##### Table of Contents



SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 For The Quarterly Period Ended September 30, 2005
 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.
  DELAWARE
(State or Other Jurisdiction of
Incorporation or Organization)
    
    94-3306718
(I.R.S. Employer Identification
No.)
 
 
 þ o
 o þ
 o þ




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TABLE OF CONTENTS
 NORTHWEST BIOTHERAPEUTICS, INC.
 TABLE OF CONTENTS
 PagePART I  FINANCIAL INFORMATIONItem 1. Financial Statements (unaudited)
    
    
    3Condensed
Balance Sheets (unaudited) as of December 31, 2004 and
September 30, 2005
    
    
    3Condensed
Statements of Operations (unaudited) for the three and nine months
ended September 30, 2004 and September 30, 2005 and the
period from March 18, 1996 (inception) to September 30, 2005
    
    
    4Condensed
Statements of Cash Flows (unaudited) for the nine months ended
September 30, 2004 and 2005 and the period from March 18,
1996 (inception) to September 30, 2005
    
    
    5Notes to Condensed Financial Statements
    
    
    7Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    12Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    27Item 4. Controls and Procedures
    
    
    27PART II  OTHER INFORMATION
    
    
    28Item 1. Legal Proceedings
    
    
    28Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    28Item 3. Defaults Upon Senior Securities
    
    
    28Item 4. Submission of Matters to a Vote of Security Holders
    
    
    28Item 5. Other Information
    
    
    28Item 6. Exhibits
    
    
    29SIGNATURES
    
    
    31INDEX TO EXHIBITS
    
    
    32EXHIBIT 10.17EXHIBIT 10.18EXHIBIT 10.19EXHIBIT 10.20EXHIBIT 10.21EXHIBIT 10.22EXHIBIT 10.23EXHIBIT 10.24EXHIBIT 10.25EXHIBIT 10.26EXHIBIT 10.27EXHIBIT 10.28EXHIBIT 10.29EXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32.1EXHIBIT 32.2
  2




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##### Table of Contents



Part I  Financial Information
 
 Item 1. Financial Statements
 NORTHWEST BIOTHERAPEUTICS, INC .
 
 Balance Sheets
  December 31,
    
    
    September 30,2004
    
    
    2005AssetsCurrent assets:Cash
    
    $
    248
    
    
    $
    301Accounts receivable
    
    
    11
    
    
    
    22Accounts receivable, related party
    
    
    
    
    
    
    58Prepaid expenses and other current assets
    
    
    151
    
    
    
    57Total current assets
    
    
    410
    
    
    
    438Property and equipment:Leasehold improvements
    
    
    69
    
    
    
    69Laboratory equipment
    
    
    139
    
    
    
    79Office furniture and other equipment
    
    
    104
    
    
    
    117312
    
    
    
    265Less accumulated depreciation and amortization
    
    
    (194
    )
    
    
    (198
    )Property and equipment, net
    
    
    118
    
    
    
    67Restricted cash
    
    
    30
    
    
    
    30Total assets
    
    $
    558
    
    
    $
    535Liabilities And Stockholders EquityCurrent liabilities:Note payable to related parties, net
    
    $
    3,226
    
    
    $
    5,756Current portion of capital lease obligations
    
    
    38
    
    
    
    15Accounts payable
    
    
    1,453
    
    
    
    357Accounts payable, related party
    
    
    
    
    
    
    2,944Accrued expenses
    
    
    201
    
    
    
    126Accrued expense, tax liability
    
    
    494
    
    
    
    329Accrued expense, related party
    
    
    316
    
    
    
    481Deferred grant revenue
    
    
    35
    
    
    
    Total current liabilities
    
    
    5,763
    
    
    
    10,008Long-term liabilities:Capital lease obligations, net of current portion
    
    
    12
    
    
    
    4Total liabilities
    
    
    5,775
    
    
    
    10,012Stockholders equity:Preferred stock, $0.001 par value; 100,000,000 shares authorized
and 32,500,000 shares issued and outstanding at September 30,
2005
    
    
    
    
    
    
    33Common stock, $0.001 par value; 300,000,000 shares authorized
and 19,028,779 and 19,078,048 shares issued and outstanding at
December 31, 2004 and September 30, 2005, respectively
    
    
    19
    
    
    
    19Additional paid-in capital
    
    
    67,524
    
    
    
    71,174Deferred compensation
    
    
    (7
    )
    
    
    Deficit accumulated during the development stage
    
    
    (72,753
    )
    
    
    (80,703
    )Total stockholders equity
    
    
    (5,217
    )
    
    
    (9,477
    )Total liabilities and stockholders equity
    
    $
    558
    
    
    $
    535
  3




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##### Table of Contents



NORTHWEST BIOTHERAPEUTICS, INC.
 
