##### Table of Contents



SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549



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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 June 30, 2002

OR

|      |  |                                                                                         
|----- |  | ----------------------------------------------------------------------------------------
|[   ] |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 0-26825



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NORTHWEST BIOTHERAPEUTICS, INC.

(Exact Name Of Registrant As Specified In Its Charter)


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

21720  23rd DRIVE SE, SUITE 100, BOTHELL, WA 98021
(Address Of Principal Executive Offices, Including Zip Code)

(425) 608-3000
(Registrants Telephone Number, Including Area Code)



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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]   No   [   ]

As of July 31, 2002, the registrant had outstanding 16,991,321 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 |                                                                                               |                                                                                                                                                                                              |  |   
|                               | Item 1. Financial Statements (unaudited)                                                      |                                                                                                                                                                                              |  |    |     
|                               |                                                                                               | Condensed
Consolidated Balance Sheets (unaudited) as of June 30,
2002, and December 31, 2001                                                                                                 |  |    | 3    | 
|                               |                                                                                               | Condensed Consolidated Statements Of Operations (unaudited) for the three and six
month periods ended June 30, 2002 and 2001 and the period from March 18, 1996
(inception) to June 30, 2002 |  |    | 4    | 
|                               |                                                                                               | Condensed Consolidated Statements Of Cash Flows (unaudited) for the six-month
periods ended June 30, 2002 and 2001 and the period from
March 18, 1996 (inception) to June 30, 2002           |  |    | 5    | 
|                               |                                                                                               | Notes To Condensed Consolidated Financial Statements                                                                                                                                         |  |    | 6    | 
|                               | Item 2. Managements Discussion And Analysis Of Financial Condition And Results Of Operations |                                                                                                                                                                                              |  | 8  |     
|                               | Item 3. Quantitative And Qualitative Disclosures About Market Risk                            |                                                                                                                                                                                              |  | 21 |     
|PART II  OTHER INFORMATION    |                                                                                               |                                                                                                                                                                                              |  |   
|                               | Item 2. Changes In Securities And Use Of Proceeds                                             |                                                                                                                                                                                              |  | 21 |     
|                               | Item 6. Exhibits                                                                              |                                                                                                                                                                                              |  | 21 |     
|SIGNATURES                     |                                                                                               |                                                                                                                                                                                              |  |   
|INDEX TO EXHIBITS              |                                                                                               |                                                                                                                                                                                              |  |   

2



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TABLE OF CONTENTS



|                               |                                                                                                |                                                      |  |  |  |  |  | 
|------------------------------ | ---------------------------------------------------------------------------------------------- | ---------------------------------------------------- |  |  |  |  |  | 
|PART I  FINANCIAL INFORMATION
|                               | Item 1. Financial Statements                                                                  
|                               |                                                                                                | Condensed Consolidated Balance Sheets               
|                               |                                                                                                | Condensed Consolidated Statements Of Operations     
|                               |                                                                                                | Condensed Consolidated Statements Of Cash Flows     
|                               |                                                                                                | Notes To Condensed Consolidated Financial Statements
|                               | Item 2. Managements Discussion And Analysis Of Financial Condition And Results Of Operations.
|                               | Item 3. Quantitative And Qualitative Disclosures About Market Risk                            
|PART II  OTHER INFORMATION   
|                               | Item 2(D). Changes In Securities And Use Of Proceeds                                          
|                               | Item 6. Exhibits And Reports On Form 8-K                                                      
|SIGNATURES                    
|INDEX TO EXHIBITS             
|EXHIBIT 3.1                   
|EXHIBIT 99.1                  
|EXHIBIT 99.2                  



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##### Table of Contents






PART I  FINANCIAL INFORMATION




Item 1. Financial Statements




NORTHWEST BIOTHERAPEUTICS, INC.
(A Development Stage Company)
AND SUBSIDIARY

Condensed Consolidated Balance Sheets
(unaudited)

|                                     |                                                                                                                                                                                |                            |                                            |             |           |            |              |             |            |            | 
|------------------------------------ | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | -------------------------- | ------------------------------------------ | ----------- | --------- | ---------- | ------------ | ----------- | ---------- | ---------- | 
|                                     |                                                                                                                                                                                |                            |                                            |             | JUNE 30,  |            | DECEMBER 31,
|                                     |                                                                                                                                                                                |                            |                                            |             | 2002      |            | 2001        
|                                     |                                                                                                                                                                                |                            |                                            |             |           |            |             
|Assets                               |                                                                                                                                                                                |                            |                                            |             |           |            |              |            
|Current assets:                      |                                                                                                                                                                                |                            |                                            |             |           |            |              |            
|                                     | Cash and cash equivalents                                                                                                                                                      |                            | $                                          | 7,427,413   |           |            | $            | 14,966,126  |           
|                                     | Accounts receivable                                                                                                                                                            |                            |                                            | 24,242      |           |            |              | 50,125      |           
|                                     | Accounts receivable from affiliates                                                                                                                                            |                            |                                            | 13,196      |           |            |              | 42,183      |           
|                                     | Stock subscription receivable                                                                                                                                                  |                            |                                            |            |           |            |              | 207,440     |           
|                                     | Prepaid expenses and other current assets                                                                                                                                      |                            |                                            | 402,595     |           |            |              | 421,400     |           
|                                     |                                                                                                                                                                                |                            |                                            |             |           |            |              |            
|                                     |                                                                                                                                                                                | Total current assets       |                                            |             | 7,867,446 |            |              |             | 15,687,274 |           
|                                     |                                                                                                                                                                                |                            |                                            |             |           |            |              |            
|Property and equipment:              |                                                                                                                                                                                |                            |                                            |             |           |            |              |            
|                                     | Leasehold improvements                                                                                                                                                         |                            |                                            | 1,982,942   |           |            |              | 1,742,453   |           
|                                     | Laboratory equipment                                                                                                                                                           |                            |                                            | 1,646,314   |           |            |              | 1,480,575   |           
|                                     | Office furniture and other equipment                                                                                                                                           |                            |                                            | 601,338     |           |            |              | 433,554     |           
|                                     |                                                                                                                                                                                |                            |                                            |             |           |            |              |            
|                                     |                                                                                                                                                                                |                            | 4,230,594                                  |             |           |            | 3,656,582    |            
|                                     | Less accumulated depreciation and amortization                                                                                                                                 |                            |                                            | 1,176,602   |           |            |              | 871,561     |           
|                                     |                                                                                                                                                                                |                            |                                            |             |           |            |              |            
|                                     | Property and equipment, net                                                                                                                                                    |                            |                                            | 3,053,992   |           |            |              | 2,785,021   |           
|Restricted cash                      |                                                                                                                                                                                |                            | 1,107,944                                  |             |           |            | 1,003,968    |            
|                                     |                                                                                                                                                                                |                            |                                            |             |           |            |              |            
|                                     |                                                                                                                                                                                |                            | Total assets                               |             | $         | 12,029,382 |              |             | $          | 19,476,263 | 
|                                     |                                                                                                                                                                                |                            |                                            |             |           |            |              |            
|Liabilities And Stockholders Equity |                                                                                                                                                                                |                            |                                            |             |           |            |              |            
|Current liabilities:                 |                                                                                                                                                                                |                            |                                            |             |           |            |              |            
|                                     | Current portion of capital lease obligations                                                                                                                                   |                            | $                                          | 75,352      |           |            | $            | 65,464      |           
|                                     | Accounts payable                                                                                                                                                               |                            |                                            | 720,924     |           |            |              | 1,341,484   |           
|                                     | Accrued expenses                                                                                                                                                               |                            |                                            | 1,102,694   |           |            |              | 778,612     |           
|                                     |                                                                                                                                                                                |                            |                                            |             |           |            |              |            
|                                     |                                                                                                                                                                                | Total current liabilities  |                                            |             | 1,898,970 |            |              |             | 2,185,560  |           
|Long-term liabilities:               |                                                                                                                                                                                |                            |                                            |             |           |            |              |            
|                                     | Capital lease obligations, net of current portion                                                                                                                              |                            |                                            | 138,644     |           |            |              | 123,212     |           
|                                     | Deferred rent                                                                                                                                                                  |                            |                                            | 306,149     |           |            |              | 232,791     |           
|                                     |                                                                                                                                                                                |                            |                                            |             |           |            |              |            
|                                     |                                                                                                                                                                                | Total liabilities          |                                            |             | 2,343,763 |            |              |             | 2,541,563  |           
|                                     |                                                                                                                                                                                |                            |                                            |             |           |            |              |            
|Stockholders equity:                |                                                                                                                                                                                |                            |                                            |             |           |            |              |            
|                                     | Common stock, $0.001 par value; 125,000,000
shares authorized and 16,987,514 and 16,868,754
shares issued and outstanding at June 30, 2002
and December 31, 2001, respectively |                            |                                            | 16,988      |           |            |              | 16,869      |           
|                                     | Additional paid-in capital                                                                                                                                                     |                            |                                            | 64,187,720  |           |            |              | 63,622,215  |           
|                                     | Deferred compensation                                                                                                                                                          |                            |                                            | (1,256,372  | )         |            |              | (1,016,380  | )         
|                                     | Deficit accumulated during the development stage                                                                                                                               |                            |                                            | (53,262,717 | )         |            |              | (45,688,004 | )         
|                                     |                                                                                                                                                                                |                            |                                            |             |           |            |              |            
|                                     |                                                                                                                                                                                | Total stockholders equity |                                            |             | 9,685,619 |            |              |             | 16,934,700 |           
|                                     |                                                                                                                                                                                |                            |                                            |             |           |            |              |            
|                                     |                                                                                                                                                                                |                            | Total liabilities and stockholders equity |             | $         | 12,029,382 |              |             | $          | 19,476,263 | 
|                                     |                                                                                                                                                                                |                            |                                            |             |           |            |              |            

