sales of Equity Securities and Use of Proceeds                             | 28  
|Item 3. Defaults Upon Senior Securities                                                         | 28  
|Item 4. Submission of Matters to a Vote of Security Holders                                     | 28  
|Item 5. Other Information                                                                       | 28  
|Item 6. Exhibits                                                                                | 28  
|SIGNATURES                                                                                      | 29  
|INDEX TO EXHIBITS                                                                               | 30  

2

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Part I  Financial Information

Item 1. Financial Statements

NORTHWEST BIOTHERAPEUTICS, INC.(A Development Stage Company)

BALANCE SHEETS(in thousands)
(Unaudited)

|                                                                                                                                                                                            |  | December 31,
  2003 |   | September 30,
  2004 |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------- | - | -------------------- | -
|                                                                                                                                                                                            |  |                     |   |                      |  
|ASSETS                                                                                                                                                                                      |  |                     |   |                      |  
|Current
  assets:                                                                                                                                                                           |  |                     |   |                      |  
|Cash
  and cash equivalents                                                                                                                                                                 |  |                     | $ | 255                  |  
|Accounts
  receivable                                                                                                                                                                       |  |                     |   | 8                    |  
|Prepaid
  expenses and other current assets                                                                                                                                                 |  |                     |   | 85                   |  
|                                                                                                                                                                                            |  |                     |   |                      |  
|Total
  current assets                                                                                                                                                                      |  |                     |   | 348                  |  
|                                                                                                                                                                                            |  |                     |   |                      |  
|Property and
  equipment:                                                                                                                                                                   |  |                     |   |                      |  
|Leasehold
  improvements                                                                                                                                                                    |  |                     |   | 69                   |  
|Laboratory
  equipment                                                                                                                                                                      |  |                     |   | 551                  |  
|Office
  furniture and other equipment                                                                                                                                                      |  |                     |   | 128                  |  
|                                                                                                                                                                                            |  |                     |   |                      |  
|                                                                                                                                                                                            |  |                     |   | 748                  |  
|Less
  accumulated depreciation and amortization                                                                                                                                            |  |                     |   | (375                 | )
|                                                                                                                                                                                            |  |                     |   |                      |  
|Property
  and equipment, net                                                                                                                                                               |  |                     |   | 373                  |  
|                                                                                                                                                                                            |  |                     |   |                      |  
|Restricted
  cash                                                                                                                                                                           |  |                     |   | 105                  |  
|Deposit and
  other non-current assets                                                                                                                                                      |  |                     |   | 45                   |  
|                                                                                                                                                                                            |  |                     |   |                      |  
|                                                                                                                                                                                            |  |                     | $ | 871                  |  
|                                                                                                                                                                                            |  |                     |   |                      |  
|LIABILITIES AND STOCKHOLDERS EQUITY
  (DEFICIT)                                                                                                                                            |  |                     |   |                      |  
|Current
  liabilities:                                                                                                                                                                      |  |                     |   |                      |  
|Notes
  payable to related parties, net of discount                                                                                                                                         |  |                     | $ | 44                   |  
|Current
  portion of capital lease obligations                                                                                                                                              |  |                     |   | 42                   |  
|Accounts
  payable                                                                                                                                                                          |  |                     |   | 128                  |  
|Accrued
  expenses                                                                                                                                                                          |  |                     |   | 34                   |  
|Accrued
  expenses, tax liability                                                                                                                                                           |  |                     |   | 492                  |  
|Common stock warrant liability                                                                                                                                                              |  |                     |   |                     |  
|Deferred
  grant revenue                                                                                                                                                                    |  |                     |   |                     |  
|                                                                                                                                                                                            |  |                     |   |                      |  
|Total
  current liabilities                                                                                                                                                                 |  |                     |   | 740                  |  
|Long-term
  liabilities:                                                                                                                                                                    |  |                     |   |                      |  
|Capital
  lease obligations, less current portion                                                                                                                                           |  |                     |   | 49                   |  
|Deferred
  rent                                                                                                                                                                             |  |                     |   | 66                   |  
|                                                                                                                                                                                            |  |                     |   |                      |  
|Total
  liabilities                                                                                                                                                                         |  |                     |   | 855                  |  
|                                                                                                                                                                                            |  |                     |   |                      |  
|Stockholders
  equity (deficit):                                                                                                                                                           |  |                     |   |                      |  
|Preferred
  stock, $0.001 par value, 15,000,000 shares authorized, no shares issued or
  outstanding at 
     December 31, 2003 and September 30, 2004, respectively                        |  |                     |   |                     |  
|Common
  stock, $0.001 par value, 125,000,000 shares authorized, 19,027,779 and
  19,028,779
     shares issued and outstanding at December 31, 2003 and
  September 30, 2004, respectively |  |                     |   | 19                   |  
|Additional
  paid-in capital                                                                                                                                                                |  |                     |   | 64,294               |  
|Deferred
  compensation                                                                                                                                                                     |  |                     |   | (53                  | )
|Deficit
  accumulated during the development stage                                                                                                                                          |  |                     |   | (64,244              | )
|                                                                                                                                                                                            |  |                     |   |                      |  
|Total
  stockholders equity (deficit)                                                                                                                                                      |  |                     |   | 16                   |  
|                                                                                                                                                                                            |  |                     |   |                      |  
|Commitments,
  contingencies and subsequent events                                                                                                                                          |  |                     |   |                      |  
|Total
  liabilities and stockholders equity (deficit)                                                                                                                                      |  |                     | $ | 871                  |  
|                                                                                                                                                                                            |  |                     |   |                      |  

See accompanying notes to financial
statements.

3

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NORTHWEST BIOTHERAPEUTICS, INC.(A Development Stage Company)

STATEMENTS OF OPERATIONS(in thousands, except per share data)
(Unaudited)

|                                                                                              |  | Three Months Ended
        September 30, |        | Nine Months Ended
        September 30, |   | Period fromMarch 18, 1996
        (inception) to
        September 30, 2004
|--------------------------------------------------------------------------------------------- |  | ---------------------------------------- | ------ | --------------------------------------- | - | ---------------------------------------------------------------------------
|                                                                                              |  |                                          |        |                                         |  
|                                                                                              |  | 2003                                     |        | 2004                                    |   | 2003                                                                       
|                                                                                              |  |                                          |        |                                         |   |                                                                            
|Revenues:                                                                                     |  |                                          |        |                                         |   |                                                                            
|Research
        material sales                                                               |  | $                                        | 8      |                                         | $ | 12                                                                         
|License
        fees                                                                          |  |                                          | 25     |                                         |   |                                                                           
|Contract
        research and development from related parties                                |  |                                          |       |                                         |   |                                                                           
|Research
        grants                                                                       |  |                                          | 112    |                                         |   | 79                                                                         
|                                                                                              |  |                                          |        |                                         |   |                                                                            
|Total
        revenues                                                                        |  |                                          | 145    |                                         |   | 91                                                                         
|                                                                                              |  |                                          |        |                                         |   |                                                                            
|Operating
        expenses:                                                                   |  |                                          |        |                                         |   |                                                                            
|Cost
        of research material sales                                                       |  |                                          | 22     |                                         |   | 8                                                                          
|Research
        and development                                                              |  |                                          | 378    |                                         |   | 1,716                                                                      
|General
        and administrative                                                            |  |                                          | 893    |                                         |   | 629                                                                        
|Depreciation
        and amortization                                                         |  |                                          | 34     |                                         |   | 35                                                                         
|Accrued
        loss on facility sublease                                                     |  |                                          |       |                                         |   |                                                                           
|Asset
        impairment loss                                                                 |  |                                          |       |                                         |   | 78                                                                         
|                                                                                              |  |                                          |        |                                         |   |                                                                            
|Total
        operating expenses                                                              |  |                                          | 1,327  |                                         |   | 2,466                                                                      
|                                                                                              |  |                                          |        |                                         |   |                                                                            
|Loss
        from operations                                                                  |  |                                          | (1,182 | )                                       |   | (2,375                                                                     
|                                                                                              |  |                                          |        |                                         |   |                                                                            
|Other
        income (expense):                                                               |  |                                          |        |                                         |   |                                                                            
|Warrant valuation                                                                             |  |                                          |       |                                         |   | 717                                                                        
|Gain
        on sale of intellectual rights                                                   |  |                                          |       |                                         |   |                                                                           
|Interest
        expense                                                                      |  |                                          | (6     | )                                       |   | (609                                                                       
|Interest
        income                                                                       |  |                                          | 1      |                                         |   | 1                                                                          
|                                                                                              |  |                                          |        |                                         |   |                                                                            
|Net
        loss                                                                              |  |                                          | (1,187 | )                                       |   | (2,266                                                                     
|Accretion
        of Series A preferred stock mandatory redemption
           obligation      |  |                                          |       |                                         |   |                                                                           
|Series
        A preferred stock redemption fee                                               |  |                                          |       |                                         |   |                                                                           
|Beneficial
        conversion feature of Series D preferred stock                             |  |                                          |       |                                         |   |                                                                           
|                                                                                              |  |                                          |        |                                         |   |                                                                            
|Net
        loss applicable to common stockholders                                            |  | $                                        | (1,187 | )                                       | $ | (2,266                                                                     
|                                                                                              |  |                                          |        |                                         |   |                                                                            
|Net
        loss per share applicable to common stockholders 
           basic and diluted   |  | $                                        | (0.06  | )                                       | $ | (0.12                                                                      
|                                                                                              |  |                                          |        |                                         |   |                                                                            
|Weighted
        average shares used in computing basic and
           diluted loss per share |  |                                          | 19,014 |                                         |   | 19,026                                                                     
|                                                                                              |  |                                          |        |                                         |   |                                                                            

See accompanying notes to condensed financial
statements.

4

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NORTHWEST BIOTHERAPEUTICS, INC.(A Development Stage Company)

STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)

|                                                                                                          |  | September 30, |        | Period from
        March 18, 1996
        (Inception) to
|--------------------------------------------------------------------------------------------------------- |  | ------------- | ------ | ---------------------------------------------------------
|                                                                                                          |  |               |        | September 30,2004                                        
|                                                                                                          |  | 2003          |        | 2004                                                     
|                                                                                                          |  |               |        |                                                          
|                                                                                                          |  |               |        |                                                          
|Cash
        Flows from Operating Activities:                                                             |  |               |        |                                                          
|Net
        Loss                                                                                          |  | $             | (4,880 | )                                                        
|Reconciliation
        of net loss to net cash used in operating activities:                              |  |               |        |                                                          
|Depreciation
        and amortization                                                                     |  |               | 171    |                                                          
|Amortization
        of deferred financing costs                                                          |  |               |       |                                                          
|Amortization
        of debt discount                                                                     |  |               |       |                                                          
|Accrued
        interest converted to preferred stock                                                     |  |               |       |                                                          
|Accreted
        interest on convertible promissory note                                                  |  |               |       |                                                          
|Stock-based
        compensation costs                                                                    |  |               | 203    |                                                          
|Loss
        on sale and disposal of property and equipment                                               |  |               | 904    |                                                          
|Gain
        on sale of intellectual property and royalty rights                                          |  |               | (816   | )                                                        
|Gain
        on sale of property and equipment                                                            |  |               |       |                                                          
|Warrant valuation                                                                                         |  |               |       |                                                          
|Asset
        impairment loss                                                                             |  |               |       |                                                          
|Loss
        on facility sublease                                                                         |  |               | 174    |                                                          
|Increase
        (decrease) in cash resulting from changes in assets and liabilities:                     |  |               |        |                                                          
|Accounts
        receivable                                                                               |  |               | (58    | )                                                        
|Prepaid
        expenses and other current assets                                                         |  |               | 637    |                                                          
|Accounts
        payable and accrued expenses                                                             |  |               | (35    | )                                                        
|Accrued
        loss on sublease                                                                          |  |               | (266   | )                                                        
|Deferred
        grant revenue                                                                            |  |               |       |                                                          
|Deferred
        rent                                                                                     |  |               | 105    |                                                          
|                                                                                                          |  |               |        |                                                          
|Net
        Cash used in Operating Activities                                                             |  |               | (3,861 | )                                                        
|                                                                                                          |  |               |        |                                                          
|Cash
        Flows from Investing Activities:                                                             |  |               |        |                                                          
|Purchase
        of property and equipment, net                                                           |  |               | (196   | )                                                        
|Proceeds
        from sale of property and equipment                                                      |  |               | 67     |                                                          
|Proceeds
        from sale of intellectual property                                                       |  |               | 816    |                                                          
|Proceeds
        from sale of marketable securities                                                       |  |               | 1,828  |                                                          
|Payment
        of security deposit                                                                       |  |               | (45    | )                                                        
|Transfer
        of restricted cash                                                                       |  |               |       |                                                          
|                                                                                                          |  |               |        |                                                          
|Net
        Cash provided by (used in) Investing Activities                                               |  |               | 2,470  |                                                          
|                                                                                                          |  |               |        |                                                          
|Cash
        Flows from Financing Activities:                                                             |  |               |        |                                                          
|Proceeds
        from issuance of note payable to stockholder                                             |  |               |       |                                                          
|Repayment
        of note payable to stockholder                                                          |  |               |       |                                                          
|Proceeds from issuance of convertible promissory note and warrants, net of issuance
                costs |  |               |       |                                                          
|Repayment
        of convertible promissory note                                                          |  |               |       |                                                          
|Borrowing
        under line of credit, Northwest Hospital                                                |  |               |       |                                                          
|Repayment
        of line of credit to Northwest Hospital                                                 |  |               |       |                                                          
|Payment
        on capital lease obligations                                                              |  |               | (64    | )                                                        
|Payment
        on note payable                                                                           |  |               | (420   | )                                                        
|Proceeds
        from issuance of preferred stock, net                                                    |  |               |       |                                                          