 STATEMENTS OF OPERATIONS
  Period fromThree Months Ended
    
    
    Nine Months Ended
    
    
    March 18, 1996September 30,
    
    
    September 30,
    
    
    (inception) to2004
    
    
    2005
    
    
    2004
    
    
    2005
    
    
    September 30, 2005Revenues:Research material sales
    
    $
    12
    
    
    $
    4
    
    
    $
    46
    
    
    $
    23
    
    
    $
    435Contract research and development
from related parties
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,128Research grants, license fees,
royalties
    
    
    79
    
    
    
    11
    
    
    
    288
    
    
    
    87
    
    
    
    1,062Total revenues
    
    
    91
    
    
    
    15
    
    
    
    334
    
    
    
    110
    
    
    
    2,625Operating expenses:Cost of research material sales
    
    
    8
    
    
    
    3
    
    
    
    38
    
    
    
    8
    
    
    
    378Research and development
    
    
    1,716
    
    
    
    1,252
    
    
    
    2,102
    
    
    
    3,860
    
    
    
    31,455General and administrative
    
    
    629
    
    
    
    634
    
    
    
    1,880
    
    
    
    1,554
    
    
    
    30,243Depreciation and amortization
    
    
    35
    
    
    
    13
    
    
    
    109
    
    
    
    52
    
    
    
    2,255Accrued loss on facility sublease
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    895Asset impairment loss
    
    
    78
    
    
    
    
    
    
    
    78
    
    
    
    
    
    
    
    2,066Total operating expenses
    
    
    2,466
    
    
    
    1,902
    
    
    
    4,207
    
    
    
    5,474
    
    
    
    67,292Loss from operations
    
    
    (2,375
    )
    
    
    (1,887
    )
    
    
    (3,873
    )
    
    
    (5,364
    )
    
    
    (64,667
    )Other income (expense):Warrant valuation
    
    
    717
    
    
    
    
    
    
    
    717
    
    
    
    
    
    
    
    (368
    )Gain on sale of intellectual rights
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,656Interest expense
    
    
    (609
    )
    
    
    (896
    )
    
    
    (962
    )
    
    
    (2,589
    )
    
    
    (12,209
    )Interest income
    
    
    1
    
    
    
    1
    
    
    
    2
    
    
    
    3
    
    
    
    734Net loss
    
    
    (2,266
    )
    
    
    (2,782
    )
    
    
    (4,116
    )
    
    
    (7,950
    )
    
    
    (72,854
    )Accretion of Series A preferred stock mandatory
redemption obligation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,872
    )Series A preferred stock redemption fee
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,700
    )Beneficial conversion feature of Series D
preferred stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,274
    )Net loss applicable to common stockholders
    
    $
    (2,266
    )
    
    $
    (2,782
    )
    
    $
    (4,116
    )
    
    $
    (7,950
    )
    
    $
    (80,700
    )Net loss per share applicable to common
stockholders  basic and diluted
    
    $
    (0.12
    )
    
    $
    (0.15
    )
    
    $
    (0.22
    )
    
    $
    (0.42
    )Weighted average shares used in computing
basic and diluted loss per share
    
    
    19,026
    
    
    
    19,078
    
    
    
    19,026
    
    
    
    19,064
 4




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##### Table of Contents



NORTHWEST BIOTHERAPEUTICS, INC.
 
 Condensed Statements of Cash Flows
  Period fromNine Months Ended
    
    
    March 18, 1996September 30,
    
    
    (Inception) to2004
    
    
    2005
    
    
    September 30, 2005Cash Flows from Operating Activities:Net Loss
    
    $
    (4,116
    )
    
    $
    (7,950
    )
    
    $
    (72,854
    )Reconciliation of net loss to net cash used in operating
activities:Depreciation and amortization
    
    
    109
    
    
    
    52
    
    
    
    2,254Amortization of deferred financing costs
    
    
    
    
    
    
    
    
    
    
    320Amortization debt discount
    
    
    860
    
    
    
    2,171
    
    
    
    9,521Accrued interest converted to preferred stock
    
    
    
    
    
    
    
    
    
    
    260Accreted interest on convertible promissory note
    
    
    92
    
    
    
    412
    
    
    
    606Stock-based compensation costs
    
    
    33
    
    
    
    10
    
    
    
    1,093Loss (gain) on sale and disposal of property and equipment
    
    
    
    
    
    
    11
    
    
    
    486Gain on sale of intellectual property and royalty rights
    
    
    
    
    
    
    
    
    
    
    (3,656
    )Gain on sale of property and equipment
    
    
    (36
    )
    
    
    (81
    )
    
    
    (217
    )Warrant valuation
    
    
    (717
    )
    
    
    
    
    
    
    368Asset impairment loss
    
    
    78
    
    
    
    
    
    
    
    2,066Loss on facility sublease
    
    
    
    
    
    
    
    
    
    
    895Increase (decrease) in cash resulting from changes in assets
and liabilities:Accounts receivable
    
    
    (29
    )
    
    
    (69
    )
    
    
    (80
    )Prepaid expenses and other current assets
    
    
    60
    
    
    
    94
    
    
    
    409Accounts payable and accrued expenses
    
    
    366
    
    
    
    1,776
    
    
    
    4,638Accrued loss on sublease
    
    
    
    
    
    
    
    
    
    
    (266
    )Deferred grant revenue
    
    
    39
    
    
    
    (35
    )
    
    
    Deferred rent
    
    
    (11
    )
    
    
    
    
    
    
    410Net Cash used in Operating Activities
    
    
    (3,272
    )
    
    
    (3,609
    )
    
    
    (53,747
    )Cash Flows from Investing Activities:Purchase of property and equipment, net
    
    
    
    
    
    
    (13
    )
    
    
    (4,550
    )Proceeds from sale of property and equipment
    
    
    36
    
    
    
    81
    
    
    
    217Proceeds from sale of intellectual property
    
    
    
    
    
    
    
    
    
    
    1,816Proceeds from sale of marketable securities
    
    
    