See accompanying notes to condensed consolidated financial statements.

3



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##### Table of Contents






NORTHWEST BIOTHERAPEUTICS, INC.
(A Development Stage Company)
AND SUBSIDIARY

Condensed Consolidated Statements Of Operations
(unaudited)

|                                                                           |                                                        |                          |            |                    |            |                  |            |                |            |      |            |               |            |   |            |           |            |   |             |            |             |  
|-------------------------------------------------------------------------- | ------------------------------------------------------ | ------------------------ | ---------- | ------------------ | ---------- | ---------------- | ---------- | -------------- | ---------- | ---- | ---------- | ------------- | ---------- | - | ---------- | --------- | ---------- | - | ----------- | ---------- | ----------- | -
|                                                                           |                                                        |                          |            | Three Months Ended |            | Six Months Ended |            | Period from   
|                                                                           |                                                        |                          |            | June 30,           |            | June 30,         |            | March 18, 1996
|                                                                           |                                                        |                          |            |                    |            |                  |            | (inception) to
|                                                                           |                                                        |                          |            | 2002               |            | 2001             |            | 2002           |            | 2001 |            | June 30, 2002
|                                                                           |                                                        |                          |            |                    |            |                  |            |                |            |      |            |              
|Revenues:                                                                  |                                                        |                          |            |                    |            |                  |            |                |            |      |            |               |            |   |            |           |            |   |             |           
|                                                                           | Research material sales                                |                          | $          | 6,177              |            |                  | $          | 16,345         |            |      | $          | 9,266         |            |   | $          | 60,406    |            |   | $           | 336,236    |            
|                                                                           | Contract research and development
from related parties |                          |            |                   |            |                  |            |               |            |      |            |              |            |   |            |          |            |   |             | 1,127,638  |            
|                                                                           | Research grants and other                              |                          |            |                   |            |                  |            |               |            |      |            |              |            |   |            |          |            |   |             | 132,090    |            
|                                                                           |                                                        |                          |            |                    |            |                  |            |                |            |      |            |               |            |   |            |           |            |   |             |           
|                                                                           |                                                        | Total revenues           |            |                    | 6,177      |                  |            |                | 16,345     |      |            |               | 9,266      |   |            |           | 60,406     |   |             |            | 1,595,964   |  
|                                                                           |                                                        |                          |            |                    |            |                  |            |                |            |      |            |               |            |   |            |           |            |   |             |           
|Operating expenses:                                                        |                                                        |                          |            |                    |            |                  |            |                |            |      |            |               |            |   |            |           |            |   |             |           
|                                                                           | Cost of research material sales                        |                          |            | 4,800              |            |                  |            | 13,312         |            |      |            | 7,500         |            |   |            | 40,187    |            |   |             | 251,900    |            
|                                                                           | Research and development                               |                          |            | 2,243,181          |            |                  |            | 1,341,622      |            |      |            | 3,595,662     |            |   |            | 2,326,609 |            |   |             | 19,989,762 |            
|                                                                           | General and administrative                             |                          |            | 2,078,749          |            |                  |            | 1,211,538      |            |      |            | 3,764,587     |            |   |            | 2,173,326 |            |   |             | 18,086,298 |            
|                                                                           | Depreciation and amortization                          |                          |            | 162,455            |            |                  |            | 117,107        |            |      |            | 305,041       |            |   |            | 229,886   |            |   |             | 1,575,509  |            
|                                                                           |                                                        |                          |            |                    |            |                  |            |                |            |      |            |               |            |   |            |           |            |   |             |           
|                                                                           |                                                        | Total operating expenses |            |                    | 4,489,185  |                  |            |                | 2,683,579  |      |            |               | 7,672,790  |   |            |           | 4,770,008  |   |             |            | 39,903,469  |  
|                                                                           |                                                        |                          |            |                    |            |                  |            |                |            |      |            |               |            |   |            |           |            |   |             |           
|                                                                           |                                                        | Loss from operations     |            |                    | (4,483,008 | )                |            |                | (2,667,234 | )    |            |               | (7,663,524 | ) |            |           | (4,709,602 | ) |             |            | (38,307,505 | )
|                                                                           |                                                        |                          |            |                    |            |                  |            |                |            |      |            |               |            |   |            |           |            |   |             |           
|Other income (expense):                                                    |                                                        |                          |            |                    |            |                  |            |                |            |      |            |               |            |   |            |           |            |   |             |           
|                                                                           | Interest expense                                       |                          |            | (10,170            | )          |                  |            | (164,637       | )          |      |            | (22,075       | )          |   |            | (300,905  | )          |   |             | (7,766,619 | )          
|                                                                           | Interest income                                        |                          |            | 46,309             |            |                  |            | 63,045         |            |      |            | 110,886       |            |   |            | 79,815    |            |   |             | 659,270    |            
|                                                                           |                                                        |                          |            |                    |            |                  |            |                |            |      |            |               |            |   |            |           |            |   |             |           
|Net loss                                                                   |                                                        |                          | (4,446,869 | )                  |            |                  | (2,768,826 | )              |            |      | (7,574,713 | )             |            |   | (4,930,692 | )         |            |   | (45,414,854 | )         
|Accretion of Series A preferred stock
mandatory redemption obligation      |                                                        |                          |           |                    |            |                  | (109,707   | )              |            |      |           |               |            |   | (219,226   | )         |            |   | (1,872,094  | )         
|Series A preferred stock redemption fee                                    |                                                        |                          |           |                    |            |                  |           |                |            |      |           |               |            |   |           |           |            |   | (1,700,000  | )         
|Beneficial conversion feature of                                           |                                                        |                          |            |                    |            |                  |            |                |            |      |            |               |            |   |            |           |            |   |             |           
|Series D preferred stock                                                   |                                                        |                          |           |                    |            |                  | (4,273,566 | )              |            |      |           |               |            |   | (4,273,566 | )         |            |   | (4,273,566  | )         
|                                                                           |                                                        |                          |            |                    |            |                  |            |                |            |      |            |               |            |   |            |           |            |   |             |           
|Net loss applicable to common
stockholders                                 |                                                        | $                        | (4,446,869 | )                  |            | $                | (7,152,099 | )              |            | $    | (7,574,713 | )             |            | $ | (9,423,484 | )         |            | $ | (53,260,514 | )         
|                                                                           |                                                        |                          |            |                    |            |                  |            |                |            |      |            |               |            |   |            |           |            |   |             |           
|Net loss per share applicable to
common stockholders  basic and
diluted   |                                                        | $                        | (0.26      | )                  |            | $                | (3.70      | )              |            | $    | (0.45      | )             |            | $ | (4.87      | )         |            |   |             |           
|                                                                           |                                                        |                          |            |                    |            |                  |            |                |            |      |            |               |            |   |            |           |            |   |             |           
|Weighted average shares used in
computing basic and diluted loss per
share |                                                        |                          | 16,885,414 |                    |            |                  | 1,935,085  |                |            |      | 16,882,397 |               |            |   | 1,934,684  |           |            |   |             |           
|                                                                           |                                                        |                          |            |                    |            |                  |            |                |            |      |            |               |            |   |            |           |            |   |             |           

See accompanying notes to condensed consolidated financial statements.