5

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|                                                                                              |  | September
  30, |        | Period fromMarch 18, 1996(Inception) to |  
|--------------------------------------------------------------------------------------------- |  | --------------- | ------ | --------------------------------------- | -
|                                                                                              |  |                 |        | September 30,                           |  
|                                                                                              |  | 2003            |        | 2004                                    |  
|                                                                                              |  |                 |        |                                         |  
|Proceeds from exercise of
  stock options and warrants                                        |  |                 |       |                                         |  
|Proceeds from issuance of
  common stock, net                                                 |  |                 |       |                                         |  
|Series A preferred stock
  redemption fee                                                     |  |                 |       |                                         |  
|Deferred financing costs                                                                      |  |                 |       |                                         |  
|                                                                                              |  |                 |        |                                         |  
|Net
  Cash (used in) provided by Financing Activities                                         |  |                 | (484   | )                                       |  
|                                                                                              |  |                 |        |                                         |  
|Net increase (decrease) in cash
  and cash equivalents                                        |  |                 | (1,875 | )                                       |  
|Cash and cash equivalents
  at beginning of period                                            |  |                 | 2,539  |                                         |  
|                                                                                              |  |                 |        |                                         |  
|Cash and cash equivalents
  at end of period                                                  |  |                 | 664    |                                         |  
|                                                                                              |  |                 |        |                                         |  
|Supplemental disclosure of cash flow information  cash paid during the period for interest   |  |                 | 25     |                                         |  
|                                                                                              |  |                 |        |                                         |  
|Supplemental schedule of
  non-cash financing activities                                      |  |                 |        |                                         |  
|Equipment acquired through
  capital leases                                                   |  | $               |       |                                         | $
|Common stock warranty liability                                                               |  |                 |       |                                         |  
|Accretion of Series A
  preferred stock mandatory redemption obligation                       |  |                 |       |                                         |  
|Beneficial conversion
  feature of convertible promissory notes                               |  |                 |       |                                         |  
|Conversion of convertible
  promissory notes and accrued interest to Series D preferred stock |  |                 |       |                                         |  
|Issuance of Series C
  preferred stock warrants in connection with lease agreement            |  |                 |       |                                         |  
|Issuance of common stock
  for license rights                                                 |  |                 |       |                                         |  
|Liability for and issuance
  of common stock and warrants to Medarex                          |  |                 | 280    |                                         |  
|Issuance of common stock to
  landlord                                                        |  |                 | 35     |                                         |  
|Deferred compensation on
  issuance of stock options and restricted stock grants              |  |                 |       |                                         |  
|Cancellation of options and
  restricted stock                                                |  |                 | 77     |                                         |  
|Financing of prepaid
  insurance through note payable                                         |  |                 |       |                                         |  
|Stock subscription
  receivable                                                               |  | $               |       |                                         | $
|                                                                                              |  |                 |        |                                         |  

See accompanying notes to financial
statements.

6

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Northwest Biotherapeutics, Inc.

(A
Development Stage Company)

Notes
to Condensed Financial Statements

(unaudited)

1. Basis of Presentation

The
accompanying unaudited financial statements for Northwest Biotherapeutics, Inc.
(the Company) have been prepared in accordance with generally accepted
accounting principles for interim financial information and with the
instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they
do not include all of the information and footnotes required by accounting
principles generally accepted in the United States for complete financial
statements. In the opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation have been
included. Operating results for the nine-month period ended September 30, 2004
are not necessarily indicative of the results that may be expected for the year
ending December 31, 2004.

For
further information, refer to the financial statements and footnotes thereto
included in the Companys Annual Report on Form 10-K for the year ended
December 31, 2003, as filed with the Securities and Exchange Commission.

The
auditors report on the foregoing financial statements of the Company for the
fiscal year ended December 31, 2003 states that because of recurring operating
losses, a working capital deficit, and a deficit accumulated during the
development stage, there is substantial doubt about the Companys ability to
continue as a going concern. A going concern opinion indicates that the
financial statements have been prepared assuming 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.

Stock-Based
Compensation

The
Company accounts for its stock option plans for employees in accordance with
the provisions of Accounting Principles Board (APB) Opinion No. 25, Accounting
for Stock Issued to Employees, and related interpretations. As such,
compensation expense related to employee stock options is recorded if, on the
date of grant, the fair value of the underlying stock exceeds the exercise
price. The Company applies the disclosure-only requirements of SFAS No. 123,
Accounting for Stock-Based Compensation, which allows entities to continue to
apply the provisions of APB Opinion No. 25 for transactions with employees, and
to provide pro-forma results of operations disclosures for employee stock
option grants as if the fair-value-based method of accounting in SFAS No. 123
had been applied to those transactions.

Stock
compensation costs related to fixed employee awards with pro rata vesting are
recognized on a straight-line basis over the period of benefit, generally the
vesting period of the options. For options and warrants issued to
non-employees, the Company recognizes stock compensation costs utilizing the
fair value methodology prescribed in SFAS No. 123 over the related period of
benefit.

7

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Had
the Company recognized the compensation cost of employee stock options based on
the fair value of the options on the date of grant as prescribed by SFAS No.
123, the pro-forma net loss applicable to common stockholders and related loss
per share would have been adjusted to the pro-forma amounts indicated below:

|                                                                                                                         |  | Three months ended September 30, |  | Nine months ended September 30, |  
|------------------------------------------------------------------------------------------------------------------------ |  | -------------------------------- |  | ------------------------------- | -
|                                                                                                                         |  |                                  |  |                                 |  
|                                                                                                                         |  | 2003                             |  | 2004                            |  
|                                                                                                                         |  |                                  |  |                                 |  
|Net loss applicable to
  common stockholders 
       As reported                                                         |  |                                  |  | (1,187                          | )
|Add: Stock-based
  employee compensation 
          expense included in reported
  net loss, net                         |  |                                  |  | 35                              |  
|Deduct: Stock-based
  employee compensation 
          determined under fair value
  based method for         all awards |  |                                  |  | (77                             | )
|                                                                                                                         |  |                                  |  |                                 |  
|Pro forma                                                                                                                |  |                                  |  | (1,229                          | )
|                                                                                                                         |  |                                  |  |                                 |  
|Net loss per share-basic and diluted:
       As reported                                                                 |  |                                  |  | (0.06                           | )
|Pro forma                                                                                                                |  |                                  |  | (0.06                           | )

There
were no stock options granted during the three-months ended September 30, 2004
and September 30, 2003. There were no stock options granted during the
nine-months ended September 30, 2004. The per share weighted average fair value
of stock options granted during the nine months ended September 30, 2003 was
$0.09. These weighted average fair values were determined on the dates of
grants using the following weighted average assumptions:

|                        |  |  |  | Nine months ended September 30,
  2003 | 
|----------------------- |  |  |  | -------------------------------------- | 
|                        |  |  |  |                                        | 
|Risk-free interest rate |  |  |  |                                        | 
|Expected life           |  |  |  |                                        | 
|Expected volatility     |  |  |  |                                        | 
|Dividend yield          |  |  |  |                                        | 

8

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2. Liquidity

On
April 26, 2004 we entered into a Recapitalization Agreement with Toucan Capital
Fund II, L.P. (Toucan). On July 30, 2004, the Company and Toucan agreed to
amend and restate the Recapitalization Agreement (the Amended and Restated
Recapitalization Agreement).

Pursuant to the Amended and Restated Recapitalization
Agreement on July 30, 2004 the Company received $2.0 million from Toucan. The Company
issued a warrant to Toucan which is exercisable immediately for up to 20
million shares of the Companys Capital Stock. This warrant is exercisable for
up to seven years. The exercise price of the warrant is the lesser of (i) $0.10
per share (subject to certain adjustments); or (ii) a 35% discount to the
average closing price of the Companys common stock during the twenty trading
days prior to the first closing of the sale of convertible preferred stock of
the Company, but not less than $0.04 per share.

On
October 22, 2004, the Company and Toucan agreed to amend the Amended And Restated Recapitalization
Agreement (Amendment No. 1). In
connection with entering into Amendment No. 1, the Company received a $500,000 loan from
Toucan on October 22, 2004. The loan (i) has a 12 month term,
(ii) accrues interest at 10% per annum on a 365 day basis compounded annually
from the issue date, (iii) is secured by a first priority senior security
interest in all of the Companys assets, and (iv) has warrant coverage equal to one
hundred percent (100%) of the $500,000 loan. The principal and interest
is convertible into capital stock of the Company, generally at Toucans option,
prior to repayment. The conversion price for any conversion of a note at the
election of Toucan will be the lowest of (i) with certain exceptions, the
lowest nominal or effective price per share paid by any investor of the Company
at any time on or after one year prior to April 26, 2004, (ii) with certain
exceptions, the lowest nominal or effective price at which any investor of the
Company has a right to acquire shares of the Company pursuant to any security,
instrument, or promise, undertaking, commitment, agreement or letter of intent
outstanding on or after April 26, 2004 or granted, issued, extended or
otherwise made available by the Company at any time on or after one year prior
to April 26, 2004 and (iii) the lesser of $0.10 per share or 35% discount to
the average closing price per share of the Companys common stock during any 20
consecutive trading days (beginning with the 20 consecutive trading days prior
to the effective date of the Recapitalization Agreement), but not less than
$0.04 per share under this clause. In addition to these conversion
rights, the notes will automatically be converted into convertible preferred
stock of the Company in the event the Company raises $15 million from investors other than Toucan Capital through the
issuance of convertible preferred stock on the terms set forth in the Amended and Restated Term Sheet. In this event the conversion price
would be the lowest nominal or effective price per share paid by investors
other than Toucan who purchase shares of convertible preferred stock (excluding
shares issuable upon exercise of the bridge warrants).