    
    
    
    
    
    
    
    2,000Transfer of restricted cash
    
    
    75
    
    
    
    
    
    
    
    (1,034
    )Net Cash provided by (used in) Investing Activities
    
    
    111
    
    
    
    68
    
    
    
    (1,551
    )Cash Flows from Financing Activities:Proceeds from issuance of note payable to stockholder
    
    
    
    
    
    
    
    
    
    
    1,650Repayment of note payable to stockholder
    
    
    
    
    
    
    
    
    
    
    (1,650
    )Proceeds from issuance of convertible promissory note and
warrants, net of issuance costs
    
    
    3,100
    
    
    
    2,400
    
    
    
    12,149Borrowing under line of credit, Northwest Hospital
    
    
    
    
    
    
    
    
    
    
    2,834Repayment of line of credit, Northwest Hospital
    
    
    
    
    
    
    
    
    
    
    (2,834
    )Repayment of convertible promissory note
    
    
    (52
    )
    
    
    (54
    )
    
    
    (106
    )Payment on capital lease obligations
    
    
    (31
    )
    
    
    (32
    )
    
    
    (305
    )Payments on note payable
    
    
    
    
    
    
    
    
    
    
    (420
    )Proceeds from issuance Series A cumulative preferred stock, net
    
    
    
    
    
    
    1,276
    
    
    
    28,708Proceeds from exercise of stock options and warrants
    
    
    
    
    
    
    4
    
    
    
    224
 5




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##### Table of Contents



Period fromNine Months Ended
    
    
    March 18, 1996September 30,
    
    
    (Inception) to2004
    
    
    2005
    
    
    September 30, 2005Proceeds from issuance common stock, net
    
    
    
    
    
    
    
    
    
    
    17,369Mandatorily redeemable Series A preferred stock redemption fee
    
    
    
    
    
    
    
    
    
    
    (1,700
    )Deferred financing costs
    
    
    
    
    
    
    
    
    
    
    (320
    )Net Cash provided by Financing Activities
    
    
    3,017
    
    
    
    3,594
    
    
    
    55,599Net increase (decrease) in cash and cash equivalents
    
    
    (144
    )
    
    
    53
    
    
    
    301Cash and cash equivalents at beginning of period
    
    
    255
    
    
    
    248
    
    
    
    Cash and cash equivalents at end of period
    
    $
    111
    
    
    $
    301
    
    
    $
    301Supplemental disclosure of cash flow informationCash paid during the period for interest
    
    $
    9
    
    
    $
    5
    
    
    $
    1,394Supplemental schedule of non-cash financing activitiesEquipment acquired through capital leases
    
    
    
    
    
    
    
    
    
    
    285Common stock warrant liability
    
    
    2,863
    
    
    
    
    
    
    
    4,714Accretion of mandatorily redeemable Series A preferred stock redemption
obligation
    
    
    
    
    
    
    
    
    
    
    1,872Beneficial conversion feature of convertible promissory notes
    
    
    2,140
    
    
    
    2,400
    
    
    
    6,193Conversion of convertible promissory notes and accrued interest to
Series D preferred stock
    
    
    
    
    
    
    
    
    
    
    5,324Issuance of Series C preferred stock warrants in connection with lease
agreement
    
    
    
    
    
    
    
    
    
    
    43Issuance of common stock for license rights
    
    
    
    
    
    
    
    
    
    
    4Issuance of common stock and warrants to Medarex
    
    
    
    
    
    
    
    
    
    
    840Issuance of common stock to landlord
    
    
    
    
    
    
    
    
    
    
    35Deferred compensation on issuance of stock options and restricted stock
grants
    
    
    
    
    
    
    10
    
    
    
    762Cancellation of options and restricted stock
    
    
    
    
    
    
    
    
    
    
    849Stock subscription receivable
    
    
    
    
    
    
    
    
    
    
    480Financing of prepaid insurance through note payable
    
    
    
    
    
    
    
    
    
    
    420
  6




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##### Table of Contents



NORTHWEST BIOTHERAPEUTICS, INC.
 
 Notes to Condensed Financial Statements
  1. Basis of Presentation
    Stock-Based Compensation
    7




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##### Table of Contents



Three months ended September 30,
    
    Nine months ended September 30,(in thousands, except earnings per share)
    
    (in thousands, except earnings per share)2004
    
    2005
    
    2004
    
    2005Net loss applicable to common
stockholders as reported
    
    
    (2,266
    )
    
    
    (2,782
    )
    
    
    (4,116
    )
    
    
    (7,950
    )Add: Stock-based employee
compensation expense included in
reported net loss, net
    
    
    7
    
    
    
    1
    
    
    
    33
    
    
    
    10Deduct: Stock-based employee
compensation determined under
fair value based method for all
awards
    
    
    (95
    )
    
    
    (12
    )
    
    
    (329
    )
    
    
    (57
    )Pro forma
    
    
    (2,354
    )
    
    
    (2,793
    )
    
    
    (4,412
    )
    
    
    (7,997
    )Net loss per share-basic and diluted:As reported
    
    
    (0.12
    )
    
    
    (0.15
    )
    
    
    (0.22
    )
    
    
    (0.42
    )Pro forma
    
    
    (0.12
    )
    
    
    (0.15
    )
    
    
    (0.23
    )
    
    
    (0.42
    )
  Nine months ended September 30, 2005Risk-free interest rate
    
    
    2.46
    %Expected life
    
    5.0 yearsExpected volatility
    
    
    439.19
    %Dividend yield
    
    
    0.00
    %
 2. Liquidity
     3. Net Loss Per Share Applicable to Common Stockholders
    4. Notes Payable to Related Parties
 Management Loans
  8




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##### Table of Contents



Lender
    
    Title
    
    PrincipalAlton L.
Boynton, Ph.D.
    