4



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##### Table of Contents






NORTHWEST BIOTHERAPEUTICS, INC.
(A Development Stage Company)
AND SUBSIDIARY

Condensed Consolidated Statements Of Cash Flows
(unaudited)

|                                                                                            |                                                                                             |   |                  |          |                |   |               |            |   |   |             |            |  
|------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------- | - | ---------------- | -------- | -------------- | - | ------------- | ---------- | - | - | ----------- | ---------- | -
|                                                                                            |                                                                                             |   |                  |          |                |   |               |            |   |   | Period from
|                                                                                            |                                                                                             |   | Six Months Ended |          | March 18, 1996
|                                                                                            |                                                                                             |   | June 30,         |          | (inception) to
|                                                                                            |                                                                                             |   | 2002             |          | 2001           |   | June 30, 2002
|                                                                                            |                                                                                             |   |                  |          |                |   |              
|Cash flows from operating activities:                                                       |                                                                                             |   |                  |          |                |   |               |            |   |   |             |           
|Net loss                                                                                    |                                                                                             | $ | (7,574,713       | )        |                | $ | (4,930,692    | )          |   | $ | (45,414,854 | )         
|Adjustments to reconcile net loss to net cash used by operating
activities:                 |                                                                                             |   |                  |          |                |   |               |            |   |   |             |           
|                                                                                            | Depreciation and amortization                                                               |   |                  | 305,041  |                |   |               | 229,886    |   |   |             | 1,575,509  |  
|                                                                                            | Amortization of deferred financing costs                                                    |   |                  |         |                |   |               |           |   |   |             | 319,799    |  
|                                                                                            | Amortization of debt discount                                                               |   |                  |         |                |   |               | 58,013     |   |   |             | 5,748,823  |  
|                                                                                            | Accrued interest converted to preferred stock                                               |   |                  |         |                |   |               |           |   |   |             | 260,378    |  
|                                                                                            | Stock-based compensation costs                                                              |   |                  | 316,866  |                |   |               | 156,910    |   |   |             | 675,847    |  
|                                                                                            | Loss on retirement of equipment                                                             |   |                  |         |                |   |               |           |   |   |             | 86,325     |  
|Changes in operating assets and liabilities:                                                |                                                                                             |   |                  |          |                |   |               |            |   |   |             |           
|                                                                                            | Accounts receivable                                                                         |   |                  | 54,870   |                |   |               | 58,410     |   |   |             | (37,438    | )
|                                                                                            | Prepaid expenses and other current assets                                                   |   |                  | 18,805   |                |   |               | (54,156    | ) |   |             | (355,830   | )
|                                                                                            | Accounts payable and accrued expenses                                                       |   |                  | (296,478 | )              |   |               | 341,198    |   |   |             | 1,823,303  |  
|                                                                                            | Accounts payable to Northwest Hospital                                                      |   |                  |         |                |   |               | (281,661   | ) |   |             |           |  
|                                                                                            | Deferred rent                                                                               |   |                  | 73,358   |                |   |               | 91,943     |   |   |             | 306,149    |  
|                                                                                            |                                                                                             |   |                  |          |                |   |               |            |   |   |             |           
|Net cash used by operating activities                                                       |                                                                                             |   | (7,102,251       | )        |                |   | (4,330,149    | )          |   |   | (35,011,989 | )         
|                                                                                            |                                                                                             |   |                  |          |                |   |               |            |   |   |             |           
|Cash flows from investing activities:                                                       |                                                                                             |   |                  |          |                |   |               |            |   |   |             |           
|                                                                                            | Purchases of property and equipment, net                                                    |   |                  | (515,141 | )              |   |               | (107,536   | ) |   |             | (4,371,616 | )
|                                                                                            | Transfer of restricted cash                                                                 |   |                  | (103,976 | )              |   |               |           |   |   |             | (1,107,944 | )
|                                                                                            |                                                                                             |   |                  |          |                |   |               |            |   |   |             |           
|Net cash used in investing activities                                                       |                                                                                             |   | (619,117         | )        |                |   | (107,536      | )          |   |   | (5,479,560  | )         
|                                                                                            |                                                                                             |   |                  |          |                |   |               |            |   |   |             |           
|Cash flows from financing activities:                                                       |                                                                                             |   |                  |          |                |   |               |            |   |   |             |           
|                                                                                            | Proceeds from issuance of note payable to stockholder                                       |   |                  |         |                |   |               | (862,232   | ) |   |             | 1,650,000  |  
|                                                                                            | Repayment of note payable to stockholder                                                    |   |                  |         |                |   |               |           |   |   |             | (1,650,000 | )
|                                                                                            | Proceeds from issuance of convertible promissory notes and                                  |   |                  |          |                |   |               |            |   |   |             |            |  
|                                                                                            | warrants, net of issuance costs                                                             |   |                  |         |                |   |               |           |   |   |             | 5,064,100  |  
|                                                                                            | Borrowings under line of credit with Northwest Hospital                                     |   |                  |         |                |   |               |           |   |   |             | 2,834,262  |  
|                                                                                            | Repayment of line of credit with Northwest Hospital                                         |   |                  |         |                |   |               |           |   |   |             | (2,834,262 | )
|                                                                                            | Payments on capital lease obligations                                                       |   |                  | (33,551  | )              |   |               | (28,275    | ) |   |             | (130,214   | )
|                                                                                            | Proceeds from issuance of preferred stock, net                                              |   |                  |         |                |   |               | 12,648,433 |   |   |             | 27,431,603 |  
|                                                                                            | Proceeds from exercise of stock options and warrants                                        |   |                  | 216,206  |                |   |               |           |   |   |             | 417,840    |  
|                                                                                            | Proceeds from issuances of common stock, net                                                |   |                  |         |                |   |               | 582        |   |   |             | 17,155,432 |  
|                                                                                            | Series A preferred stock redemption fee                                                     |   |                  |         |                |   |               |           |   |   |             | (1,700,000 | )
|                                                                                            | Deferred financing costs                                                                    |   |                  |         |                |   |               |           |   |   |             | (319,799   | )
|                                                                                            |                                                                                             |   |                  |          |                |   |               |            |   |   |             |           
|Net cash provided by financing activities                                                   |                                                                                             |   | 182,655          |          |                |   | 11,758,508    |            |   |   | 47,918,962  |           
|                                                                                            |                                                                                             |   |                  |          |                |   |               |            |   |   |             |           
|Net increase (decrease) in cash and cash equivalents                                        |                                                                                             |   | (7,538,713       | )        |                |   | 7,320,823     |            |   |   | 7,427,413   |           
|Cash and cash equivalents at beginning of period                                            |                                                                                             |   | 14,966,126       |          |                |   | 410,756       |            |   |   |            |           
|                                                                                            |                                                                                             |   |                  |          |                |   |               |            |   |   |             |           
|Cash and cash equivalents at end of period                                                  |                                                                                             | $ | 7,427,413        |          |                | $ | 7,731,579     |            |   | $ | 7,427,413   |           
|                                                                                            |                                                                                             |   |                  |          |                |   |               |            |   |   |             |           
|Supplemental disclosure of cash flow information  cash paid during
the period for interest |                                                                                             | $ | 22,075           |          |                | $ | 185,916       |            |   | $ | 1,320,084   |           
|                                                                                            |                                                                                             |   |                  |          |                |   |               |            |   |   |             |           
|Supplemental schedule of noncash financing and investing activities:                        |                                                                                             |   |                  |          |                |   |               |            |   |   |             |           
|                                                                                            | Equipment acquired through capital leases                                                   |   | $                | 58,871   |                |   | $             | 89,154     |   |   | $           | 344,210    |  
|                                                                                            | Accretion of Series A preferred stock mandatory redemption
obligation                       |   |                  |         |                |   |               | 219,226    |   |   |             | 1,872,094  |  
|                                                                                            | Beneficial conversion feature of convertible promissory notes                               |   |                  |         |                |   |               |           |   |   |             | 1,025,575  |  
|                                                                                            | Conversion of convertible promissory notes and accrued interest
to Series D preferred stock |   |                  |         |                |   |               |           |   |   |             | 5,324,478  |  
|                                                                                            | Issuance of Series C preferred stock warrants in connection with
lease agreement            |   |                  |         |                |   |               |           |   |   |             | 41,130     |  
|                                                                                            | Issuance of common stock for license rights                                                 |   | $                |         |                |   | $             |           |   |   | $           | 4,250      |  
|                                                                                            |                                                                                             |   |                  |          |                |   |               |            |   |   |             |           