Pursuant to Amendment No.1, Toucan and the Company also agreed to the terms of an additional $500,000 loan that
Toucan may make to the Company to cover operating expenses and certain other
expenses of the Company, subject to the satisfaction of certain closing
conditions, including but not limited to the mutual agreement between the
Company and Toucan on an acceptable budget for the Company for the period
through December 17, 2004 and the Company providing Toucan with a report
detailing its cash position, all expenditures, financial agreements,
commitments and undertakings as of October 22, 2004. This additional loan was made on November 10, 2004 on terms
substantially similar to the loan made on October 22, 2004 and included a
warrant to purchase up to 5,000,000 additional shares of capital stock of the
Company with terms substantially similar to the warrant issued on
October 22, 2004.  The provision of further loans is generally within the
discretion of Toucan and there can be no assurance
that Toucan will provide any additional funding to the
Company on the terms described above or at all.

Through
November 10, 2004, the Company has issued seven promissory notes to Toucan
pursuant to which Toucan has loaned the Company an aggregate of $4.1 million which,
with interest of $138,326, is convertable into 106 million shares of common stock. In
connection with the issuance of promissory notes to Toucan, the Company has
issued and Toucan has received warrants that are currently exercisable for an
aggregate of up to 96 million shares of the Companys capital stock.
All of the warrants issued to date to Toucan are
currently exercisable and exercisable for up to seven years for their respective issuance dates. The exercise price
of the warrants issued for the $1.1 million of bridge loans received from
February 2, 2004 through June 11, 2004 is $0.01 per share, subject to
adjustments. The exercise price of the warrants issued for the $3.0 million of
bridge loans received from July 30, 2004 through November 10, 2004 is the lesser
of (i) $0.10 per share (subject to certain adjustments); or (ii) a 35% discount
to the average closing price of the Companys common stock during the
twenty trading days prior to the first closing of the sale of convertible
preferred stock of the Company, but not less than $0.04 per share.

In accordance with EITF 00-19, the Company accounts for potential shares that can be converted to common stock that are in
excess of authorized shares as a liability that is recorded at fair value.  Total potential outstanding common stock exceeded the
Company's authorized shares on July 30, 2004 when an additional $2.0 million bridge loan, convertible into common stock,
was received from Toucan and additional warrants were issued. The fair value of
the warrants in excess of the authorized shares was approximately $2.8 million and was recognized as a liability on July 30, 2004.
This liability is required to be revalued at each reporting date with any change in value included in other income/(expense) until
such time as enough shares are authorized to cover all potentially convertible instruments.  The Company's stock price had declined
from $0.04 at July 30, 2004 to $0.03 at September 30, 2004. The drop in stock price as of September 30, 2004 was the primary reason
for a decrease in the fair value of the warrants of $717,000 and an increase in other income to the Company.

The Amended and Restated Recapitalization Agreement contemplates a
proposed equity financing that would provide for the potential issuance and
sale of up to $40 million of convertible preferred stock (including any shares
issuable upon conversion of bridge funding, but not including any shares
issuable upon exercise of warrants, options, and similar instruments or
obligations), in one or more closings over a period of 12 months from the first
closing of the sale of convertible preferred stock. If issued, the convertible
preferred stock will be issued at a price per share equal to the lesser of $0.10
(as adjusted for stock splits, stock dividends and the like) or a 35% discount
to the average closing price of the Companys common stock during the twenty
trading days prior to the first closing of the proposed equity financing, but
not less than $0.04 per share. The proposed equity financing is contingent upon
the Company complying with covenants in the Amended and Restated Recapitalization Agreement and
locating investors who are willing to invest in the Company on the terms
proposed. If fully implemented, the proposed equity financing would result in
Toucan and other investors potentially owning, on a combined basis, over 90% of
the outstanding capital stock of the Company.

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As
of November 10, 2004 after giving effect to aggregate borrowings from Toucan of
$4.1 million, the Company had approximately $689,000 in cash and cash
equivalents.  The Company believes that
its remaining cash of approximately $689,000, based on recurring operating and
associated financing costs, will be sufficient to fund its operations
approximately through the third week of December 2004.

While
the Company has attempted to obtain funding for working capital from multiple
parties since 2002, Toucan is the only party, to date, that has invested a
significant amount of capital in the Company.  In addition, because: (i) Toucan has a first priority, senior secured interest in all of our assets,
(ii) Toucan has the right to acquire a controlling interest in the Company, and, (iii) the Company is generally prohibited from negotiating
a financing with any parties other than Toucan and its designees, it is unlikely that the Company could obtain funding
from any investors other than Toucan. Therefore, if the Amended and
Restated Recapitalization Agreement is not fully implemented, or if Toucan is
unwilling to continue to fund the Companys operations, it is unlikely the
Company will obtain additional funding from any third parties and the Company
will be required to cease operations and liquidate its assets.

3. Net Loss Per Share Applicable to Common Stockholders

Basic
and diluted net loss per share applicable to common stockholders has been
computed using the weighted-average number of shares of common stock
outstanding during the period, less, for the three months and nine months ended September 30,
2004, 2,000 issued and outstanding restricted shares of common stock that were
subject to repurchase. Options to purchase 919,488 shares of common stock and
warrants to purchase 91 million shares of common stock were
excluded from the calculation of diluted net loss per share for the three and
nine-months ended September 30, 2004 as such securities were antidilutive.
Options to purchase 1.7 million shares of common stock and warrants to purchase
1.4 million shares of common stock were excluded from the
calculation of diluted net loss per share for the three and nine-months ended
September 30, 2003 as such securities were antidilutive.

4. Notes Payable to Related Parties

The
initial bridge funding period commenced on February 2, 2004 when the Company issued
Toucan an unsecured convertible promissory note, in the amount of $50,000. On
March 1, 2004, the Company issued Toucan a secured convertible promissory note, in the
amount of $50,000. The notes were convertible at prices below the current price
of the Companys common stock at the date of issuance resulting in a beneficial
conversion cost of approximately $100,000 which is being amortized over the
12-month term of the notes. Amortization of deferred debt discount of approximately $25,000 and $62,000 was recorded for
the three months and nine months ended September 30, 2004, respectively.
Interest accretion on the notes of approximately $3,000 and $6,000 was recorded
for the three months and nine months ended September 30, 2004 for the February 2
and March 1, 2004 note balances, respectively.

The
 Recapitalization Agreement stipulated that the February and March 2004 notes
for $50,000 each were to be cancelled and reissued effective April 26, 2004 as
two separate notes for $50,000 each and conforming to the conditions of the
note signed for the April 26, 2004 bridge loan for $500,000. As a result, the
notes issued in February and March 2004, respectively, (i) have a 12 month
term, (ii) accrue interest at 10% per annum on a 365 day basis compounded
annually from their respective original issuance dates, (iii) are secured by a
first priority senior security interest in all of the Companys assets, and
(iv) have warrants with coverage equal to three hundred percent (300%) of the
amount due under the bridge notes.

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On
April 26, 2004 the Company issued Toucan a senior secured convertible promissory note
and warrants, in the amount of $500,000. Proceeds from the April 26, 2004 loan
were allocated between the notes and warrants on a relative fair value basis.
The value allocated to the warrants on the date of the grant was approximately
$375,000. The fair value of the warrants was determined using the Black-Scholes
option pricing model with the following assumptions: expected dividend yield of
0%, risk-free interest rate of 3.57%, volatility of 218%, and a contractual
life of 7-years. The value of the warrants was recorded as a deferred debt
discount against the $500,000 proceeds of the notes. In addition, a beneficial
conversion feature related to the notes was determined to be approximately
$375,000 but is capped at the remaining value originally allocated to the notes
of approximately $125,000. As a result, the total discount on the notes equaled
the face value of $500,000 which is being amortized over the twelve-month term
of the notes. Amortization of deferred debt discount of approximately $126,000 and $215,000 was recorded
for the three months and nine months ended September 30, 2004, respectively.
Interest accretion on the note of approximately $13,000 and $21,500 was recorded
for the three months and nine months ended September 30, 2004 for the April 26,
2004 note balance, respectively.

On
June 11, 2004 the Company issued Toucan a senior secured convertible promissory note and
warrants, in the amount of $500,000. Proceeds from the June 11, 2004 loan were
allocated between the notes and warrants on a relative fair value basis. The
value allocated to the warrants on the date of the grant was approximately
$353,000. The fair value of the warrants was determined using the Black-Scholes
option pricing model with the following assumptions: expected dividend yield of
0%, risk-free interest rate of 3.70%, volatility of 219%, and an contractual
life of 7-years. The value of the warrants was recorded as a deferred debt
discount against the $500,000 proceeds of the notes. In addition, a beneficial
conversion feature related to the notes was determined to be approximately
$353,000 but is capped at the remaining value originally allocated to the notes
of approximately $147,000. As a result, the total discount on the notes equaled
the face value of $500,000 which is being amortized over the twelve-month term
of the notes. Amortization of deferred debt discount of approximately $126,000 and $152,000 was recorded
for the three months and nine months ended September 30, 2004, respectively.
Interest accretion on the note of approximately $13,000 and $15,000 was recorded
for the three months and nine months ended September 30, 2004 for the June 11,
2004 note balance, respectively.

On
July 30, 2004 the Company issued Toucan a senior secured convertible promissory note and
warrants, in the amount of $2.0 million. Proceeds from the July 30, 2004 loan
were allocated between the notes and warrants on a relative fair value basis.
The value allocated to the warrants on the date of the grant was approximately
$570,000. The fair value of the warrants was determined using the Black-Scholes
option pricing model with the following assumptions: expected dividend yield of
0%, risk-free interest rate of 1.61%, volatility of 226%, and an contractual
life of 7-years. The value of the warrants was recorded as a deferred debt
discount against the $2.0 million proceeds of the notes. In addition, a
beneficial conversion feature related to the notes was determined to be
approximately $570,000. As a result, the total
discount on the notes equaled 1.1 million which is being
amortized over the twelve-month term of the notes. Amortization
of deferred debt discount of approximately $194,000 was recorded for the three
months and nine months ended September 30, 2004, respectively. Interest
accretion on the note of approximately $34,000 was recorded for the three months
and nine months ended September 30, 2004 for the July 30, 2004 note balance.

On
October 22, 2004 the Company issued Toucan a senior secured convertible promissory note
and warrants, in the amount of $500,000, pursuant to Amendment No. 1. Pursuant to Amendment No. 2, on November 10, 2004 the Company
issued Toucan a senior secured convertible promissory note and warrants, in the
amount of $500,000. Toucan has the option to loan additional amounts to the
Company, on terms mutually acceptable to the Company and Toucan, but is not obligated
to do so.

5. Contingency

Through
abandoning the tenant improvements at our prior facility, on which use tax
payments to the State of Washington had been qualified for tax deferral,
including the disposal and impairment of previously qualified tax deferred
equipment, we received a tax assessment of $492,000 on October 21, 2003 for
87.5% of the gross tax deferred on such qualified investments. The tax
assessment payment was initially due on November 20, 2003 and accrues interest
at 9% until paid. This contingent assessment is being carried as an estimated
liability on the balance sheet as of September 30, 2004, and for the year ended
December 31, 2003, was included in general and administrative expense.

The assessment was reduced by the State of Washington on August 2, 2004. The
current net assessment including accrued interest is $486,000. The length of time that has
elapsed since the completion of the leasehold improvement, the major subject of
the assessment, has made it difficult to provide the State with specific
segment specifications, and respective segment costs. We believe the blueprints
for the construction project will make it possible to provide the State with
the requested construction detail and costs. We timely filed, on August 25,
2004, a petition for further review of this assessment through the appeal
process as outlined in Washington Administrative Code (WAC) 458-20-100. While
an appeal is pending, it is our understanding of Washingtons code that payment of
the assessment is suspended until the appeal process is finally exhausted, but interest will continue to accrue.

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In
addition, regarding a separate tax matter, in February 2004, a refund request
of approximately $175,000 related to certain other State taxes was submitted to
the State. This review is ongoing with the State recently requesting
approximately 350 paid invoices for review. The finalization of our appeal
process for the tax assessment, and our request for a tax refund related to
other State taxes, is expected to take several more months. We cannot with any
certainty determine any amount that may be deducted from the August 2, 2004 assessed
liability or that will be recovered, if any, from our tax refund request.