    Director, President, Chief Scientific Officer, Chief
Operating Officer and Secretary
    
    $
    183,000Marnix Bosch, Ph.D.
    
    Vice President of Vaccine Research and Development
    
    
    41,000Larry L. Richards
    
    Controller (Principal Financial and Accounting Officer)
    
    
    11,000Total
    
    $
    235,000
    Toucan Capital Loans
  9




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##### Table of Contents



Loan Date
    
    Principal(6)
    
    
    Due Date
    
    
    Accrued Interest(1)
    
    
    Convertible Shares
    
    
    Shares Warrant(In thousands)
    
    
    
    
    
    
    (In thousands)
    
    
    (In thousands)
    
    
    (In thousands)(2)(3)02/02/04
    
    $
    50
    
    
    
    01/17/06
    
    
    $
    9
    
    
    
    1,466
    
    
    
    3,000
    (4)03/01/04
    
    
    50
    
    
    
    01/17/06
    
    
    
    8
    
    
    
    1,455
    
    
    
    3,000
    (4)04/26/04
    
    
    500
    
    
    
    01/17/06
    
    
    
    74
    
    
    
    14,341
    
    
    
    30,000
    (4)06/11/04
    
    
    500
    
    
    
    01/17/06
    
    
    
    67
    
    
    
    14,168
    
    
    
    30,000
    (4)07/30/04
    
    
    2,000
    
    
    
    01/17/06
    
    
    
    237
    
    
    
    55,933
    
    
    
    20,000
    (5)10/22/04
    
    
    500
    
    
    
    01/17/06
    
    
    
    47
    
    
    
    13,675
    
    
    
    5,000
    (5)11/10/04
    
    
    500
    
    
    
    01/17/06
    
    
    
    44
    
    
    
    13,610
    
    
    
    5,000
    (5)12/27/04
    
    
    250
    
    
    
    01/17/06
    
    
    
    19
    
    
    
    6,724
    
    
    
    2,500
    (5)04/12/05
    
    
    450
    
    
    
    04/12/06
    
    
    
    21
    
    
    
    11,774
    
    
    
    4,500
    (5)05/13/05
    
    
    450
    
    
    
    05/13/06
    
    
    
    17
    
    
    
    11,681
    
    
    
    4,500
    (5)06/16/05
    
    
    500
    
    
    
    06/16/06
    
    
    
    15
    
    
    
    12,866
    
    
    
    5,000
    (5)07/26/05
    
    
    500
    
    
    
    07/26/06
    
    
    
    9
    
    
    
    12,725
    
    
    
    5,000
    (5)09/07/05
    
    
    500
    
    
    
    09/07/06
    
    
    
    3
    
    
    
    12,579
    
    
    
    5,000
    (5)Total
    
    $
    6,750
    
    
    
    
    
    
    $
    570
    
    
    
    182,997
    
    
    
    122,500
 
 (1)
    
    As of September 30, 2005. Interest accrues at 10% per annum based on a 365-day basis compounded
annually from their respective original issuance dates.(2)
    
    The warrant shares are exercisable for shares of convertible preferred stock if the convertible
preferred stock is approved and authorized and other investors have purchased in cash a minimum
of $15 million of such convertible preferred stock, on the terms and conditions set forth in the
Recapitalization Agreement. However, if, for any reason, such convertible preferred stock is not
approved or authorized and/or if other investors have not purchased in cash a minimum of $15
million of such convertible preferred stock, on the terms and conditions set forth in the
Recapitalization Agreement, these warrants shall be exercisable for any equity security and/or
debt security and/or any combination thereof.(3)
    
    Exercise period is 7 years from the issuance date of the corresponding convertible note, except
for the warrants corresponding to the February 2, 2004 and
March 1, 2004 warrants which were issued on April 26, 2004
and are exercisable through April 26, 2011.(4)
    
    Per share exercise price is $0.01 (subject to adjustment in
the event of stock splits, reverse stock splits, stock dividends,
dilutive events and the like).(5)
    
    Per share exercise price is $0.04 (subject to adjustment in
the event of stock splits, reverse stock splits, stock dividends,
dilutive events and the like).(6)
    
    The notes are secured by a first priority senior security interest in all of the Companys assets. 5. Unregistered Sales of Equity Securities
 Toucan Capital Series A Cumulative Convertible Preferred Stock
  (i)
    
    is entitled to cumulative dividends at the rate of 10% per year;(ii)
    
    is entitled to a liquidation preference in the amount of its initial purchase
price plus all accrued and unpaid dividends (to the extent of legally available
funds);(iii)
    
    has a preference over the common stock with respect to dividends and distributions;(iv)
    
    is entitled to participate on an as-converted basis with the common stock on any
distributions after the payment of any preferential amounts to the series A stock;(v)
    
    votes on an as converted basis with the common stock on matters submitted to the
common stockholders for approval and as a separate class on certain other material
matters; and(vi)
    
    is convertible into common stock on a one-for-one basis (subject to adjustment in
the event of stock dividends, stock splits, reverse stock splits,
recapitalizations, etc.).
  10