See accompanying notes to condensed consolidated financial statements.

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Northwest Biotherapeutics, Inc.
(A Development Stage Company)
And Subsidiary

Notes To Condensed Consolidated Financial Statements
(unaudited)

1. Basis Of Presentation

The accompanying unaudited condensed consolidated financial statements of
Northwest Biotherapeutics, Inc. and subsidiary (the Company) have been
prepared in accordance with accounting principles generally accepted in the
United States of America for interim financial information and with the
instructions for Form 10-Q and Article 10 of Regulation S-X and reflect all
adjustments consisting of normal recurring adjustments which, in the opinion of
management, are necessary for a fair presentation of the results for the
periods shown. Accordingly, they do not include all of the information and
footnotes required by accounting principles generally accepted in the United
States of America for complete financial statements. The results of operations
for such periods are not necessarily indicative of the results expected for the
full fiscal year or any future period. These condensed consolidated financial
statements should be read in conjunction with the audited consolidated
financial statements and related notes included in the Companys 2001 Annual
Report on Form 10-K as filed with the Securities and Exchange Commission on
April 1, 2002.

The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and liabilities
at the date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ from
those estimates.

2. 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 and six months ended June
30, 2002, 99,000 issued and outstanding restricted shares of common stock that
are subject to repurchase. Options to purchase 1,503,698 shares of common
stock and warrants to purchase 568,525 shares of common and preferred stock
were excluded from the calculation of diluted net loss per share for the three
and six months ended June 30, 2002 as such securities were antidilutive.
Options to purchase 1,120,148 shares of common stock and warrants to purchase
2,658,449 shares of common and preferred stock were excluded from the
calculation of diluted net loss per share for the three and six months ended
June 30, 2001 as such securities were antidilutive.

3. Stockholder Rights Agreement

On March 6, 2002, the Company adopted a Stockholder Rights Agreement,
under which each common stockholder of record at the close of business on March
4, 2002 will receive a dividend of one right per share of common stock held.
Each right entitles the holder to purchase one share of common stock from the
Company at a price equal to $19.25 per share, subject to certain antidilution
provisions. The rights become exercisable only in the event that a third party
acquires beneficial ownership of, or announces a tender or exchange offer for,
at least 15% of the then outstanding shares of the Companys common stock and
such acquisition or offer is determined by the Board of Directors to not be in
the best interests of the stockholders. If the acquisition or offer were
determined by the Board of Directors to be in the best interests of the
stockholders, the rights may be redeemed by the Company for $0.0001 per right.
The rights will expire on February 25, 2012, unless earlier redeemed, exchanged
or terminated in accordance with the rights agreement.

4. Operations and Financing

The Companys financial statements have been prepared on a going concern
basis. The consolidated financial statements do not include any adjustments
that might be necessary if the Company were unable to continue as a going
concern. If the Company were required to liquidate certain assets, the
carrying value of such assets may not be recoverable. The Company intends to
manage its current cash balances so that they will be sufficient to meet its
operating cash requirements and to fund budgeted capital expenditures
through at least December 31, 2002. The Companys actual cash needs will depend on
many unpredictable factors, including the timeframe for the successful
development of an effective product, if ever, and the commercialization of such
product, both of which include the regulatory approval process. The regulatory
approval process is uncertain, includes extensive preclinical

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testing and clinical trials of each product candidate in order to establish its
safety and effectiveness, can take many years and requires the expenditure of
substantial resources. As a result of these factors, the Company cannot
accurately predict the amount or timing of future cash needs.

The Company will need to raise substantial funds to conduct the research
and development activities, preclinical studies and clinical trials necessary
to bring its product candidates to market. The Company intends to seek
additional funding through public or private equity financings, strategic
alliances with corporate collaborators or other sources. However, there is no
assurance that such efforts will be successful and that adequate funds will be
available to the Company.

In order to raise additional funds, in July 2002 the Company retained C.E.
Unterberg, Towbin, an investment bank, to assist it in searching out strategic
alternatives, including the sale or merger of the Company or any of its
development programs. Additionally, in an effort to reduce cash
expenditures, on August 8, 2002, the Company terminated the employment of 18
members of its research and administration staff. Severance and other related
costs of that downsizing are estimated to be approximately $100,000.

5. Collaboration Agreement

Under the terms of
the Companys Collaboration
Agreement with Medarex, Inc., development of HuRx-Prostate has
advanced to the stage where the costs incurred on development of this
product candidate are shared equally by Medarex and the Company. For
the three months ended June 30, 2002, the Company accrued
approximately $400,000 representing its share of the costs incurred
under the cost sharing portion of the agreement.

6. New Accounting Pronouncements

In July 2002, the FASB issued Statement No. 146, Accounting for Costs
Associated with Exit or Disposal Activities, which addresses financial
accounting and reporting for costs associated with exit or disposal activities.
Statement No. 146 nullifies EITF Issue No. 94-3, Liability Recognition for
Certain Employee Termination Benefits and Other Costs to Exit an Activity
(including Certain Costs Incurred in a Restructuring). The principal
difference between Statement No. 146 and Issue No. 94-3 relates to the
recognition of a liability for a cost associated with an exit or disposal
activity. Statement No. 146 requires that a liability be recognized for those
costs only when the liability is incurred, that is, when it meets the
definition of a liability in the FASBs conceptual framework. In contrast,
under Issue No. 94-3, a company recognized a liability for an exit cost when it
committed to an exit plan. Statement No. 146 also establishes fair value as
the objective for initial measurement of liabilities related to exit or
disposal activities. The Statement is effective for exit or disposal
activities that are initiated after December 31, 2002 although earlier
application is encouraged. The Company intends to adopt SFAS 146 on January 1,
2003.

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Item 2. Managements Discussion And Analysis Of Financial Condition And Results
Of Operations.

FORWARD LOOKING INFORMATION

The following discussion and analysis of our financial condition and
results of operations should be read in conjunction with our condensed,
consolidated financial statements and the notes to those financial statements
included with this report. In addition to historical information, this report
contains forward-looking statements that are within the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995, and 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 their absence does not mean that such statement
is not forward-looking. Many factors could affect our actual results,
including those factors described under Factors That May Affect Results of
Operations and Financial Condition at the end of this Item 2. These factors,
among others, could cause results to differ materially from those presently
anticipated by us. Readers are cautioned not to place undue reliance on these
forward-looking statements.