The
Company is presently party to an arbitration proceeding with Soma Partners, LLC,
an investment bank located in New Jersey (Soma). The Company and
Soma were parties to an Engagement Letter dated October 15, 2003 pursuant to
which the Company hired Soma to locate potential investors for the Company.
Pursuant to the terms of the Engagement Letter the Company and Soma agreed to that
any disputes arising between the parties would be submitted to arbitration in
the New York metropolitan area. Soma has filed an arbitration Statement of Claim
against the Company with the American Arbitration Association in New York, NY
claiming unpaid commission fees of $186,000 and seeking declaratory relief
regarding potential fees for future transactions which may be undertaken by the
Company with Toucan. The Company intends to vigorously defend itself against
this claim and has filed a counterclaim against Soma.

The
Company has recorded a contingent liability of $108,000 with respect to this
matter, which is included in general and administrative expense at September 30,
2004.

The
Company entered into a service agreement dated July 30, 2004 with Cognate
Therapeutics, Inc. Cognate is a Contract Research Organization, majority owned
by Toucan and two of the principals of Toucan are board members of Cognate. The
Company is committed to utilizing Cognates services for a two year period
related primarily to manufacturing drugs, regulatory advice, research and
development (R&D) preclinical activities and managing clinical trials.
Monthly expenditures are expected to range between approximately $427,000 and
$718,000. The contract with Cognate includes a penalty of $4.0 million if the
Company cancels the contract within one year and $2.0 million if the Company
cancels the contract after one year as well as payment for all services
performed in winding down any ongoing activities. The Company entered into this
contract after consultation with an independent expert in the field of Good
Manufacturing Practices (GMP), regulatory affairs, and clinical trial
activities. The Company believes entering into this agreement gives it an
opportunity to restart its clinical and research programs much more efficiently
and rapidly as opposed to rebuilding its infrastructure, internal cGMP
facilities, regulatory, clinical and R&D expertise. In addition, if the
Company did not enter into this contract with Cognate it is likely that Toucan
would not have loaned it the additional $2.0 million on July 30, 2004 because of
the significant delay in moving forward with rebuilding these capabilities
within the Company, and the potential negative impact on formation of a
syndicate of potential investors. Given these facts the Company believes it was
in its best interest to enter into this agreement. Payments made to Cognate, which are included
in research and development expense, were approximately $1.5 million for the three and nine months ended
September 30, 2004.

6. Impairment of Long-lived Assets

In connection
with entering into the service agreement with Cognate in the
third quarter of 2004 and the underutilization of certain equipment while
its Recapitalization Agreement with Toucan is in progress, the Company
recorded an asset impairment loss of approximately $78,000 as of September
30, 2004 related to its property and equipment.

Item 2. Managements Discussion and
Analysis of Financial Condition and Result of Operations

The
following discussion and analysis of our financial condition and results of
operations should be read in conjunction with our financial statements and the
notes to those statements included with this report. In addition to historical
information, this report contains forward-looking statements that 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 Factors That May Affect Results of Operations and Financial Condition.
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
believe that primarily due to the difficult financial markets of 2002, we were
unable to raise the additional money needed to fund our ongoing operations and
clinical trial activities. Consequently, on October 9, 2002, our Board of
Directors authorized management to initiate immediate actions to conserve cash.
For that purpose, we reduced staff, eliminated certain future commitments, and
sold certain fixed assets. We are continuing to assess our alternatives.

In
November 2002, we suspended all clinical trial activity for our DCVax product
candidates. We withdrew our Investigational New Drug Application (IND) for
DCVax-Prostate, a prostate cancer treatment, and for DCVax-Lung, a potential
treatment for non-small cell lung cancer. We maintained our FDA clearance and
our Orphan Drug designation for a multi-site Phase II clinical trial to
evaluate the DCVax-Brain product candidate as a possible treatment for
Glioblastoma Multiforme. However, this trial cannot be initiated without
additional funding. The DCVax-Brain trial was moved to an inactive status and
no patients were recruited. That trial remains open with the FDA.

Operating
costs and expenses consist primarily of research and development expenses,
including clinical trial expenses when the Company is actively participating in
clinical trials, and general and administrative expenses.

Research
and development expenses include salary and benefit expenses and costs of
laboratory supplies used in our internal research and development projects.

From
our inception through September 30, 2004, we incurred costs of approximately
$26.1 million associated with our research and development activities. Because
our technologies are unproven, we are unable to estimate with any certainty the
costs we will incur in the continued development of our product candidates for
commercialization.

General
and administrative expenses include salary and benefit expenses related to
administrative personnel, cost of facilities, insurance, legal support, as well
as amortization costs of stock options granted to employees and warrants issued
to consultants for entering into commercial arrangements.

To
date, our revenues have primarily been derived from the manufacture and sale of
research materials, contract research and development services, and research
grants from the federal government. For the nine-months ended September 30,
2004, we earned approximately $46,000 in revenues from the manufacture and sale
of research materials. If we are to rely exclusively on revenues from the sale
of our research products to fund our operations, we will need to significantly
increase both the number of customers and the size of such sales. We lack
high-volume manufacturing, sales and marketing experience and, as a result, it
is unlikely we will be able to fund our operations through the manufacture and
sale of research products.

Our
financial statements for the year ended December 31, 2003 and nine-months ended
September 30, 2004 were prepared on a going concern basis, which contemplates
the realization of assets and the settlement of liabilities in the normal
course of business. Nevertheless, we have experienced recurring losses from
operations, have a working capital deficit, and have a deficit accumulated
during the development stage of $68.4 million, as of September 30, 2004, that
raises substantial doubt about our ability to continue as a going concern and
our auditors have issued an opinion on the December 31, 2003 financial
statements which states that there is substantial doubt about our ability to
continue as a going concern.

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Critical Accounting Policies and Estimates

Accounting
principles generally accepted in the United States of America require our
management to make estimates and assumptions that affect the amounts of assets
and liabilities and disclosure of contingent assets and liabilities at the date
of our financial statements, as well as the amounts of revenues and expenses
during periods covered by our financial statements. The actual amounts of these
items could differ materially from those estimates.

For
example, previously under EITF 94-3, Accounting for Costs Associated with Exit
or Disposal Activities, if an entity remains responsible, without realizing
ongoing economic benefit, for continued rental payments for premises being
vacated, an estimate of the loss over the remaining life of the primary lease
must be made. Sublease rental income is an allowable offset against the total
accrued cost of the rental payments that the entity continues to be liable for
related to the vacated space.

Consequently,
we recognized, for the year ended December 31, 2002, a liability of
approximately $929,000 and a loss on facility sublease of $721,000, net of
deferred rent write off in estimating the loss of economic benefit from
vacating approximately 22,000 square feet of laboratory and administrative
space at our prior facility.

On
June 30, 2003, we entered into a Settlement Agreement with Nexus Canyon Park,
our prior landlord. Under this Settlement Agreement, Nexus Canyon Park agreed
to permit premature termination of our prior lease and excuse us from future
performance of lease obligations in exchange for 90,000 shares of our
unregistered common stock with a fair value of $35,000 and Nexus retention of
our $1.0 million lease security deposit. The Settlement Agreement resulted in
an additional loss on facility sublease and lease termination of $174,000, net
of deferred rent of $202,000. FASB 146 Accounting
for Costs Associated with Exit or
Disposal Activitieshas replaced EITF 94-3 but similar charges may
occur if we have to cancel our current lease or enter into other restructuring
transactions.

We
also determine our employee stock option compensation costs as the difference
between the estimated fair value of our common stock and the exercise price of
options on their date of grant. Prior to our initial public offering, our
common stock was not actively traded. The fair value of our common stock for
purposes of determining compensation expense for this period was determined
based on our review of the primary business factors underlying the value of our
common stock on the date such option grants were made, viewed in light of the
expected initial public offering price per share prior to the initial public
offering of our common stock. The actual initial public offering price was
significantly lower than the expected price used in determining compensation
expense.

Also,
on an ongoing basis the estimate of expense for stock options and warrants is
dependent on factors such as expected life and volatility of our stock. To the
extent actual expense is different than that estimated, the actual expense that
would have been recorded may be substantially different.

Related Party Transactions

On
November 13, 2003, we entered into an Amended and Restated Employment Agreement
with our President, Chief Operating Officer, Chief Science Officer and
Secretary, wherein we eliminated any potential award of severance compensation
in exchange for a one-time payment of $281,571. We also eliminated any potential
award of severance compensation, totaling $33,635, to our Vice President of
Vaccine Research and Development and our Controller. Subsequently, the
after-tax portion of those payments, totaling $210,000, were invested in the
November 13, 2003 completed Secured Convertible Promissory Note and Warrant
financing.

It
was also Managements understanding that Washington State law considers
accrued, but unpaid, wages (including possibly severance payments) a personal
liability of our Directors. Management, by electing to take potential severance
payments in cash in November 2003, eliminated this potential personal liability
on the part of our Directors.

In
addition to the above sums, our Vice President of Vaccine Research and
Development invested an additional $25,000 and another $100,000 was received
from non-employee investors. These additional funds, including the after-tax
severance funds, brought the total invested in the November 13, 2003 secured
convertible promissory note and warrants financing to $335,000.

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The
November 13, 2003 notes have a 12 month term, accrue interest at an annual rate
equal to the prime rate plus 2% and initially were secured by substantially all
of our assets. The aggregate principal amount of the five notes was $335,000 of
which $50,000, including interest of $1,674, was repaid on June 1, 2004. In
connection with the April 26, 2004 Recapitalization Agreement with Toucan, note
holders of 70% of the principal amount of the notes agreed to an amendment to
their notes. The purpose of the amendment was to set the conversion price of
the amended notes at $0.10 per share and change the maturity date to November
12, 2004 in the event the Company raises at least $15 million in a financing
prior to that time or May 12, 2005 if the Company has not completed a $15
million financing by May 12, 2005.

As
part of the November 13, 2003 investment, the investors received warrants
initially exercisable to acquire an aggregate of 3.7 million shares of our common
stock, expiring November 2008 subject to certain antidilution adjustments, at
an exercise price to be determined as follows: (i) in the event that we
complete an offering of our common stock generating gross proceeds to us of at
least $1 million, then the price per share paid by investors in that offering;
or (ii) if we do not complete such an offering, then $0.18, which was the
closing price of our common stock on the date of the financing. In connection
with the April 26, 2004 Recapitalization Agreement, certain members of
management who hold warrants agreed to an amendment to their warrants. The
amendment applies to all warrants issued in the November 13, 2003 financing.
The purpose of the amendment was to remove the economic anti-dilution provisions
and set the warrant exercise price at the lesser of (i) $0.10 per share or (ii)
a 35% discount to the average closing price during the twenty trading days
prior to the first closing of the sale by the Company of convertible preferred
stock as contemplated by the Recapitalization Agreement but not less than $0.04
per share.

Proceeds
from the November 13, 2003 offering were allocated between the notes and
warrants on a relative fair value basis. The value allocated to the warrants on
the date of the grant was approximately $221,000. The fair value of the
warrants was determined using the Black-Scholes option pricing model with the
following assumptions: expected dividend yield of 0%, risk-free interest rate
of 3.36%, volatility of 194%, and an contractual life of 5-years. The value of
the warrants was recorded as a deferred debt discount against the $335,000
proceeds of the notes. In addition, a beneficial conversion feature related to
the notes was determined to be approximately $221,000 but is capped at the
remaining value originally allocated to the notes of approximately $114,000. As
a result, the total discount on the notes equaled the face value of $335,000
which is being amortized over the twelve-month term of the notes. Amortization of deferred debt discount of
approximately $69,000 and $237,000 was recorded for the three months and nine
months ended September 30, 2004, respectively.  Interest accretion on the note of
approximately $5,000 and $15,500 was recorded for the three months and nine months ended September 30, 2004
for the November 13, 2003 note balance, respectively.