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##### Table of Contents



Toucan Capital Series A Warrant
  6. Contingency
   7. Subsequent Events
  11




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##### Table of Contents



Item. 2. Managements Discussion and Analysis of Financial Condition and Result of Operations
  Overview
    Critical Accounting Policies and Estimates
         12




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##### Table of Contents



Results of Operations
 Operating costs:
  Research and development:
    General and administrative:
  Three Months Ended September 30, 2004 and 2005
 Total Revenues.
 Cost of Research Material Sales.
 Research and Development Expense.
 13




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##### Table of Contents



General and Administrative Expense.
 Depreciation and Amortization.
 Asset Impairment Loss.
 Total Other Income (Expense), Net.
   Nine Months Ended September 30, 2004 and 2005
 Total Revenues.
  Cost of Research Material Sales.
 14




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##### Table of Contents



Research and Development Expense.
 General and Administrative Expense.
 Depreciation and Amortization.
 Asset Impairment Loss.
 Total Other Income (Expense), Net.
   Liquidity and Capital Resources
   15




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##### Table of Contents



Aged Trade Payables
    
    (in thousands)Current:
    
    $
    27115 Days
    
    
    33530 Days
    
    
    7545 Days
    
    
    32160 Days
    
    
    2,299Total
    
    
    3,301
      16




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##### Table of Contents



Sources of Cash
 Federal Grants
   Research Reagent Sales
  17




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##### Table of Contents



License Fees
  Management Loan
   Toucan Capital Loans
  Toucan Capital Series A Cumulative Convertible Preferred Stock
  Uses of Cash
    18




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##### Table of Contents



Factors That May Affect Results of Operations and Financial Condition
  Without committed long-term financing, we will be unable to initiate our clinical trials.
  We will need to raise additional capital which may not be available.
     19




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##### Table of Contents



Aged Trade Payables
    
    (in thousands)Current:
    
    $
    27115 Days
    
    
    33530 Days
    
    
    7545 Days
    
    
    32160 Days
    
    
    2,299Total
    
    
    3,301
  Toucan Capital has indicated it does not intend to provide further capital to us. We may be unable to obtain capital from new sources.
  Our auditors have issued a going concern audit opinion.
  We expect to continue to incur substantial losses, and we may never achieve profitability.
  
    
    $5.8 million in 2003;
    
    $8.6 million in 2004; and
    
    $7.9 million for the nine months ended September 30, 2005.
 20




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##### Table of Contents



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.
  
    
    $529,000 in 2003;
    
    $390,000 in 2004; and
    
    $110,000 for the nine months ended September 30, 2005.
  
    
    the sale of research products to a single customer;
    
    contract research and development from related parties; and
    
    research grants, and license fees.
  We have reduced business umbrella, auto, crime and fiduciary, and directors and officers
liability insurance coverage.
  We may not be able to retain or recruit personnel.
  Failure to obtain regulatory approval for one or more of our product candidates could
significantly harm our business.
   21




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##### Table of Contents



Because we lack sales and marketing experience, we may experience significant difficulties
commercializing our research product candidates.
  Our success partially depends on existing and future partners.
   
    
    may not commit sufficient resources to our programs or product candidates;
    
    may not conduct their agreed activities on time, or at all, resulting in delay or
termination of the development of our product candidates and technology;
    
    may not perform their obligations as expected;
    
    may pursue products or alternative technologies in preference to ours; or
    
    may dispute the ownership of products or technology developed under our partnerships.
  22




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##### Table of Contents



Competition in our industry is intense and most of our competitors have substantially greater
resources than we have.
  
    
    biopharmaceutical companies;
    
    biotechnology companies;
    
    pharmaceutical companies;
    
    academic institutions; and
    
    other research organizations.
   
    
    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 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.
  23




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##### Table of Contents



Our success will depend partly on our ability to operate without infringing or
misappropriating the proprietary rights of others.
   24




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##### Table of Contents



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.
   Toucan Capital and affiliates own the vast majority of our stock and, as a result, the trading
price for our shares may be depressed as they can take actions that may be adverse to your
interests.
   25




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##### Table of Contents



There may not be an active, liquid trading market for our common stock.
  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.
  
    
    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;
    
    changes in financial estimates or recommendations by securities analysts; and
    
    changes in accounting principles.
  Our incorporation documents, bylaws and stockholder rights plan may delay or prevent a change
in our management.
  
    
    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;
 26




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##### Table of Contents




    
    authorize our board of directors to issue dilutive shares
of common stock upon certain events; and
    
    provide for a classified board of directors.
  
 Item 3. Quantitative and Qualitative Disclosures About Market Risk
  
 Item 4. Controls and Procedures
 (a) Evaluation of disclosure controls and procedures.
    (b) Changes in internal control over financial reporting.
  27




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##### Table of Contents



Part II  Other Information
 
 Item 1. Legal Proceedings
    
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
  
 Item 3. Defaults upon Senior Securities
  
 Item 4. Submission of Matters to a Vote of Security Holders
  
 Item 5. Other Information
         Lender
    
    Title
    
    Principal (1)Alton L. Boynton, Ph.D.
    
    Director, President, Chief Scientific Officer, Chief Operating Officer and Secretary
    
    $
    183,000Marnix Bosch, Ph.D.
    