Overview

We are a biotechnology company focused on discovering, developing and
commercializing innovative immunotherapy products that safely generate and
enhance effective immune responses to treat cancer. Since formation in 1996,
our activities have primarily been devoted to research and development of our
dendritic cell-based immunotherapy platform and our monoclonal antibody-based
cancer therapies. We have a limited history of operations. Since inception,
we have incurred significant losses and, as of June 30, 2002, had a deficit
accumulated during the development stage of approximately $53.3 million. We
anticipate incurring additional losses, which will increase in the foreseeable
future, as we progress through current and anticipated clinical trials and
expand research and development activities.

None of our primary product candidates have received regulatory approval
for commercial sale and no such approval may be received unless we successfully
complete clinical trials that demonstrate to the satisfaction of the U.S. Food
and Drug Administration that our candidates are safe and effective for the uses
we propose. 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. Ultimately, we
believe our revenue will consist mainly of pharmaceutical product sales, and
licensing and royalties from marketing and distribution partnerships and
technology transfers.

Critical Accounting Policies and Estimates

We currently believe that none of our accounting policies or estimates are
critical. However, as the nature and scope of our business operations mature,
certain of our accounting policies and estimates may become critical. You
should understand that generally accepted accounting principles 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 the periods covered by our financial statements. The actual amounts of
these items could differ materially from those estimates. For example, we
estimate the fair value of stock options and warrants issued to nonemployees
using an option valuation method that considers market indicators.

Results Of Operations

Three Months Ended June 30, 2002 and 2001

Total Revenues. Revenues decreased 62% from $16,345 for the three months
ended June 30, 2001 to $6,177 for the three months ended June 30, 2002. Our
revenues from research material sales will fluctuate depending upon the timing
of purchases by BioWhittaker, Inc., our sole customer.

Cost of Research
Material Sales. Cost of research material sales
decreased 64% from $13,312 for the three months ended June 30, 2001 to $4,800
for the three months ended June 30, 2002. This decrease was due to the reduced
sales activity.

Research and
Development Expense. Research and development expense
increased 67% from $1,341,622 for the three months ended June 30, 2001 to
$2,243,181 for the three months ended June 30, 2002. This increase was
primarily due to increased costs associated with site initiation expenditures
related to our Phase III clinical trials, research and development
expenditures relating to HuRx-Prostate, and our 50% share of certain
research and development costs initially incurred by Medarex under
our collaboration agreement with Medarex.

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General and
Administrative Expense.General and administrative expense
increased 72% from $1,211,538 for the three months ended June 30, 2001 to
$2,078,749 for the three months ended June 30, 2002. The increase in costs was
primarily due to an increase in the number of employees, increased costs
associated with our directors and officers liability insurance and costs
attributable to our becoming a public company, which occurred in December 2001.

Depreciation and Amortization.Depreciation and amortization increased
39% from $117,107 for the three months ended June 30, 2001 to
$162,455 for the
three months ended June 30, 2002. This increase was primarily due to the
purchase of laboratory equipment during 2001 to support expanding clinical
activities.

Total Other Income (Expense), Net.Other income (expense), net, consists
primarily of interest expense and interest income. Interest expense decreased
94% from $164,637 for the three months ended June 30, 2001 to $10,170 for the
three months ended June 30, 2002. This decrease was primarily due to the
repayment and termination of our line of credit from Northwest Hospital which
occurred in December 2001. Interest income decreased 27% from $63,045 for the
three months ended June 30, 2001 compared to $46,309 for the three months ended
June 30, 2002. This decrease was due to the decline in market interest rates.

Six Months Ended June 30, 2002 and 2001

Total Revenues.Revenues decreased 85% from $60,406 for the six months
ended June 30, 2001 to $9,266 for the six months ended June 30, 2002. Our
revenues from research material sales will fluctuate depending upon the timing
of purchases by BioWhittaker, Inc., our sole customer.

Cost of Research Material Sales.Cost of research material sales
decreased 81% from $40,187 for the six months ended June 30, 2001 to $7,500 for
the six months ended June 30, 2002. This decrease was due to the reduced sales
activity.

Research and Development Expense.Research and development expense
increased 55% from $2,326,609 for the six months ended June 30, 2001 to
$3,595,662 for the six months ended June 30, 2002. This increase was primarily
due to increased costs associated with site initiation expenditures related to
our Phase III clinical trials, research and development expenditures
relating to HuRx-Prostate, and our 50% share of certain research and
development costs initially incurred by Medarex under our
collaboration agreement with Medarex.

General and Administrative Expense.General and administrative expense
increased 73% from $2,173,326 for the six months ended June 30, 2001 to
$3,764,587 for the six months ended June 30, 2002. The increase in costs was
primarily due to an increase in the number of employees, increased costs
associated with our directors and officers liability insurance and costs
attributable to our becoming a public company, which occurred in December 2001.

Depreciation and Amortization.Depreciation and amortization increased
33% from $229,886 for the six months ended June 30, 2001 to
$305,041 for the
six months ended June 30, 2002. This increase was primarily due to the
purchase of laboratory equipment during 2001 to support expanding clinical
activities.

Total Other Income (Expense), Net.Other income (expense), net, consists
primarily of interest expense and interest income. Interest expense decreased
93% from $300,905 for the six months ended June 30, 2001 to $22,075 for the six
months ended June 30, 2002. This decrease was primarily due to the repayment
and termination of our line of credit from Northwest Hospital which occurred in
December 2001. Interest income increased 39% from $79,815 for the six months
ended June 30, 2001 compared to $110,886 for the six months ended June 30,
2002. This increase was due to the investment of the net proceeds from our
initial public offering which occurred in December 2001.

Liquidity and Capital Resources

From inception through June 30, 2002, we have financed our operations
primarily through the public and private sale of securities, cash generated
from the sale of biomedical research products, equipment leases and borrowings
from stockholders. At June 30, 2002, we had cash and cash equivalents of $7.4
million compared to $15.0 million at December 31, 2001.

We used $7.1 million in cash for operating activities during the six
months ended June 30, 2002, compared to $4.3 million during the six months
ended June 30, 2001. The change in cash used in operating activities from 2001
to 2002 was primarily due to an increased net loss resulting from expanded
operations including expenditures related to three clinical trials in 2002
compared to a single trial in 2001. We used $619,117 in cash for investing
activities during the six months ended June 30, 2002 compared to

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$107,536 during the six months ended June 30, 2001. The change in cash used in
investing activities from 2001 to 2002 was primarily due to the purchase of
property and equipment necessary for the expansion of Company operations. For
the six months ended June 30, 2002, we obtained $182,655 in cash
from financing
activities compared to $11.8 million for the six months ended June
30, 2001. The primary reason for this difference was the $12.6 million of
proceeds from the issuance of preferred stock during the second quarter of
2001.

We would expect to incur substantial
costs if we were to continue to
expand our clinical trials, research and pre-clinical development initiatives.
We expect that our existing cash and cash equivalents will be sufficient to
fund operations through at least December 31, 2002. We need to raise additional
capital by issuing additional equity or debt securities, obtaining credit
arrangements or through strategic partnerships and licenses. Additional
financing may not be available on terms acceptable to us or at all. The
issuance of additional equity or convertible debt securities could result in
additional dilution to our stockholders. Our future capital needs will depend
on many unpredictable factors including the size, duration and number of
clinical trials, the progress associated with pre-clinical trials, the time
frame for successful development of an effective product, if ever, and the
commercialization of such product all of which includes the regulatory approval
process. The regulatory process is uncertain, includes extensive pre-clinical
testing and clinical trials of each product candidate in order to establish its
safety and effectiveness, can take many years and requires the expenditure of
substantial resources. Additional costs will be incurred for preparing,
filing, maintaining and enforcing patent claims and other intellectual property
rights, modifications in existing or the establishment of new strategic
partnerships and licensing arrangements, and clinical trials manufacturing
costs. As a result of these factors, we cannot predict accurately the amount
or timing of future cash needs.

In order to raise additional funds, in July 2002 we retained C.E.
Unterberg, Towbin, an investment bank, to assist us in searching out strategic
alternatives, including the sale or merger of the company or any of our
development programs. Additionally, in an effort to extend our operating
horizon, we eliminated 18 research and administrative staff on August 8, 2002.
Severance and other related costs of that downsizing are estimated to be
approximately $100,000.