Toucan Financing

In
an effort to continue to fund our operations, on April 26, 2004 the Company
entered into a Recapitalization Agreement with Toucan. On July 30, 2004 the
Company and Toucan amended and restated the Recapitalization Agreement (the
Amended and Restated Recapitalization Agreement. On October 22, 2004 the
Company and Toucan amended  the Amended
and Restated Recapitalization Agreement,  (Amendment No. 1) and on November 10, 2004, the Company
and Toucan amended the Amended and Restated Recapitalization Agreement (Amendment No. 2). To date, we have issued Toucan seven 10% convertible
promissory notes in the aggregate principal amount of $4.1 million. All of
the  notes accrue interest at 10% per
year from their respective issuance dates and are convertible into capital
stock of the Company. We have also issued Toucan warrants to purchase up to 96
million shares of our capital stock. The recent borrowing from Toucan should
enable the Company to fund its operations approximately through the third week of December 2004.
Toucan has the option to loan additional amounts to the Company, on terms
mutually acceptable to the Company and Toucan, but is not obligated to do so.

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Results
of Operations

Three
Months Ended September 30, 2004 and 2003

Total
Revenues.Revenues decreased from $145,000 for the three
months ended September 30, 2003 to $91,000 for the three months ended September
30, 2004. The research material sales component of revenue increased 50% from
$8,000 for the three months ended September 30, 2003 to $12,000 for the three
months ended September 30, 2004. This slightly higher sales volume resulted
from additional direct advertising in select trade journals in the first and
third quarters of 2004. We are unable to project when, if ever, our sales of
research materials will attain consistent profitability.
License fee revenue of $25,000 for the three months ended September 30, 2003 was a one-time
license fee for utilization of specific cell lines.
Research grant income decreased 29% from $112,000 for the
three months ended September 30, 2003 to $79,000 for the three months ended
September 30, 2004. The decrease in grant revenue reflects decreased direct
grant research activity, and therefore a decrease in reimbursable direct and
indirect costs associated with remaining grant awards.

Cost
of Research Material Sales.Cost of research material sales
decreased 64% from $22,000 for the three months ended September 30, 2003 to
$8,000 for the three months ended September 30, 2004. During the three months
ended September 30, 2004, we contracted with a third party in lowering direct
labor costs of manufacturing our research materials. We are unable to project
when, if ever, our sales of research materials will attain consistent profitability.

15

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Research
and Development Expense.Research and development expense
increased from $378,000 for the three months ended September 30, 2003 to $1.7
million for the three months ended September 30, 2004. This increase was
primarily pursuant to a service agreement between the Company and Cognate, a
contract research organization, to manufacture drugs, provide regulatory advice,
research and development (R&D) preclinical activities, and for managing
clinical trials.

General
and Administrative Expense.General and administrative
expense decreased 30% from $893,000 for the three months ended September 30,
2003 to $629,000 for the three months ended September 30, 2004. This decrease
was primarily due to the October 9, 2002 directive from our Board of Directors
to initiate immediate actions to conserve cash and the resulting staff
reductions and other cost reduction steps implemented. General and Administrative expenses for the three months ended
 September 30, 2004 includes $108,000 related to arbitration proceedings with SOMA Partners, LLC.

Depreciation
and Amortization.Depreciation and amortization increased 3%
from $34,000 for the three months ended September 30, 2003 to $35,000 for the
three months ended September 30, 2004. This increase was primarily due to
additional depreciation incurred as a result of moving to a smaller facility in
June 30, 2003.

Asset Impairment Loss.In connection
with entering into the service agreement with Cognate in the
third quarter of 2004 and the underutilization of certain equipment while
its Recapitalization Agreement with Toucan is in progress, the Company
recorded an asset impairment loss of approximately $78,000 as of September
30, 2004 related to its property and equipment.

Other Income (Expense), NetInterest expense increased from
$6,000 for the three months ended September 30, 2003 to $609,000 for the three
months ended September 30, 2004. This increase was due primarily to recognizing
interest expense relative to the debt discount and interest accretion
associated with the November 13, 2003 Secured Convertible Promissory Note and
Warrants debt financing and the bridge loans from Toucan. Interest income
remained constant at $1,000 for the three months ended September 30, 2003 to
$1,000 for the three months ended September 30, 2004. This consistency was
primarily due to having comparable average cash balances during the three
months ended September 30, 2004 and 2003. Warrant valuation increased to $717,000 due to the change in the
valuation of the common stock warrant liability. Total potential outstanding common stock
exceeded the Companys authorized shares on July 30, 2004 when an
additional $2.0 million bridge loan, convertible into common stock, was received
from Toucan and additional warrants were issued. The fair value of
the warrants in excess of the authorized shares was approximately $2.8 million
and was recognized as a liability on July 30, 2004. This liability is required
to be revalued at each reporting date with any change in value included in other
income/(expense) until such time as enough shares are authorized to cover all
potentially convertible instruments. The Companys stock price had declined
from $0.04 at July 30, 2004 to $0.03 at September 30, 2004. The drop in stock
price as of September 30, 2004 was the primary reason for a decrease in the fair value
of the warrants and an increase in other income to the Company.

Nine
Months Ended September 30, 2004 and 2003

Total
Revenues.Revenues decreased from $401,000 for the
nine-months ended September 30, 2003 to $334,000 million for the nine-months ended
September 30, 2004. The research material sales component of revenue increased
from $15,000 for the nine-months ended September 30, 2003 to $46,000 for the
nine-months ended September 30, 2004. This higher sales volume resulted from
direct advertising in select trade journals in the first and third quarters
of 2004. We are unable to project when, if ever, our sales of research materials
will attain consistent profitability. License fee revenue of $25,000 for the
nine months ended September 30, 2003 was a one-time license fee for utilization
of specific cell lines.  Research grant
income decreased 20% from $361,000 for
the nine-months ended September 30, 2003 to $288,000 for the nine-months ended
September 30, 2004. The decrease in grant revenue reflects decreased direct
grant research activity, and therefore a decrease in reimbursable direct and
indirect costs associated with the remaining grant award.

Cost
of Research Material Sales.Cost of research material sales
decreased 39% from $62,000 for the nine-months ended September 30, 2003 to
$38,000 for the nine-months ended September 30, 2004. During 2004, we
contracted with a third party in lowering direct labor costs of manufacturing
our research materials. We are unable to project when, if ever, our sales of
research materials will attain consistent profitability.

Research
and Development Expense.Research and development expense
increased 50% from $1.4 million for the nine-months ended September 30, 2003 to
$2.1 million for the nine-months ended September 30, 2004. This increase was
primarily pursuant to a service agreement between the Company and Cognate, a
contract research organization, to manufacture drugs, provide regulatory advice,
research and development (R&D) preclinical activities, and for managing
clinical trials.

General
and Administrative Expense.General and administrative expense
decreased 44% from $3.4 million for the nine-months ended September 30, 2003 to
$1.9 million for the nine-months ended September 30, 2004. This decrease was
primarily due to the October 9, 2002 directive from our Board of Directors to
initiate immediate actions to conserve cash and the resulting staff reductions
and other cost reduction steps implemented. General and Administrative expenses for the nine months ended
 September 30, 2004 includes $108,000 related to arbitration proceedings with SOMA Partners, LLC.

Depreciation
and Amortization.Depreciation and amortization decreased 36%
from $171,000 for the nine-months ended September 30, 2003 to $109,000 for the
nine-months ended September 30, 2004. This decrease was primarily due to the
approximately $904,000, net, of equipment and leasehold improvements write-offs
for the year ended December 31, 2003.

Loss
on Facility Sublease and Lease Cancellation.Lease cancellation costs of $174,000 are associated
with the June 30, 2003 termination of the Companys primary lease of its prior
offices and release from future lease obligations.

16

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Asset
Impairment Loss.Asset
disposal costs of $904,000 for the nine months ended September 30, 2003 was primarily related to the write-off of leasehold
improvements and equipment associated with the June 30, 2003 termination of the
Companys primary lease and the resulting move from a 38,000 square foot
facility to a facility of approximately 14,000 square feet whereby such assets
will not be utilized. In connection with entering into the service agreement with Cognate in the
third quarter of 2004 and the underutilization of certain equipment while
its Recapitalization Agreement with Toucan is in progress, the Company
recorded an asset impairment loss of approximately $78,000 as of September
30, 2004 related to its property and equipment.

Other Income (Expense), NetInterest expense increased from
$25,000 for the nine-months ended September 30, 2003 to $962,000 for the
nine-months ended September 30, 2004. This increase was due primarily to
recognizing interest expense relative to the debt discount and interest
accretion associated with the November 13, 2003 Secured Convertible Promissory
Note and Warrants debt financing and the bridge loans from Toucan. Interest
income decreased 90% from $21,000 for the nine-months ended September 30, 2003
to $2,000 for the nine-months ended September 30, 2004. This decrease was
primarily due to the decline in market interest rates and having lower average
cash balances during the nine months ended September 30, 2004. Warrant valuation increased to $717,000 due to the change in the
valuation of the common stock warrant liability. Total potential outstanding common stock
exceeded the Companys authorized shares on July 30, 2004 when an
additional $2.0 million bridge loan, convertible into common stock, was received
from Toucan and additional warrants were issued. The fair value of
the warrants in excess of the authorized shares was approximately $2.8 million
and was recognized as a liability on July 30, 2004. This liability is required
to be revalued at each reporting date with any change in value included in other
income/(expense) until such time as enough shares are authorized to cover all
potentially convertible instruments. The Companys stock price had declined
from $0.04 at July 30, 2004 to $0.03 at September 30, 2004. The drop in stock
price as of September 30, 2004 was the primary reason for a decrease in the fair value
of the warrants and an increase in other income to the Company.

Gain
on Sale of Intellectual Property. The $816,000 gain realized
on the sale of royalty rights was negotiated based on the expected discounted
net present value (NPV) of the future 2% royalty obligation under that certain
Assignment and License Agreement dated December 9, 2002 with Medarex and was
received in cash on July 1, 2003.

17

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Liquidity and Capital Resources

General
Discussion

Through
abandoning the tenant improvements at our prior facility, on which use tax
payments to the State of Washington had been qualified for tax deferral,
including the disposal and impairment of previously qualified tax deferred
equipment, we received a tax assessment of $492,000 on October 21, 2003 for
87.5% of the gross tax deferred on such qualified investments. The tax
assessment payment was initially due on November 20, 2003 and accrues interest
at 9% until paid. This contingent assessment is being carried as an estimated
liability on the balance sheet as of September 30, 2004, and for the year ended
December 31, 2003, was included in general and administrative expense.

The assessment was reduced by the State of Washington on August 2, 2004. The
current net assessment including accrued interest is $486,000. The length of time that has
elapsed since the completion of the leasehold improvement, the major subject of
the assessment, has made it difficult to provide the State with specific
segment specifications, and respective segment costs. We believe the blueprints
for the construction project will make it possible to provide the State with
the requested construction detail and costs. We timely filed, on August 25,
2004, a petition for further review of this assessment through the appeal
process as outlined in Washington Administrative Code (WAC) 458-20-100. While
an appeal is pending, it is our understanding of Washingtons code, payment of
the assessment is suspended until the appeal process is finally exhausted, but interest will continue to accrue.

In
addition, regarding a separate tax matter, in February 2004, a refund request
of approximately $175,000 related to certain other State taxes was submitted to
the State. This review is ongoing with the State recently requesting
approximately 350 paid invoices for review. The finalization of our appeal
process for the tax assessment, and our request for a tax refund related to
other State taxes, is expected to take several more months. We cannot with any
certainty determine any amount that may be deducted from the August 2, 2004
assessed liability or that will be recovered, if any, from our tax refund
request.

As
of November 10, 2004, after giving effect to aggregate borrowings from Toucan of
$4.1 million, the Company had approximately $689,000 in cash and cash
equivalents. The Company believes that its remaining cash of approximately
$689,000, based on recurring operating and associated financing costs, will be
sufficient to fund its operations through approximately the third week of
December 2004. While the Company has attempted to obtain funding for working capital from multiple
parties since 2002, Toucan is the only party, to date, that has invested a
significant amount of capital in the Company. Therefore, if the Amended and
Restated Recapitalization Agreement is not fully implemented, or if Toucan is
unwilling to continue to fund the Companys operations, it is unlikely the
Company will obtain additional funding from any third parties and the Company
will be required to cease operations and liquidate its assets.