    Vice President of Vaccine Research and Development
    
    
    41,000Larry L. Richards
    
    Controller (Principal Financial and Accounting Officer)
    
    
    11,000Total
    
    $
    235,000
   28




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##### Table of Contents



Item 6. Exhibits
  3.1
    
    Sixth Amended and Restated Certificate of Incorporation. (3.1) (1)3.2
    
    Certificate of Designations, Preferences and Rights of Series A Cumulative
Convertible Preferred Stock. (3.1) (2)3.3
    
    Second Amended and Restated Bylaws of Northwest Biotherapeutics, Inc. (3.2) (2)10.1
    
    Amendment No. 8 to the Amended and Restated Recapitalization Agreement between Northwest
Biotherapeutics, Inc. and Toucan Capital Fund II, L.P., dated July 26, 2005. (10.1) (1)10.2
    
    Loan Agreement, Security Agreement and 10% Convertible, Secured Promissory Note in the
principal amount of $500,000 between Northwest Biotherapeutics, Inc. and Toucan Capital
Fund II, L.P., dated July 26, 2005. (10.2) (1)10.3
    
    Warrant to purchase securities of the Company dated July 26, 2005 issued to Toucan Capital
Fund II, L.P. (10.3) (1)10.4
    
    Sixth Amendment to Amended and Restated Binding Term Sheet, dated July 26, 2005. (10.4) (1)10.5
    
    Second Amendment To Amended And Restated Loan Agreement, Security Agreement and 10%
Convertible, Secured Promissory Note dated February 2, 2004 in the principal amount of
$50,000 between the Company and Toucan Capital Fund II, L.P., dated July 26, 2005. (10.5)
(1)10.6
    
    Second Amendment To Amended And Restated Loan Agreement, Security Agreement and 10%
Convertible, Secured Promissory Note dated March 1, 2004 in the principal amount of
$50,000 between the Company and Toucan Capital Fund II, L.P., dated July 26, 2005. (10.6)
(1)10.7
    
    Second Amendment To Amended And Restated Loan Agreement, Security Agreement and 10%
Convertible, Secured Promissory Note dated April 26, 2004 in the principal amount of
$500,000 between the Company and Toucan Capital Fund II, L.P., dated July 26, 2005. (10.7)
(1)10.8
    
    First Amendment To Amended And Restated Loan Agreement, Security Agreement and 10%
Convertible, Secured Promissory Note dated June 11, 2004 in the principal amount of
$500,000 between the Company and Toucan Capital Fund II, L.P., dated July 26, 2005. (10.8)
(1)10.9
    
    First Amendment To Amended And Restated Loan Agreement, Security Agreement and 10%
Convertible, Secured Promissory Note dated July 30, 2004 in the principal amount of
$2,000,000 between the Company and Toucan Capital Fund II, L.P., dated July 26, 2005.
(10.9) (1)10.10
    
    First Amendment To Amended And Restated Loan Agreement, Security Agreement and 10%
Convertible, Secured Promissory Note dated October 22, 2004 in the principal amount of
$500,000 between the Company and Toucan Capital Fund II, L.P., dated July 26, 2005.
(10.10) (1)10.11
    
    Form of Fourth Amendment To Convertible Secured Promissory Note between the Company and
Holders of the November 13, 2003 Convertible Secured Promissory Note, dated July 26, 2005.
(10.11) (1)10.12
    
    Amendment No. 9 to the Amended and Restated Recapitalization Agreement between Northwest
Biotherapeutics, Inc. and Toucan Capital Fund II, L.P., dated September 7, 2005. (10.1)
(3)10.13
    
    Loan Agreement, Security Agreement and 10% Convertible, Secured Promissory Note in the
principal amount of $500,000 between Northwest Biotherapeutics, Inc. and Toucan Capital
Fund II, L.P., dated September 7, 2005. (10.2) (3)10.14
    
    Warrant to purchase securities of the Company dated September 7, 2005 issued to Toucan
Capital Fund II, L.P. (10.3) (3)10.15
    
    Seventh Amendment to Amended and
Restated Binding Term Sheet, dated September 7, 2005. (10.4) (3)10.16
    
    Employment Agreement between Northwest Biotherapeutics, Inc., and Paul Zeltzer, dated
August 1, 2005. (99.1) (2)10.17
    
    Third Amendment To Amended And Restated Loan Agreement, Security Agreement and 10%
Convertible, Secured Promissory Note dated February 2, 2004 in the principal amount of
$50,000 between the Company and Toucan Capital Fund II, L.P., dated
November 14, 2005.*10.18
    
    Third Amendment To Amended And Restated Loan Agreement, Security Agreement and 10%
Convertible, Secured Promissory Note dated March 1, 2004 in the principal amount of
$50,000 between the Company and Toucan Capital Fund II, L.P., dated
November 14, 2005.*
 29




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##### Table of Contents



10.19
    
    Third Amendment To Amended And Restated Loan Agreement, Security Agreement and 10%
Convertible, Secured Promissory Note dated April 26, 2004 in the principal amount of
$500,000 between the Company and Toucan Capital Fund II, L.P., dated November 14, 2005.*10.20
    
    Second Amendment To Amended And Restated Loan Agreement, Security Agreement and 10%
Convertible, Secured Promissory Note dated June 11, 2004 in the principal amount of
$500,000 between the Company and Toucan Capital Fund II, L.P., dated November 14, 2005.*10.21
    