We do not have committed external sources of funding and we may be unable
to obtain additional funds on acceptable terms, if at all. If adequate funds
are not available, we may be required to, among other things:



| |  |  | delay, reduce the scope of or eliminate one or more of our programs;                                                                                                                                 
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | obtain funds through arrangements with strategic partners or others that may require us to relinquish rights to technologies or
product candidates that we would otherwise seek to develop ourselves;
|
| |  |  | license rights to technologies or product candidates on terms that are less favorable to us than might otherwise be available; or                                                                    
|
| |  |  | dispose of assets and no assurance can be given as to what value will be realized upon their liquidation.                                                                                            

FACTORS THAT MAY AFFECT RESULTS OF OPERATIONS AND FINANCIAL CONDITION

This section briefly discusses certain risks that should be considered by
stockholders and prospective investors in Northwest Biotherapeutics, Inc. You
should carefully consider the risks described below, together with all other
information included in this quarterly report on Form 10-Q and the information
incorporated into this report by reference. If any of the following risks
actually occur, our business, financial condition or operating results could be
materially harmed. In such case, the trading price of our common stock could
decline.

We need to raise additional capital that may not be available, which would
adversely affect our operations.

None of our products are available for commercial sale and we are not
generating sufficient cash to fund our operations. We intend to manage our
existing cash and cash equivalents so that they will be sufficient to meet operating cash
requirements through at least December 31, 2002. We may seek
additional funds from public and private stock offerings, strategic
partnerships and licenses, borrowing under lease lines of credit or other
sources. We have no commitments for additional financing and we may experience
difficulty in raising additional capital on terms acceptable to us, or at all.
Any additional equity financing would likely be dilutive to stockholders, and
debt financing, if available, may include restrictive covenants. If we cannot
raise more money, we will have to reduce our capital expenditures, scale back
our development of product candidates, further reduce our workforce or license
our product candidates to third parties for commercialization that we would
otherwise seek to commercialize ourselves.

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We are in the early stage of development and have a history of net losses.

We are a development stage company and none of our primary product
candidates have received regulatory approval for commercial sale. Therefore,
we have a limited operating history upon which an investor may evaluate our
operations and future prospects. We have incurred net losses since inception,
including net losses applicable to common stockholders of approximately $17.3
million for the year ended December 31, 2001 and approximately
$7.6 million for
the six months ended June 30, 2002. As of June 30, 2002, we had a deficit
accumulated during the development stage of approximately $53.3 million. We
would need to make substantial expenditures to further develop and
commercialize our product candidates. While we have devoted and expect to
continue to devote significant resources to the research and development of new
products we may not be successful in developing products, and we may never
realize any benefits from such research and development activities. Our
ability to achieve and sustain profitability depends upon our ability to
successfully develop new and commercially viable products, which is
particularly difficult for us as our technologies and their commercial
viability are unproven. As a result of these factors, it is difficult to
evaluate our prospects, and our future success is more uncertain than if we had
a longer or more proven history of operations.

Our success partially depends on existing and future strategic partners.

The success of our business strategy partially depends upon our ability to
develop and maintain multiple strategic partnerships and to manage them
effectively. Therefore, our success depends partially upon the performance of
our strategic partners. For example, our primary current strategic partner,
Medarex, Inc., manufactures prostate specific membrane antigen which is a
critical reagent used in our Phase III trial for DCVax-Prostate. If Medarex
fails to timely manufacture prostate specific membrane antigen, our Phase III
trial would be delayed. Moreover, we cannot directly control the amount and
timing of resources that any of our existing or future strategic partners
devote to the research, development or marketing of our products. As a result,
those strategic 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 strategic partnerships.                                                 

We may have disputes with our strategic 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 strategic partnerships in the future.
However, we may be unable to successfully negotiate any additional strategic
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, the
University of Iowa and Northwest Hospital, 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.

Failure to obtain regulatory approval for one or more of our product candidates
could significantly harm our business.

All of our product candidates are in early stages of development. None of
our product candidates will be commercially available prior to FDA approval
which is not expected for several years. Significant further research and
development, financial resources and personnel will be required to transition
any of our product candidates into commercially viable products and obtain

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regulatory approvals. Success in pre-clinical and early clinical trials does
not ensure that subsequent large-scale trials will be successful nor is it a
basis for predicting final results. A number of companies in the biotechnology
industry have suffered significant setbacks in advanced clinical trials, even
after promising results have been achieved in earlier trials. Failure to
obtain FDA approval for one or more of our lead product candidates would
significantly harm our business.

Our common stock has and may continue to 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 has ranged from a high of $5.92 per
share to a low of $0.82 per share between December 14, 2001, the date that our
common shares commenced trading, and July 31, 2002. The price may continue to
fluctuate substantially due to a variety of factors, including:



| |  |  | the amount of funds that we have available to pursue our business strategies;
| | - |  | -----------------------------------------------------------------------------
|
| |  |  | announcements concerning our competitors;                                    
|
| |  |  | development and introduction of new cancer therapies;                        
|
| |  |  | media reports and publications about cancer therapies;                       
|
| |  |  | 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.                                            

The market prices of the securities of biotechnology companies,
particularly companies like ours without earnings and product revenues, have
been highly volatile and are likely to remain highly volatile in the future.
In some cases this volatility has 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. 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.

Clinical trials for our product candidates are expensive and time consuming,
their outcome is uncertain and we have limited experience in managing them.

The process of obtaining and maintaining regulatory approvals for new
therapeutic products is expensive, lengthy and uncertain. It can vary
substantially, based upon the type, complexity and novelty of the product
involved. Accordingly, any of our current or future product candidates could
take a significantly longer time to gain regulatory approval than we expect or
may never gain approval, either of which could delay or terminate the potential
commercialization of our product candidates.

We have very limited experience in designing, conducting and managing
clinical trials. We rely on third parties, including our strategic partners,
to assist us in designing, managing and monitoring all of our clinical trials.
Our reliance on these third parties may result in delays in completing, or
failure to complete, these trials if the third parties fail to perform under
the terms of our agreements with them. For example, we rely solely on
Quintiles Laboratories Limited to provide us with analytical and data
management services in connection with our Phase III clinical trial for
DCVax-Prostate. We may not be able to find a sufficient alternative supplier
of these services in a reasonable time period, or on commercially reasonable
terms, if at all. If we were unable to obtain an alternative supplier of these
services, we might be forced to curtail our Phase III clinical trial for
DCVax-Prostate which would substantially harm our business.

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We may choose to, or may be required to, suspend, repeat or terminate our
clinical trials if they are not conducted in accordance with regulatory
requirements, the results are negative or inconclusive, or the trials are not
well designed.

Clinical trials must be conducted in accordance with the FDAs regulations
and guidelines and are subject to oversight by the FDA and the clinical sites
where the clinical trials are conducted. In addition, clinical trials must be
conducted with product candidates produced under the FDAs manufacturing
guidelines, and may require large numbers of test patients.

Clinical trials may be suspended by the FDA or a clinical site at any time
if the trials are not being conducted in accordance with FDA or clinical site
requirements, or if the trials expose patients to unacceptable health risks.

In addition, we, the clinical site, or the FDA might delay or halt our
clinical trials of a product candidate for various reasons, including but not
limited to the following:



| |  |  | we may be unable to produce sufficient quantities of the product candidate to complete the trials;                                                       
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | there may be insufficient patient enrollment in the clinical trials;                                                                                     
|
| |  |  | the product candidate may have significant adverse side effects;                                                                                         
|
| |  |  | the time required to determine whether the product candidate is effective may be longer than expected;                                                   
|
| |  |  | fatalities or other adverse events may arise during a clinical trial due to medical problems that may
or may not be related to clinical trial treatments;
|
| |  |  | the product candidate may not achieve the level of efficacy required by the FDA.                                                                         

We believe we are currently in compliance with all applicable regulations
relating to our product candidates, all of which are subject to governmental
regulation.