Our
independent auditors have indicated in their report on our financial statements
included in our December 31, 2003 annual report on Form 10-K, that there is
substantial doubt about our ability to continue as a going concern. We need to
raise significant additional funding to continue our operations, conduct
research and development activities, pre-clinical studies and clinical trials
necessary to bring our product candidates to market. However, additional
funding may not be available on terms acceptable to us or at all. The
alternative of issuing additional equity or convertible debt securities also
may not be available and, in any event, would result in additional dilution to
our stockholders.

Asset
Sales and Sources of Cash

On
April 8, 2003, we were awarded a National Institutes of Health (NIH) cancer
research grant. The total first year grant award was for approximately $318,000
and has been earned under the grant and was recognized in revenue through the
year ended December 31, 2003. The total award for fiscal 2004 was approximately
$328,000, comprised of approximately $198,000 authorized for direct grant
research expenditures and approximately $130,000 authorized for use to cover
our facilities and administrative overhead costs. Approximately $118,000 of the
grants aggregate award remains to be utilized of which $39,000 has been
received and is included in deferred grant revenue as of September 30, 2004.

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On
April 21, 2003, because we had received frequent requests from researchers for
access to our cancer-associated monoclonal antibodies, human dendritic cells,
and dendritic cell precursors (monocytes), we announced our entry into the
Research Reagents Market. We earned approximately $46,000 in revenue for the
nine-months ended September 30, 2004 from the manufacture and sale of research
materials. However, we have limited manufacturing facilities and expertise to
produce our research products and the commercial success of any of our research
products will depend upon the strength of our sales and marketing efforts. We
are unable to project when, if ever, its sales of research materials will
attain consistent profitability.

Our
effort to license certain rights, title, and interest to technology relating to
specific cell lines resulted in the July 1, 2003 License Agreement with
DakoCytomation with the payment of a one-time $25,000 license fee and future
non-refundable minimum annual royalty payments of $10,000 credited against any
royalty payments made to NWBT. The Company waived its right to the July 2004
royalty payment because of a cell line contamination issue that DakoCytomation
resolved at their expense. The $25,000 one-time license fee was received on
August 25, 2003.

Recapitalization
Plan

In an
effort to continue to fund our operations, On April 26, 2004 we entered into a
Recapitalization Agreement with Toucan Capital Fund II, L.P. (Toucan). The
Company and Toucan amended and restated this agreement on July 30, 2004 (the
Amended and Restated Recapitalization Agreement). The Amended and Restated
Recapitalization Agreement calls for the possible recapitalization of the
Company. At Toucans option, and if successfully implemented, the
recapitalization could potentially provide the Company with up to $40 million
through the issuance of new securities to Toucan and a syndicate of investors
selected by Toucan. Following full implementation of the recapitalization plan,
Toucan and the investor syndicate would potentially own, on a combined basis,
over 90% of the outstanding capital stock of the Company.

19

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Initial
Bridge Funding

The
initial bridge funding period commenced on February 2, 2004 when we issued
Toucan an unsecured convertible promissory note, in the amount of $50,000. On
March 1, 2004, we issued Toucan a secured convertible promissory note, in the
amount of $50,000. On April 26, 2004, we issued Toucan a senior secured
convertible promissory note and warrants, in the amount of $500,000.

Additional Bridge Funding

Toucan,
during the 60 day period following May 26, 2004, or to July 25, 2004, in its
sole discretion, could provide up to an additional $500,000 of bridge funding,
in one or more tranches, on the same terms and conditions as the initial bridge
funding. On June 11, 2004, we issued Toucan a senior secured convertible promissory
note and warrants, in the amount of $500,000.

The
April 26, 2004 Recapitalization Agreement stipulated that the February and
March 2004 notes for $50,000 each were to be cancelled and reissued effective
April 26, 2004 as two separate notes for $50,000 each and conforming to the
conditions of the note signed for the April 26, 2004 bridge loan for $500,000.
As a result, the notes issued in February and March 2004, respectively, and the
notes issued in April and June 11, 2004 have (i) a 12 month term, (ii) accrue
interest at 10% per annum on a 365 day basis compounded annually from their
respective original issuance dates, (iii) are secured by a first priority
senior security interest in all of the Companys assets, and (iv) warrants with
coverage equal to three hundred percent (300%) of the amount due under the
bridge notes. The initial bridge funding period expired May 26, 2004.

Subsequent Bridge Funding

On
July 30, 2004, the Company and Toucan entered into the Amended and Restated Recapitalization
Agreement wherein Toucan agreed to make, and the Company agreed to receive, an
additional loan from Toucan. In connection with this loan the Company issued
Toucan a senior secured convertible promissory note in the amount of $2.0
million, and warrants.

On
October 22, 2004, the Company and Toucan amended the Amended and Restated
Recapitalization Agreement (Amendment No. 1) and in connection with Amendment No. 1, the Company received a
$500,000 loan from Toucan on October 22, 2004. On November 10, 2004 the Company and Toucan further amended the
Amended and Restated Recapitalization Agreement (Amendment No. 2) and in conjunction with  Amendment No. 2 the
Company received an additional $500,000 from Toucan on November 10, 2004.

Uses of Cash

We
used $3.3 million in cash for operating activities during the nine-months ended
September 30, 2004, compared to $3.9 million for the nine-months ended
September 30, 2003. The decrease in cash used in operating activities from 2003
to 2004 was primarily the result of the suspension of all
clinical trial activities while the Company attempted to raise additional
capital from third parties in order to attempt to restart its clinical and research
programs.

We
generated $111,000 in cash from investing activities during the nine-months
ended September 30, 2004 compared to $2.5 million provided by investing
activities during the nine-months ended September 30, 2003. The cash provided
during the nine-months ended September 30, 2004 consisted primarily of
restricted cash released as collateral for the Companys credit cards and the
sale of non-essential equipment.

Factors
That May Affect Results of Operations and Financial Condition

This
section briefly discusses certain risks that should be considered by our
stockholders and prospective investors. You should carefully consider the risks
described below, together with all other information included in the December
31, 2004 annual report on Form 10-K and the information incorporated by
reference. If any of the following risks actually occur, our business,
financial condition or operating results could be harmed. In such case, you
could lose all of your investment.

Control
by Toucan Capital Fund II, LP of a large percentage of our voting stock
and Toucans rights under the
Recapitalization Agreement may permit Toucan to influence the Company in a way that can adversely
affect our stock price

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As
of November 10, 2004, Toucan has the right to acquire up to 106 million
shares of the Companys outstanding capital stock upon conversion of
outstanding principal of $4.1 million and interest of $138,326 under the
bridge loans, and up to 96 million shares upon exercise of warrants. This
represents a beneficial ownership of approximately 88% of the outstanding
capital stock of the Company on a fully diluted basis.

In
addition, under the terms of the Amended and Restated Recapitalization
Agreement, we are required to consult with Toucan on how we conduct many
aspects of our business. As a result, Toucan has significant authority over how
we presently conduct our business, and with its stock acquisition rights, could
influence all matters requiring stockholder approval. This control may cause us
to conduct our business differently from the way we have operated in the past.
The concentration of ownership may also delay, deter or prevent acts that would
result in a change in control, which, in turn, could reduce the market price of
our common stock.

We will
need to raise additional capital which may not be available.

As
of November 10, 2004, after giving effect to aggregate borrowings from Toucan of
$4.1 million, the Company had approximately $689,000 in cash and cash equivalents.
The Company believes that its remaining cash of approximately $689,000, based
on recurring operating and associated financing costs, will be sufficient to
fund its operations approximately through the third week of December 2004.

While
the Company has attempted to obtain funding for working capital from multiple
parties since 2002, Toucan is the only party, to date, that has invested a
significant amount of capital in the Company. In addition, because: (i) our loans from Toucan are secured by
all of our assets, (ii) Toucan has the right to acquire a controlling interest in the company, and, (iii) we
are generally prohibited from negotiating a financing with any parties other than
Toucan and its designees, it is unlikely that the Company could obtain funding from any investors other than Toucan.
Therefore, if the Amended and Restated Recapitalization Agreement is not fully implemented, or if Toucan is
unwilling to continue to fund the Companys operations, it is unlikely the
Company will obtain additional funding from any third parties and the Company
will be required to cease operations and liquidate its assets.

Our
auditors have issued a going concern audit opinion.

Our
independent auditors have indicated in their report on our December 31, 2003
financial statements included in our Form 10-K that there is substantial doubt
about our ability to continue as a going concern. A going concern opinion
indicates that the financial statements have been prepared assuming we 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.

We have
reduced business umbrella, auto, crime and fiduciary, and directors and
officers liability insurance coverage.

With
rising insurance premiums for most business insurance coverage, with our
reduced level of operating activity, and reduced liability exposure through the
stopping of all clinical trials, we lowered the levels of all of our insurance
coverage. When our finances permit and when our level of operating activities
rise, our insurance needs will be reassessed. Making a material reduction in
our insurance coverage may make it difficult for us to retain our existing
directors and officers, and will also result in increased exposure to potential
liabilities arising from any future litigation, either of which may materially
harm our business and results of operations.

As a
result of questions concerning our status as a going concern, potential
customers and partners may decide not to do
business with us.

The
success of our restructured operations will depend on our ability to attract
partners to our research initiatives and to a lesser extent our ability to
attract customers to our research products. Due to concerns regarding our
ability to continue operations, these third parties may decide not to conduct
business with us, or may conduct business with us on terms that are less
favorable than those customarily extended by them. If either of these events
occurs, our business will suffer significantly.

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We
expect to continue to incur substantial losses, and we may never achieve
profitability.

We
have incurred net losses every year since our incorporation in July 1998 and,
as of September 30, 2004, we had a deficit accumulated during the development
stage of approximately $68.4 million. We have had net losses applicable to
common stockholders for the prior three years as follows:

| | $17.3 million in 2001;    
|- | --------------------------
|  |                           
| | $12.8 million in 2002; and
|  |                           
| | $5.8 million in 2003.     

We
expect that these losses will continue and anticipate negative cash flows from
operations for the foreseeable future. Because of our current cash position, we
will need to secure additional funding to continue operations. In addition, we
will need to generate revenue sufficient to cover operating expenses and
research and development costs to achieve profitability. We may never achieve
or sustain profitability.

As a
company in the early stage of development with an unproven business
strategy, our limited history of operations
makes an evaluation of our business and prospects difficult.

We
have had a limited operating history and are at an early stage of development.
We may not be able to achieve revenue growth in the future. We have generated
the following limited revenues for the prior three years.

| | $129,000 in 2001;  
|- | -------------------
|  |                    
| | $9,000 in 2002; and
|  |                    
| | $529,000 in 2003.  

We
have derived most of these limited revenues from:

| | the sale of research products to a single customer;          
|- | -------------------------------------------------------------
|  |                                                              
| | contract research and development from related
  parties; and
|  |                                                              
| | research grants.                                             

In
the future, we anticipate that our revenues will be derived primarily through
the commercialization of our product candidates.

We may
not be able to retain existing personnel.

From
approximately October 2002 through March 22, 2004, we reduced our research and
administrative staff by approximately sixty-three members. Our remaining staff,
as of September 30, 2004 consisted of six full-time employees and one part-time
employee.

The
uncertainty of our cash position, workforce reductions, the volatility in our
stock price and our recent asset sales may create anxiety and uncertainty,
which may adversely affect employee morale and cause us to lose employees whom
we would prefer to retain. To the extent that we are unable to retain our
existing personnel, our business and financial results may suffer.

Because
we lack sales and marketing experience, we may experience significant
difficulties commercializing our research
products.