    Second Amendment To Amended And Restated Loan Agreement, Security Agreement and 10%
Convertible, Secured Promissory Note dated July 30, 2004 in the principal amount of
$2,000,000 between the Company and Toucan Capital Fund II, L.P., dated November 14, 2005.*10.22
    
    Second Amendment To Amended And Restated Loan Agreement, Security Agreement and 10%
Convertible, Secured Promissory Note dated October 22, 2004 in the principal amount of
$500,000 between the Company and Toucan Capital Fund II, L.P., dated November 14, 2005.*10.23
    
    First Amendment To Amended And Restated Loan Agreement, Security Agreement and 10%
Convertible, Secured Promissory Note dated November 10, 2004 in the principal amount of
$500,000 between the Company and Toucan Capital Fund II, L.P., dated November 14, 2005.*10.24
    
    First Amendment To Amended And Restated Loan Agreement, Security Agreement and 10%
Convertible, Secured Promissory Note dated December 27, 2004 in the principal amount of
$250,000 between the Company and Toucan Capital Fund II, L.P., dated November 14, 2005.*10.25
    
    Form of Fifth Amendment To Convertible Secured Promissory Note between the Company and
Holders of the November 13, 2003 Convertible Secured Promissory Notes, dated November 14,
2005.*10.26
    
    Amendment No. 10 to the Amended and Restated Recapitalization Agreement between
Northwest Biotherapeutics, Inc., Toucan Capital Fund II, L.P., and Toucan
Partners, L.L.C., dated November 14, 2005.*10.27
    
    Loan Agreement, Security Agreement and 10% Convertible, Secured Promissory Note in
the principal amount of $400,000 between Northwest Biotherapeutics, Inc., and Toucan Partners, L.L.C., dated November 14, 2005.*10.28
    
    Warrant to purchase securities of the Company dated November 14, 2005 issued to
Toucan Partners, L.L.C.*10.29
    
    Eighth Amendment to Amended and Restated Binding Term Sheet, dated November 14, 2005.*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.*
 
 *

Filed herewith.(1)
    
    Incorporated by reference to the exhibit shown in the preceding
parentheses filed with the Registrants Form 8-K on August 1,
2005.(2)
    
    Incorporated by reference to the exhibit shown in the preceding
parentheses filed with the Registrants Form 8-K on August 5,
2005.(3)
    
    Incorporated by reference to the exhibit shown in the preceding
parentheses filed with the Registrants Form 8-K on September 9,
2005. 30




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##### Table of Contents



SIGNATURES
  NORTHWEST BIOTHERAPEUTICS, INCDated: November 14, 2005
    By:
    /s/ Alton L. BoyntonAlton L. BoyntonPresident (Principal Executive
Officer) Dated: November 14, 2005
    By:
    /s/ Larry L. RichardsLarry L. RichardsController (Principal Financial and
Accounting Officer) 31




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##### Table of Contents



NORTHWEST BIOTHERAPEUTICS, INC.   EXHIBIT INDEX
 ExhibitNumber
    
    Description3.1
    
    Sixth Amended and Restated Certificate of Incorporation. (3.1) (1)3.2
    
    Certificate of Designations, Preferences and Rights of Series A Cumulative
Convertible Preferred Stock. (3.1) (2)3.3
    
    Second Amended and Restated Bylaws of Northwest Biotherapeutics, Inc. (3.2) (2)10.1
    
    Amendment No. 8 to the Amended and Restated Recapitalization Agreement between
Northwest Biotherapeutics, Inc. and Toucan Capital Fund II, L.P., dated July 26,
2005. (10.1) (1)10.2
    
    Loan Agreement, Security Agreement and 10% Convertible, Secured Promissory Note in
the principal amount of $500,000 between Northwest Biotherapeutics, Inc. and Toucan
Capital Fund II, L.P., dated July 26, 2005. (10.2) (1)10.3
    
    Warrant to purchase securities of the Company dated July 26, 2005 issued to Toucan
Capital Fund II, L.P. (10.3) (1)10.4
    
    Sixth Amendment to Amended and Restated Binding Term Sheet, dated July 26, 2005.
(10.4) (1)10.5
    
    Second Amendment To Amended And Restated Loan Agreement, Security Agreement and 10%
Convertible, Secured Promissory Note dated February 2, 2004 in the principal amount
of $50,000 between the Company and Toucan Capital Fund II, L.P., dated July 26, 2005.
(10.5) (1)10.6
    
    Second Amendment To Amended And Restated Loan Agreement, Security Agreement and 10%
Convertible, Secured Promissory Note dated March 1, 2004 in the principal amount of
$50,000 between the Company and Toucan Capital Fund II, L.P., dated July 26, 2005.
(10.6) (1)10.7
    
    Second Amendment To Amended And Restated Loan Agreement, Security Agreement and 10%
Convertible, Secured Promissory Note dated April 26, 2004 in the principal amount of
$500,000 between the Company and Toucan Capital Fund II, L.P., dated July 26, 2005.
(10.7) (1)10.8
    
    First Amendment To Amended And Restated Loan Agreement, Security Agreement and 10%
Convertible, Secured Promissory Note dated June 11, 2004 in the principal amount of
$500,000 between the Company and Toucan Capital Fund II, L.P., dated July 26, 2005.
(10.8) (1)10.9
    