Because we are not certain that we will obtain necessary regulatory approvals
to market our products in the United States and foreign jurisdictions, we do
not know if we will be permitted to commercialize our products.

The biotechnology and biopharmaceutical industries are subject to
stringent regulation by a wide range of authorities. We may fail to obtain
regulatory approval for any product candidate we develop. We cannot market any
of our products in the United States until they have completed rigorous
pre-clinical testing and clinical trials and the FDAs extensive regulatory
approval process. Satisfaction of regulatory requirements typically takes many
years, is dependent upon the type, complexity, and novelty of the product and
requires the expenditure of substantial resources for research and development,
testing, manufacturing, quality control, labeling and promotion of drugs.
Neither the FDA nor international regulatory authorities have approved
cancer-therapy products based on our area of scientific focus for
commercialization, and we do not know whether our research and clinical
approaches to developing new cancer therapies will lead to products that the
FDA will consider safe and effective for indicated uses. We must receive FDA
approval of preliminary investigational applications before commencing clinical
trials in humans. Clinical trials are subject to oversight by clinical sites
and the FDA and:



| |  |  | must conform with the FDAs good laboratory practice regulations;
| | - |  | -----------------------------------------------------------------
|
| |  |  | must meet requirements for informed consent;                     
|
| |  |  | must meet requirements for good clinical practices;              
|
| |  |  | are subject to continuing FDA oversight; and                     
|
| |  |  | may require large numbers of test subjects.                      

Before receiving FDA approval to market a product, we must demonstrate
that the product is safe and effective for the patient population that will be
treated. If we fail to comply with applicable FDA or other regulatory
requirements, we could be subject to criminal prosecution, civil penalties,
recall or seizure of products, total or partial suspension of production or
injunction, as well as

13



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other regulatory actions against our product candidates or us. If we are
unable to obtain approval for any of our product candidates, we will not be
permitted to bring these product candidates to market.

Outside the United States, our ability to market a product will depend
upon receiving marketing approvals from the appropriate regulatory authorities.
This foreign regulatory approval process includes all of the risks associated
with FDA approval described above.

We lack sales and marketing experience and, as a result, we may experience
significant difficulties commercializing our products.

Even if we do obtain regulatory approval to market one of our product
candidates, the commercial success of such 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 product
candidates. If we develop an approved product, we will need to create a
substantial marketing staff and sales force with technical expertise and the
ability to distribute our products. As an alternative, we could seek
assistance from a pharmaceutical or biotechnology company 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.

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

We have limited manufacturing facilities and expertise to produce our
product candidates. For the duration of our currently anticipated clinical
trials and pre-development efforts, third-party manufacturers, such as Medarex,
Inc., will produce some or all of the components of our product candidates.
They will also package, label and distribute some or all of those products.
Although we believe that such third parties have adequate resources to meet our
needs, we cannot directly control the amount or timing of resources they will
devote to our product candidates.

We have never manufactured, on a commercial scale, any of our product
candidates. We may be unable to manufacture these product candidates or any
other products that we or our strategic partners develop at a reasonable cost
or in sufficient quantities to be profitable. If we cannot manufacture or
contract with manufacturers to provide a sufficient supply of our product
candidates on acceptable terms, it will delay:



| |  |  | our pre-clinical and clinical testing schedule;        
| | - |  | -------------------------------------------------------
|
| |  |  | our submission of products for regulatory approval; and
|
| |  |  | our new development programs.                          

These delays would seriously harm our business. Any other delays or
difficulties that we may have in manufacturing or contracting with
manufacturers to produce, package and distribute our products will also harm
our ability to market or sell our products.

Our product candidates may not gain market acceptance among physicians,
patients, health care payors and the medical community.

The degree of market acceptance of any approved product will depend on a
number of factors, including:



| |  |  | cost-effectiveness;                                 
| | - |  | ----------------------------------------------------
|
| |  |  | potential advantage over alternative treatments; and
|
| |  |  | marketing and distribution support.                 

In addition, government health administrative authorities, private health
insurers and other organizations are increasingly challenging both the need for
and the price of new medical products and services. Consequently, uncertainty
exists as to the reimbursement status of newly approved therapeutics. For
these and other reasons, physicians, patients, third-party payors and the

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medical community may not accept and utilize any product candidates that we
develop and, even if they do, adequate levels of reimbursement may not be
available to enable us to realize an appropriate return on our investment in
research and product development.

Even if we obtain regulatory approval of a product candidate, we will be
subject to extensive regulation, which can be costly and time consuming and may
subject us to unanticipated delays.

Even if we obtain regulatory approval of a product candidate, we will
continue to be subject to extensive governmental regulation which may be costly
and time consuming, and which may adversely impact our ability to commercialize
our product candidates. Currently, we are required to comply with FDA
manufacturing guidelines for compounds used in our product candidates in
clinical trials, and we believe that we and our third-party suppliers of our
compounds are in compliance with these guidelines. The principal regulating
authority in the United States is the FDA. Similar agencies in other countries
will regulate our products. These regulations affect product:



| |  |  | manufacturing;   
| | - |  | -----------------
|
| |  |  | labeling;        
|
| |  |  | marketing;       
|
| |  |  | sales;           
|
| |  |  | distribution; and
|
| |  |  | export or import.

Any approved product candidate will be subject to extensive governmental
regulation. For example, regulatory agencies could:



| |  |  | withdraw product approvals;                                                                                                
| | - |  | ---------------------------------------------------------------------------------------------------------------------------
|
| |  |  | limit the uses for which our product may be labeled, which would limit the uses for which our new products may be marketed;
|
| |  |  | impose burdensome labeling requirements;                                                                                   
|
| |  |  | require us to conduct additional clinical trials, thereby suspending our ability to sell any approved products; or         
|
| |  |  | require us to prepare and submit additional marketing applications.                                                        

We may be subject to any of the following penalties or compliance actions
for violating government regulations:



| |  |  | warning letters;                                             
| | - |  | -------------------------------------------------------------
|
| |  |  | fines;                                                       
|
| |  |  | injunctions;                                                 
|
| |  |  | recall or seizure of our products;                           
|
| |  |  | total or partial suspension of production;                   
|
| |  |  | government refusal to approve our marketing applications; and
|
| |  |  | criminal prosecution.                                        

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We must also comply with numerous laws, regulations and recommendations
relating to:



| |  |  | safe working conditions;                                                                                                                                          
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | laboratory and manufacturing practices;                                                                                                                           
|
| |  |  | experimental use of animals;                                                                                                                                      
|
| |  |  | protection of the environment; and                                                                                                                                
|
| |  |  | safe use and disposal of hazardous substances used in product
discovery, research, and development, including radioactive compounds
and infectious disease agents.

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

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. No cell-based therapeutic product is currently approved for
commercial sale. Additionally, several companies, such as Abgenix, Inc.,
Agensys, Inc., IDEC Pharmaceuticals Corporation and Genentech, Inc., are
actively involved in the research and development of monoclonal antibody-based
cancer therapies. Currently, at least three 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 sales 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:



| |  |  | 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 strategic 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.

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Our intellectual property rights may not provide meaningful commercial
protection for our products, 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 four issued patents (one in the United States and three in foreign
jurisdictions) and 33 patent applications pending (10 in the United States and
23 in foreign jurisdictions) which cover the use of dendritic cells in DCVax as
well as targets for either DCVax or HuRx-based therapies. The issued patents
expire at dates from 2015 to 2017. In addition, we have a world-wide exclusive
license from Cytogen to use PSMA for the development, manufacture and sale of
DCVax-Prostate. The license expires upon the expiration of the last to expire
of the underlying patents, but not prior to November 2012.