The
commercial success of any of our research products will depend upon the
strength of our sales and marketing efforts. We do not have a sales force and
have no experience in the sales, marketing or distribution of our research
products. To fully commercialize our research products, we will need to create
a substantial marketing staff and sales force with technical expertise and the ability
to distribute these products. As an alternative, we could seek assistance from
a third party with a large distribution system and a large direct sales force.
We may be unable to put either of these plans in place. In addition, if we
arrange for others to market and sell our products, our revenues will depend
upon the efforts of those parties. Such arrangements may not succeed. If we
fail to establish adequate sales, marketing and distribution capabilities,
independently or with others, our business will be seriously harmed.

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We have
limited manufacturing capabilities, which could adversely impact our
ability to commercialize our research
products.

We
have limited manufacturing facilities and expertise to produce our research
products. We have never manufactured, on a commercial scale, any of our
research products. We may be unable to manufacture these products at a
reasonable cost or in sufficient quantities to be profitable.

Our
success partially depends on existing and future partners.

The
success of our business strategy may partially depend upon our ability to
develop and maintain multiple partnerships and to manage them effectively.
Therefore, our success depends partially upon the performance of our partners.
We cannot directly control the amount and timing of resources that our existing
or future partners devote to the research, development or marketing of our
products. As a result, those partners:

| | may not commit sufficient resources to our programs
  or products;                                                                                  
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------
|  |                                                                                                                                                     
| | may not conduct their agreed activities on time, or
  at all, resulting in delay or termination of the development of our products
  and technology;
|  |                                                                                                                                                     
| | may not perform their obligations as expected;                                                                                                      
|  |                                                                                                                                                     
| | may pursue product candidates or alternative
  technologies in preference to ours; or                                                               
|  |                                                                                                                                                     
| | may dispute the ownership of products or technology
  developed under our partnerships.                                                             

We
may have disputes with our partners, which could be costly and time consuming.
Our failure to successfully defend our rights could seriously harm our
business, financial condition and operating results.

We
intend to continue to enter into partnerships in the future. However, we may be
unable to successfully negotiate any additional partnerships and any of these
relationships, if established, may not be scientifically or commercially
successful.

We
also work with scientists and medical professionals at academic and other
institutions, including the University of California, Los Angeles, M.D.
Anderson Cancer Center, and the H. Lee Moffitt Cancer Center some of whom
conduct research for us or assist us in developing our research and development
strategy. These scientists and medical professionals are not our employees.
They may have commitments to, or contracts with, other businesses or
institutions that limit the amount of time they have available to work with us.
We have little control over these individuals. We can only expect them to
devote to our projects the amount of time required by our license, consulting
and sponsored research agreements. In addition, these individuals may have
arrangements with other companies to assist in developing technologies that may
compete with ours. If these individuals do not devote sufficient time and
resources to our programs, our business could be seriously harmed.

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Competition
in our industry is intense and most of our competitors have substantially greater resources than we have.

The
research products market recently entered by us is very competitive with many
well-established large and small distribution companies, such as BioWhittaker,
a Cambrex Company, DakoCytomation, and Cellsignalling Technology.

We
have marketed our research products through direct mail, the Internet, and
select participation in trade shows frequented by researchers who could be
interested in our research products. We are also seeking distribution
relationships with established and well-positioned distribution companies.
There can be no assurances that we will be successful in establishing a market
demand for our research products nor that we will be successful in finding a
suitable distributor interested in selling our research products.

The
biotechnology and biopharmaceutical industries are characterized by rapidly advancing
technologies, intense competition and a strong emphasis on proprietary
products. Several companies, such as Cell Genesys, Inc., Dendreon Corporation
and Genzyme Molecular Oncology, a division of Genzyme Corporation, are actively
involved in the research and development of cell-based cancer therapeutics. Of
these companies, we believe that only Dendreon is carrying-out Phase III
clinical trials with a cell-based therapy. No dendritic cell-based therapeutic
product is currently approved for commercial sale. Additionally, several
companies, such as Abgenix, Inc., Agensys, Inc., and Genentech, Inc., are
actively involved in the research and development of monoclonal antibody-based
cancer therapies. Currently, at least six antibody-based products are approved
for commercial sale for cancer therapy. Genentech is also engaged in several
Phase III clinical trials for additional antibody-based therapeutics for a
variety of cancers, and several other companies are in early stage clinical
trials for such products. Many other third parties compete with us in
developing alternative therapies to treat cancer, including:

| | biopharmaceutical companies; 
|- | -----------------------------
|  |                              
| | biotechnology companies;     
|  |                              
| | pharmaceutical companies;    
|  |                              
| | academic institutions; and   
|  |                              
| | other research organizations.

Many
of our competitors have significantly greater financial resources and expertise
in research and development, manufacturing, pre-clinical testing, conducting
clinical trials, obtaining regulatory approvals and marketing than we do. In
addition, many of these competitors have become active in seeking patent
protection and licensing arrangements in anticipation of collecting royalties
for use of technology they have developed. Smaller or early-stage companies may
also prove to be significant competitors, particularly through collaborative
arrangements with large and established companies. These third parties compete
with us in recruiting and retaining qualified scientific and management
personnel, as well as in acquiring technologies complementary to our programs.

We
expect that our ability to compete effectively will be dependent upon our
ability to:

| | obtain additional funding;                                                            
|- | --------------------------------------------------------------------------------------
|  |                                                                                       
| | successfully complete clinical trials and obtain all
  requisite regulatory approvals;
|  |                                                                                       
| | maintain a proprietary position in our technologies
  and products;                   
|  |                                                                                       
| | attract and retain key personnel; and                                                 
|  |                                                                                       
| | maintain existing or enter into new partnerships.                                     

Our
competitors may develop more effective or affordable products, or achieve
earlier patent protection or product marketing and sales than we may. As a
result, any products we develop may be rendered obsolete and noncompetitive.

24

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---

Our
intellectual property rights may not provide meaningful commercial
protection for our research products or
product candidates, which could enable third parties to use our technology, or very similar technology, and
could reduce our ability to
compete in the market.

We
rely on patent, copyright, trade secret and trademark laws to limit the ability
of others to compete with us using the same or similar technology in the United
States and other countries. However, as described below, these laws afford only
limited protection and may not adequately protect our rights to the extent necessary
to sustain any competitive advantage we may have. The laws of some foreign
countries do not protect proprietary rights to the same extent as the laws of
the United States, and we may encounter significant problems in protecting our
proprietary rights in these countries.

We
have ten issued patents (four in the United States and six in foreign
jurisdictions) and 113 patent applications pending (22 in the United States and
91 in foreign jurisdictions) which cover the use of dendritic cells in DCVax as
well as targets for either our dendritic cell or fully human monoclonal
antibody therapy candidates. The issued patents expire at dates from 2015 to
2017.

We
will only be able to protect our technologies from unauthorized use by third
parties to the extent that they are covered by valid and enforceable patents or
are effectively maintained as trade secrets. The patent positions of companies
developing novel cancer treatments, including our patent position, generally
are uncertain and involve complex legal and factual questions, particularly
concerning the scope and enforceability of claims of such patents against
alleged infringement. Recent judicial decisions are prompting a
reinterpretation of the limited case law that exists in this area, and
historical legal standards surrounding questions of infringement and validity
may not apply in future cases. A reinterpretation of existing law in this area
may limit or potentially eliminate our patent position and, therefore, our
ability to prevent others from using our technologies. The biotechnology patent
situation outside the United States is even more uncertain. Changes in either
the patent laws or in interpretations of patent laws in the United States and
other countries may therefore diminish the value of our intellectual property.

We
own, or have rights under licenses to a variety of issued patents and pending
patent applications. However, the patents on which we rely may be challenged
and invalidated, and our patent applications may not result in issued patents.
Moreover, our patents and patent applications may not be sufficiently broad to
prevent others from practicing our technologies or from developing competing
products. We also face the risk that others may independently develop similar
or alternative technologies or design around our patented technologies.

We
have taken security measures to protect our proprietary information, especially
proprietary information that is not covered by patents or patent applications.
These measures, however, may not provide adequate protection of our trade
secrets or other proprietary information. We seek to protect our proprietary
information by entering into confidentiality agreements with employees,
partners and consultants. Nevertheless, employees, partners or consultants may
still disclose our proprietary information, and we may not be able to protect
our trade secrets in a meaningful way. If we lose any employees, we may not be
able to prevent the unauthorized disclosure or use of our technical knowledge
or other trade secrets by those former employees despite the existence of
nondisclosure and confidentiality agreements and other contractual restrictions
to protect our proprietary technology. In addition, others may independently
develop substantially equivalent proprietary information or techniques or
otherwise gain access to our trade secrets.

Our
success will depend partly on our ability to operate without infringing or
misappropriating the proprietary rights of
others.

Our
success will depend to a substantial degree upon our ability to develop,
manufacture, market and sell our research products and product candidates
without infringing the proprietary rights of third parties and without breaching
any licenses we have entered into regarding our product candidates.

There
is a substantial amount of litigation involving patent and other intellectual
property rights in the biotechnology and biopharmaceutical industries
generally. Infringement and other intellectual property claims, with or without
merit, can be expensive and time-consuming to litigate and can divert
managements attention from our core business. We may be exposed to future
litigation by third parties based on claims that our products infringe their
intellectual property rights. This risk is exacerbated by the fact that there
are numerous issued and pending patents in the biotechnology industry and the
fact that the validity and breadth of biotechnology patents involve complex
legal and factual questions for which important legal principles remain
unresolved.

Our
competitors may assert that our products and the methods we employ are covered
by U.S. or foreign patents held by them. In addition, because patent
applications can take many years to issue, there may be currently pending
applications, unknown to us, which may later result in issued patents that our
products may infringe. There could also be existing patents of which we are not
aware that one or more of our products may inadvertently infringe.

25

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If
we lose a patent infringement lawsuit, we could be prevented from selling our
research products or product candidates unless we can obtain a license to use
technology or ideas covered by such patent or are able to redesign our products
to avoid infringement. A license may not be available at all or on terms
acceptable to us, or we may not be able to redesign our products to avoid any
infringement. If we are not successful in obtaining a license or redesigning
our products, we may be unable to sell our products and our business could
suffer.

We use
hazardous materials and must comply with environmental, health and
safety laws and regulations, which can be
expensive and restrict how we do business.

We
store, handle, use and dispose of controlled hazardous, radioactive and
biological materials in our business. Our current use of these materials
generally is below thresholds giving rise to burdensome regulatory
requirements. Our development efforts, however, may result in our becoming
subject to additional requirements, and if we fail to comply with applicable
requirements we could be subject to substantial fines and other sanctions,
delays in research and production, and increased operating costs. In addition,
if regulated materials were improperly released at our current or former
facilities or at locations to which we send materials for disposal, we could be
strictly liable for substantial damages and costs, including cleanup costs and
personal injury or property damages, and incur delays in research and
production and increased operating costs.

Insurance
covering certain types of claims of environmental damage or injury resulting
from the use of these materials is available but can be expensive and is
limited in its coverage. We have no insurance specifically covering
environmental risks or personal injury from the use of these materials and if
such use results in liability, our business may be seriously harmed.

Our
principal stockholders, executive officers and directors own a significant
percentage of our stock and, as a result, the
trading price for our shares may be
depressed and these stockholders can take actions that may be adverse to
your interests.

Our
principal stockholders, executive officers, and directors and entities
affiliated with them, in the aggregate, beneficially owned approximately 94% of
our common stock and shares of common stock issuable pursuant to options and
warrants exercisable on September 30, 2004. This significant concentration of
ownership may adversely affect the trading price for our common stock because
investors often perceive disadvantages in owning stock in companies with
controlling stockholders. Company management and Toucan, as a result of the
security ownership described above, has the ability to exert substantial
influence over all matters requiring approval by our stockholders, including
the election and removal of directors and any proposed merger, consolidation or
sale of all or substantially all of our assets. In addition, they can dictate
the management of our business and affairs. This concentration of ownership
could have the effect of delaying, deferring or preventing a change in control,
or impeding a merger or consolidation, takeover or other business combination
that could be favorable to you.