    First Amendment To Amended And Restated Loan Agreement, Security Agreement and 10%
Convertible, Secured Promissory Note dated July 30, 2004 in the principal amount of
$2,000,000 between the Company and Toucan Capital Fund II, L.P., dated July 26, 2005.
(10.9) (1)10.10
    
    First Amendment To Amended And Restated Loan Agreement, Security Agreement and 10%
Convertible, Secured Promissory Note dated October 22, 2004 in the principal amount
of $500,000 between the Company and Toucan Capital Fund II, L.P., dated July 26,
2005. (10.10) (1)10.11
    
    Form of Fourth Amendment To Convertible Secured Promissory Note between the Company
and Holders of the November 13, 2003 Convertible Secured Promissory Note, dated July
26, 2005. (10.11) (1)10.12
    
    Amendment No. 9 to the Amended and Restated Recapitalization Agreement between
Northwest Biotherapeutics, Inc. and Toucan Capital Fund II, L.P., dated September 7,
2005. (10.1) (3)10.13
    
    Loan Agreement, Security Agreement and 10% Convertible, Secured Promissory Note in
the principal amount of $500,000 between Northwest Biotherapeutics, Inc. and Toucan
Capital Fund II, L.P., dated September 7, 2005. (10.2) (3)10.14
    
    Warrant to purchase securities of the Company dated September 7, 2005 issued to
Toucan Capital Fund II, L.P. (10.3) (3)10.15
    
    Seventh Amendment to Amended and Restated Binding Term Sheet, dated September 7,
2005. (10.4) (3)10.16
    
    Employment Agreement between Northwest Biotherapeutics, Inc., and Paul Zeltzer, dated
August 1, 2005. (99.1) (2)10.17
    
    Third Amendment To Amended And Restated Loan Agreement, Security Agreement and 10%
Convertible, Secured Promissory Note dated February 2, 2004 in the principal amount
of $50,000 between the Company and Toucan Capital Fund II, L.P., dated November 14,
2005.*
 32




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##### Table of Contents



ExhibitNumber
    
    Description10.18
    
    Third Amendment To Amended And Restated Loan Agreement, Security Agreement and 10%
Convertible, Secured Promissory Note dated March 1, 2004 in the principal amount of
$50,000 between the Company and Toucan Capital Fund II, L.P., dated
November 14,
2005.*10.19
    
    Third Amendment To Amended And Restated Loan Agreement, Security Agreement and 10%
Convertible, Secured Promissory Note dated April 26, 2004 in the principal amount of
$500,000 between the Company and Toucan Capital Fund II, L.P., dated
November 14,
2005.*10.20
    
    Second Amendment To Amended And Restated Loan Agreement, Security Agreement and 10%
Convertible, Secured Promissory Note dated June 11, 2004 in the principal amount of
$500,000 between the Company and Toucan Capital Fund II, L.P., dated
November 14,
2005.*10.21
    
    Second Amendment To Amended And Restated Loan Agreement, Security Agreement and 10%
Convertible, Secured Promissory Note dated July 30, 2004 in the principal amount of
$2,000,000 between the Company and Toucan Capital Fund II, L.P.,
dated November 14,
2005.*10.22
    
    Second Amendment To Amended And Restated Loan Agreement, Security Agreement and 10%
Convertible, Secured Promissory Note dated October 22, 2004 in the principal amount
of $500,000 between the Company and Toucan Capital Fund II, L.P.,
dated November 14,
2005.*10.23
    
    First Amendment To Amended And Restated Loan Agreement, Security Agreement and 10%
Convertible, Secured Promissory Note dated November 10, 2004 in the principal amount
of $500,000 between the Company and Toucan Capital Fund II, L.P.,
dated November 14,
2005.*10.24
    
    First Amendment To Amended And Restated Loan Agreement, Security Agreement and 10%
Convertible, Secured Promissory Note dated December 27, 2004 in the principal
amount of $250,000 between the Company and Toucan Capital Fund II, L.P., dated
November 14, 2005.*10.25
    
    Form of Fifth Amendment To Convertible Secured Promissory Note between the Company
and Holders of the November 13, 2003 Convertible Secured Promissory Notes, dated
November 14, 2005.*10.26
    
    Amendment No. 10 to the Amended and Restated Recapitalization Agreement between
Northwest Biotherapeutics, Inc., Toucan
Capital Fund II, L.P., and Toucan
Partners, L.L.C., dated November 14, 2005.*10.27
    
    Loan Agreement, Security Agreement and 10% Convertible, Secured Promissory Note in
the principal amount of $400,000 between Northwest Biotherapeutics, Inc. and Toucan Partners, L.L.C., dated
November 14, 2005.*10.28
    
    Warrant to purchase securities of
the Company dated November 14, 2005 issued to
Toucan Partners, L.L.C.*10.29
    
    Eighth Amendment to Amended and
Restated Binding Term Sheet, dated November 14, 2005.*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.*
 
 *
    
    Filed herewith.(1)
    
    Incorporated by reference to the exhibit shown in the preceding
parentheses filed with the Registrants Form 8-K on August 1,
2005.(2)
    
    Incorporated by reference to the exhibit shown in the preceding
parentheses filed with the Registrants Form 8-K on August 5,
2005.(3)
    
    Incorporated by reference to the exhibit shown in the preceding
parentheses filed with the Registrants Form 8-K on September 9,
2005. 33