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, strategic partners and consultants. Nevertheless, employees,
strategic 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 future success will depend to a substantial degree upon our ability to
develop, manufacture, market and sell our product candidates without infringing
the proprietary rights of third parties and without breaching any licenses we
have entered into regarding our product candidates. Numerous U.S. and foreign
issued patents and pending patent applications, which are owned by third
parties, exist in the general field of immunotherapy. In particular, we are
aware of other patents issued to third parties for monoclonal antibodies that
bind to prostate-specific membrane antigen, or PSMA, and patent applications of
others that may issue with similar claims. Our ability to market a product
based on the binding of antibodies to PSMA may depend on the actual invention
date of the subject matter of the issued patent, or the scope of claimed
coverage of the pending patent applications, both of which are unknown to us.

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

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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.

If we lose a patent infringement lawsuit, we could be prevented from
selling our products 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.

Our rights to the use of technologies licensed to us by third parties are not
within our control, and without these technologies, our products and programs
may not be successful and our business could be harmed.

We rely on our license from Cytogen to use PSMA and may rely on other
licenses in the future to use various technologies that may be material to our
business. We rely upon our licensors to prevent infringement of the licensed
patents. Our rights to use these technologies and employ the inventions
claimed in the licensed patents are or may be subject to our licensors abiding
by the terms of those licenses and not terminating them.

Our license from Cytogen provides us with worldwide exclusive rights to
use PSMA for the development, manufacture and sale of DCVax-Prostate in
exchange for payments upon the achievement of certain milestones. Cytogen may
terminate our license to use PSMA if we fail to use reasonable efforts to
achieve certain milestones in the development of commercial products or
otherwise breach the agreement. We believe we are currently in compliance with
the terms of this agreement. Nevertheless, the scope of our rights under this
or other licenses may be subject to dispute of our licensors or third parties.

If we lose key management or scientific personnel or cannot recruit qualified
employees, our business could suffer.

We are highly dependent on the principal members of our management and
scientific staff, including Daniel O. Wilds, our Chairman, President and Chief
Executive Officer, and Alton L. Boynton, our Executive Vice President, Chief
Operating Officer, Chief Scientific Officer and Secretary, and other members of
senior management. Experienced biotechnology CEO candidates are few in number,
and we believe it would be very difficult and time-consuming to replace Mr.
Wilds. We are dependent upon Mr. Wilds and his position in the biotechnology
community to continue our efforts to pursue strategic partnerships and
commercialize our product candidates. Dr. Boynton is one of our founders, has
substantial experience in immunotherapy research and is a recognized leader in
that field of study. Because of Dr. Boyntons history with us, we believe that
it would be very difficult, expensive and time-consuming to replace him.

With the exception of Mr. Wilds and Dr. Boynton we do not have any key
person life insurance on individuals. Our future success will also depend in
part on the continued service of our key scientific and management personnel
and our ability to identify, hire and retain additional personnel. We
experience intense competition for qualified personnel. We may be unable to
attract and retain the personnel necessary for the development of our business.
Moreover, our work force is located in the Seattle, Washington area, where
demand for personnel with the scientific and technical skills we seek is
extremely high and is likely to remain high. Because of this competition, our
compensation costs may increase significantly.

Health care reform and other changes in the health care industry, including
changes in reimbursement policies, could adversely affect our potential
profitability.

Recent proposals to change the health care system in the United States
have included measures that would limit or eliminate payments for medical
procedures and treatments or subject the pricing of medical treatment products
to government control. In addition, as a result of the trend towards managed
health care in the United States, as well as legislative proposals to reduce
government insurance programs, third-party payors are increasingly attempting
to contain health care costs by limiting both coverage and the level of
reimbursement for new medical treatment products. Even if we are successful in
obtaining regulatory approval for any of our product candidates, our
commercialization efforts and any potential profits may be adversely affected
by these developments in the U.S. health care system.

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We are exposed to potential product liability claims, and it is uncertain that
insurance against these claims will be available to us at a reasonable rate in
the future.

Testing product candidates and marketing and selling commercial
biotechnology and biopharmaceutical products involves unavoidable risks. The
use of our product candidates in clinical trials, and the sale of products we
may develop, could result in injury to patients receiving our product
candidates or products, and may lead to claims or lawsuits against us by:



| |  |  | consumers;                                                 
| | - |  | -----------------------------------------------------------
|
| |  |  | regulatory agencies;                                       
|
| |  |  | biotechnology and biopharmaceutical companies; or          
|
| |  |  | others using or selling our product candidates or products.

We have purchased liability insurance coverage in the amount of $15
million for our current clinical trials and for the research products we may
sell. We intend to seek additional liability insurance coverage if and when we
develop products that are approved for commercialization. We may be unable to
obtain or maintain product liability insurance in the future on acceptable
terms. Even if we are able to purchase the insurance, the policy limits may be
insufficient to cover all potential claims or liabilities. Insufficient
insurance to cover any damages resulting from a claim could seriously harm our
business.

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 plans for growth, 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 executive officers and directors and entities affiliated with them, in
the aggregate, beneficially own approximately 21% of our common stock as of
June 30, 2002. This significant concentration of share ownership may adversely
affect the trading price for our common stock because investors often perceive
disadvantages in owning stock in companies with controlling stockholders.
These stockholders, acting together, will have 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 could
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.

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 provisions 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                                                                                                                                        

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| |  |  | 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.

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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.




PART II  OTHER INFORMATION




Item 2(D). Changes In Securities And Use Of Proceeds

The Registration Statement (SEC File No. 333-67350) for our initial public
offering, or IPO, was declared effective by the Securities and Exchange
Commission on December 14, 2001, covering an aggregate of 4,000,000 shares of
our common stock, and on December 19, 2001, we issued 4,000,000 shares of our
common stock at an initial public offering price of $5.00 per share.
Approximately $2.8 million of the aggregate $20,000,000 IPO proceeds was used
to pay underwriting discounts and commissions and offering expenses resulting
in net IPO proceeds of approximately $17.2 million. C.E. Unterberg, Towbin was
the managing underwriter of our IPO, and Fahnestock & Co., Inc. and Roth
Capital Partners, LLC were the co-managers. As of June 30, 2002, we had
approximately $7.4 million of these proceeds remaining which are invested in
money market accounts.




Item 6. Exhibits And Reports On Form 8-K

a) Exhibits:

|     |  |                                                        
|---- |  | -------------------------------------------------------
|3.1  |  | Sixth Amended and Restated Certificate of Incorporation
|3.2  |  | Bylaws (3.2)(1)                                        
|4.1  |  | Form of Stock Certificate (4.1)(1)                     
|99.1 |  | Certificate of Chief Executive Officer                 
|99.2 |  | Certificate of Chief Financial Officer                 



---

|(1) |  | Incorporated by reference to the exhibit shown in the preceding parentheses
filed with the Registrants Registration Statement on Form S-1 (File No.
333-67350).
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------

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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: August 14, 2002 |  |  | By:                            | /s/ Daniel O. Wilds                                                                
|                       |  |  |                                |                                                                                    
|                       |  |  |                                | Daniel O. Wilds
President and Chief Executive Officer
(principal executive officer)

|                       |  |  |     |                                                                                                                                        
|---------------------- |  |  | --- | ---------------------------------------------------------------------------------------------------------------------------------------
|Dated: August 14, 2002 |  |  | By: | /s/ Jim D. Johnston                                                                                                                    
|                       |  |  |     |                                                                                                                                        
|                       |  |  |     | Jim D. Johnston
Executive Vice President, Chief Financial Officer,
and Assistant Secretary
(principal financial and accounting officer)

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INDEX TO EXHIBITS

|        |  |                                                        
|------- |  | -------------------------------------------------------
|Exhibit |  |                                                        
|Number  |  | Description                                            
|        |  |                                                        
|3.1     |  | Sixth Amended and Restated Certificate of Incorporation
|3.2     |  | Bylaws of the Registrant (3.2)(1)                      
|4.1     |  | Specimen of Common Stock Certificate (4.1)(1)          
|99.1    |  | Certificate of Chief Executive Officer                 
|99.2    |  | Certificate of Chief Financial Officer                 



---

|(1) |  | Incorporated by reference to the exhibit shown in the preceding parentheses
filed with the Registrants Registration Statement on Form S-1 (File No.
333-67350).
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------

23