There
may not be an active, liquid trading market for our common stock.

On
December 14, 2001, our common stock was listed on the NASDAQ National Market.
Prior to that time there was no public market for our common stock. On December
23, 2002, we were delisted from the NASDAQ National Market and our common stock
is currently listed on the Over The Counter Bulletin Board (OTCBB), which is
generally recognized as being a less active market than the NASDAQ National
Market. You may not be able to sell your shares at the time or at the price
desired.

Our
common stock may experience extreme price and volume fluctuations, which
could lead to costly litigation for us and
make an investment in us less appealing.

The market price of our
common stock may fluctuate substantially due to a variety of factors,
including:

| | announcements of technological innovations or new
  products by us or our competitors;
|- | --------------------------------------------------------------------------------------
|  |                                                                                       
| | development and introduction of new cancer
  therapies;                               
|  |                                                                                       
| | media reports and publications about cancer
  therapies;                              
|  |                                                                                       
| | announcements concerning our competitors or the
  biotechnology industry in general;  
|  |                                                                                       
| | new regulatory pronouncements and changes in
  regulatory guidelines;                 
|  |                                                                                       
| | general and industry-specific economic conditions;                                    
|  |                                                                                       

26

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| | changes in financial estimates or recommendations by
  securities analysts; and
|- | -------------------------------------------------------------------------------
|  |                                                                                
| | changes in accounting principles.                                              

The
market prices of the securities of biotechnology companies, particularly
companies like ours without earnings and consistent product revenues, have been
highly volatile and are likely to remain highly volatile in the future. This
volatility has often been unrelated to the operating performance of particular
companies. In the past, securities class action litigation has often been
brought against companies that experience volatility in the market price of
their securities. Moreover, market prices for stocks of biotechnology-related
and technology companies occasionally trade at levels that bear no relationship
to the operating performance of such companies. These market prices generally
are not sustainable and are subject to wide variations. Whether or not
meritorious, litigation brought against us could result in substantial costs,
divert managements attention and resources and harm our financial condition
and results of operations.

Our
incorporation documents, bylaws and stockholder rights plan may delay or
prevent a change in our management.

Our
amended and restated certificate of incorporation, bylaws and stockholder
rights plan contain provision that could delay or prevent a change in our
management team. Some of these provisions:

| | authorize the issuance of preferred stock that can
  be created and issued by the board of directors without prior stockholder
  approval, commonly referred to as blank check preferred stock, with rights
  senior to those of common stock;
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  |                                                                                                                                                                                                                                                 
| | authorize our board of directors to issue dilutive
  shares of common stock upon certain events; and                                                                                                                                            
|  |                                                                                                                                                                                                                                                 
| | provide for a classified board of directors.                                                                                                                                                                                                    

These
provisions could allow our board of directors to affect your rights as a
stockholder since our board of directors can make it more difficult for common
stockholders to replace members of the board. Because our board of directors is
responsible for appointing the members of our management team, these provisions
could in turn affect any attempt to replace our current management team.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Our
exposure to market risk is presently limited to the interest rate sensitivity
of our cash and cash equivalents which is affected by changes in the general
level of U.S. interest rates. We are exposed to interest rate changes primarily
as a result of our investment activities. The primary objective of our
investment activities is to preserve principal while at the same time
maximizing the income we receive without significantly increasing risk. To
minimize risk, we maintain our cash and cash equivalents in interest-bearing
instruments, primarily money market funds. Our interest rate risk management
objective with respect to our borrowings is to limit the impact of interest
rate changes on earnings and cash flows. Due to the nature of our cash and cash
equivalents, we believe that we are not subject to any material market risk
exposure. We do not have any foreign currency or other derivative financial
instruments.

Item 4. Controls and Procedures

(a)
Evaluation of disclosure controls, procedures, and internal controls

Our
President (Principal Executive Officer) and our Controller (Principal Financial
and Accounting Officer), after evaluating the effectiveness of the Companys
disclosure controls and procedures (as defined in Exchange Act Rules
13a-14(c) and 15d-14(c)) and internal control over financial reporting, as of
the date of this quarterly report, have concluded that, as of September 30,
2004, our disclosure controls and procedures were adequate to ensure that
material information relating to the registrant would be made known to them by
others within the Company. In addition, our President and our Controller have
determined that our internal control over financial reporting is sufficient to
provide reasonable assurance that; (i) our records accurately and fairly
reflect our transaction and our disposition of our assets; (ii) allow
transactions to be recorded as necessary to permit preparation of financial
statements in accordance with generally accepted accounting principles and that
receipts and expenditures of our Company are only being made in accordance with
authorizations of management and Company Directors; and (iii) the Company
prevents or timely detects the unauthorized acquisition, use, or disposition of
assets that could have a material effect on our financial statements.

(b)
Changes in internal controls.

To our
knowledge, there were no significant changes in the Companys internal controls
or in other factors that could significantly affect internal controls during
the quarter ended September 30, 2004.

27

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Part II  Other Information

Item 1. Legal Proceedings.

The
Company is presently party to an arbitration proceeding with Soma Partners,
LLC, an investment bank located in New Jersey (Soma).  The Company and Soma were parties to an
Engagement Letter dated October 15, 2003 pursuant to which the Company hired
Soma to locate potential investors for the Company.  Pursuant to the terms of the Engagement Letter the Company and
Soma agreed to that any disputes arising between the parties would be submitted to
arbitration in the New York metropolitan area. Soma has filed an arbitration
Statement of Claim against the Company with the American Arbitration
Association in New York, NY claiming unpaid commission fees of $186,000 and seeking
declaratory relief regarding potential fees for future transactions which may
be undertaken by the Company with Toucan. 
The Company intends to vigorously defend itself against this claim and
has filed a counterclaim against Soma.

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

None

Item 3. Defaults upon Senior Securities.

None

Item 4. Submission of Matters to a Vote of Security Holders.

No
matters were submitted to a vote of our stockholders during the quarter ended
September 30, 2004.

Item 5. Other Information

None

Item 6. Exhibits.a) Exhibits

|10.1 | Amended and Restated Recapitalization Agreement between the Company and Northwest Biotherapeutics, Inc. and Toucan Capital Fund II, L.P., dated July 30, 2004.+                                                    
|---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     |                                                                                                                                                                                                                    
|10.2 | Loan Agreement, Security Agreement and 10% Convertible, Secured Promissory Note in the principal amount of $2,000,000 between the Company and Toucan Capital Fund II, L.P. dated July 30, 2004.+                   
|     |                                                                                                                                                                                                                    
|10.3 | Amended and Restated Loan Agreement, Security Agreement and 10% Convertible, Secured Promissory
Note in the principal amount of $500,000 between the Company and Toucan Capital Fund II, L.P.
dated July 30, 2004.+
|     |                                                                                                                                                                                                                    
|10.4 | Amended and Restated Loan Agreement, Security Agreement and 10% Convertible, Secured Promissory
Note in the principal amount of $500,000 between the Company and Toucan Capital Fund II, L.P.
dated July 30, 2004.+
|     |                                                                                                                                                                                                                    
|10.5 | Amended and Restated Loan Agreement, Security Agreement and 10% Convertible, Secured Promissory
Note in the principal amount of $50,000 between the Company and Toucan Capital Fund II, L.P.
dated July 30, 2004.+ 
|     |                                                                                                                                                                                                                    
|10.6 | Amended and Restated Loan Agreement, Security Agreement and 10% Convertible, Secured Promissory
Note in the principal amount of $50,000 between the Company and Toucan Capital Fund II, L.P.
dated July 30, 2004.+ 
|     |                                                                                                                                                                                                                    
|10.7 | Warrant to purchase securities of the Company dated July 30, 2004 issued to Toucan Capital Fund
II, L.P.+                                                                                                          
|     |                                                                                                                                                                                                                    
|10.8 | Warrant to purchase securities of the Company dated June 11, 2004 issued to Toucan Capital Fund
 II, L.P.+                                                                                                         
|     |                                                                                                                                                                                                                    
|10.9 | Warrant to purchase securities of the Company dated April 26, 2004 issued to Toucan Capital Fund
II, L.P.+                                                                                                         
|     |                                                                                                                                                                                                                    
|31.1 | Certification of President (Principal Executive
  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.                        
|     |                                                                                                                                                                                                                    
|31.2 | Certification of Controller (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 Pursuant to Section 906
  of the Sarbanes-Oxley Act of 2002.                                                                                                                            
|     |                                                                                                                                                                                                                    
|32.2 | Certification of Controller Pursuant to Section 906
  of the Sarbanes-Oxley Act of 2002.                                                                                                                           

+ Incorporated by reference to the Companys Current Report on Form 8-K filed on August 6, 2004.

28

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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: November 15, 2004 | By:                           
|                         |                               
|                         |                               
|                         |                               
|                         |                               
|Dated: November 15, 2004 | By:                           
|                         |                               
|                         |                               
|                         |                               
|                         |                               

29

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NORTHWEST
BIOTHERAPEUTICS, INC.(A Development Stage Company)

EXHIBIT
INDEX

|Exhibit
  Number |  | Description                                                                                                                                                                                                        
|---------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                 |  |                                                                                                                                                                                                                    
|10.1             |  | Amended and Restated Recapitalization Agreement between the Company and Northwest Biotherapeutics, Inc. and Toucan Capital Fund II, L.P., dated July 30, 2004.+                                                    
|                 |  |                                                                                                                                                                                                                    
|10.2             |  | Loan Agreement, Security Agreement and 10% Convertible, Secured Promissory Note in the principal amount of $2,000,000 between the Company and Toucan Capital Fund II, L.P. dated July 30, 2004.+                   
|                 |  |                                                                                                                                                                                                                    
|10.3             |  | Amended and Restated Loan Agreement, Security Agreement and 10% Convertible, Secured Promissory
Note in the principal amount of $500,000 between the Company and Toucan Capital Fund II, L.P.
dated July 30, 2004.+
|                 |  |                                                                                                                                                                                                                    
|10.4             |  | Amended and Restated Loan Agreement, Security Agreement and 10% Convertible, Secured Promissory
Note in the principal amount of $500,000 between the Company and Toucan Capital Fund II, L.P.
dated July 30, 2004.+
|                 |  |                                                                                                                                                                                                                    
|10.5             |  | Amended and Restated Loan Agreement, Security Agreement and 10% Convertible, Secured Promissory
Note in the principal amount of $50,000 between the Company and Toucan Capital Fund II, L.P.
dated July 30, 2004.+ 
|                 |  |                                                                                                                                                                                                                    
|10.6             |  | Amended and Restated Loan Agreement, Security Agreement and 10% Convertible, Secured Promissory
Note in the principal amount of $50,000 between the Company and Toucan Capital Fund II, L.P.
dated July 30, 2004.+ 
|                 |  |                                                                                                                                                                                                                    
|10.7             |  | Warrant to purchase securities of the Company dated July 30, 2004 issued to Toucan Capital Fund
II, L.P.+                                                                                                          
|                 |  |                                                                                                                                                                                                                    
|10.8             |  | Warrant to purchase securities of the Company dated June 11, 2004 issued to Toucan Capital Fund
 II, L.P.+                                                                                                         
|                 |  |                                                                                                                                                                                                                    
|10.9             |  | Warrant to purchase securities of the Company dated April 26, 2004 issued to Toucan Capital Fund
II, L.P.+                                                                                                         
|                 |  |                                                                                                                                                                                                                    
|31.1             |  | Certification of President (Principal Executive
  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.                        
|                 |  |                                                                                                                                                                                                                    
|31.2             |  | Certification of Controller (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 Pursuant to Section 906
  of the Sarbanes-Oxley Act of 2002.                                                                                                                            
|                 |  |                                                                                                                                                                                                                    
|32.2             |  | Certification of Controller Pursuant to Section 906
  of the Sarbanes-Oxley Act of 2002.                                                                                                                           
|                 |  |                                                                                                                                                                                                                    

30

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