NWBO US Equity☆

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read this discussion together with the Financial Statements, related Notes and other financial information included elsewhere in this Form 10-K. The following discussion contains assumptions, estimates and other forward-looking statements that involve a number of risks and uncertainties, including those discussed under “Risk Factors,” and elsewhere in this Form 10-K. These risks could cause our actual results to differ materially from those anticipated in these forward-looking statements.

The following Management’s Discussion and Analysis provides a historical and prospective narrative on the Company’s financial condition, and results of operations for the year ended December 31, 2023 as compared to the year ended December 31, 2022. The discussion of the Company’s financial condition and results of operations for the year ended December 31, 2022 compared to the same period in 2021 is included in Part II, Item 7. Below includes Management’s Discussion and Analysis of Financial Condition and Results of Operations in the Company’s Annual Report on Form 10–K for the year ended December 31, 2023.

We are a biotechnology company focused on developing personalized immune therapies for cancer. We have developed a platform technology, DCVax®, which uses activated dendritic cells to mobilize a patient’s own immune system to attack their cancer. Our lead product, DCVax®-L, is designed to treat solid tumor cancers in which the tumor can be surgically removed. Our additional product, DCVax®-Direct, is designed to treat inoperable solid tumors.

During 2023, we completed or made substantial progress on all of the key areas that we outlined at the Annual Meeting in December 2022 as priorities for the following 12-18 months, as well as some additional areas not outlined at the Annual Meeting.

Sawston Facility Development. We continued the development of our GMP facility in Sawston UK. We believe that the facility is a major asset and that the ongoing development is materially further enhancing its value.

● Controlled GMP cryostorage: existing capacity for 3 million vials.

Product Release Improvements. We continued to streamline processes related to product release. After manufacturing, medical products must go through a range of “release tests” - i.e., quality control and other tests (composition, purity, potency, sterility, etc.) to be approved for release for use in patients. In order for scale-up of manufacturing to be effective, the product release process must also be streamlined and scaled up so that it is not a bottleneck. This is an important part of overall preparations for commercialization and is particularly critical for autologous (personalized) products, for which each “batch” of product that is released is only for one patient. We have been

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working on this for years and made substantial progress in 2023. Activities have included partial automation and acquiring specialized equipment and bringing in-house some key tests previously conducted by outside specialized vendors.

Flaskworks. Major progress was made in 2023 in the development of the Flaskworks system for a “closed” manufacturing process for DCVax-L. We completed the evaluation of three fundamentally different process approaches that the Flaskworks system could take, and chose the one that we believe will be optimal both operationally and to facilitate regulatory approval. We also completed most of the functional optimization of the Flaskworks system itself. A specialized contractor was engaged to produce GMP-compliant (i.e., clinical grade) versions of the prototype Flaskworks machine made with GMP grade materials. When the GMP-grade units are delivered, Advent BioServices will undertake qualification and validation of those units, conduct engineering runs and collect data, and apply to regulators for approval to use the system to produce DCVax-L for patients. As previously reported, the Company views the Flaskworks program and system as a centerpiece of efforts toward scale-up for potential commercial operations.

Supply chain issues and equipment backlogs continue to be factors affecting operations both for Advent and for Flaskworks. However, the work of both Advent and Flaskworks is progressing in spite of these issues.

Intellectual Property. We further strengthened our intellectual property portfolio in three ways during 2023: we achieved issuance of certain patents previously filed, we filed new patent applications based on our own work, and we in-licensed patents and patent applications from other parties. We are continuing to build an IP portfolio that we believe will provide a strong foundation to help us build a leading franchise in dendritic cells and active immunotherapies. This includes enhanced versions of dendritic cells, combinations of other agents with dendritic cells, manufacturing methods and processes, and related IP.

Collaborations. The Company continued active discussions on certain combination treatment regimens and is planning for certain strategic trials with such combination treatments. Some of these would be in connection with the Company’s in-licensing of intellectual property and others would be separate collaborations. The Company anticipates proceeding with such an initial combination during 2024 when it is able to free up sufficiently from the MAA review process and the inspections processes.

Expansion of the SAB: addition of Dr. Linda Liau. We were pleased to expand our Scientific Advisory Board during 2023 with the addition of Dr. Linda Liau, Chairman of the Neurosurgery Department at UCLA and the Principal Investigator in the Phase 3 trial of DCVax-L for GBM.

Mechanism of Action data and analyses. During 2023, we completed and publicly presented key information about the mechanism of action (MoA) of DCVax-L. We have undertaken such analyses over time, as technology tools have advanced - including recent advances in proteomics. The analyses completed and presented in 2023 provided strong support for what we believe are the keys to the treatment effects observed with DCVax-L and are the key differentiators of DCVax-L vs. other cancer treatments for glioblastoma (GBM) and other solid tumors: namely, that DCVax-L is a broad-spectrum treatment and it is aiming at personalized tumor targets that are actually present on the patient’s version of the tumor. The MoA studies showed that the dendritic cells in DCVax-L processed and presented well over 600 peptide antigens (all drawn from a sample of the patient’s own tumor) to the T cells. The antigens presented by the DCs become targets for T cells to attack. The MoA studies also showed that a very large number and diversity of T cells responded, and that the depth and breadth of the T cell response increased over time following DCVax-L treatments, ranging ranged from several hundred to as many as 1200 different T cell clones. Each T cell clone addresses a distinct tumor target. We believe that the data from these MoA studies provide important support for the extended survival seen in our Phase 3 clinical trial of DCVax-L for GBM and will be helpful in the regulatory review of our MAA application for commercial approval.

Continued compassionate use (Specials) patients. We continued treating compassionate use cases of GBM patients. We believe these treatments are helpful for the patients, and these cases are also helping us prepare for real world circumstances that we are likely to encounter in potential commercialization and that are much more diverse than in clinical trials. For example, the compassionate use cases include patients who have continued to receive DCVax-L treatments over many years (including having a second batch of DCVax-L doses made after the first batch of doses was exhausted), patients who are older than the age range in the clinical trials, and a patient with an enormous (14 cm.) GBM tumor of which only half could be removed by surgery and the remaining half regressed with treatment by DCVax-L and nutritional support for the immune system (case study accepted for peer reviewed publication).

Continued survival follow-up on patients in the Phase 3 trial. The contract research organization (CRO) managing the Phase 3 trial continued to conduct long-term follow-up on patients from the Phase 3 trial as there are still patients alive.

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Drafting and submission of the MAA. We worked with consultants throughout the year to draft the MAA application package and supporting documents and exhibits. Advent BioServices undertook much of the work with specialized consultants to prepare the CMC (product related) sections of the MAA and those supporting documents and exhibits. The MAA was completed and filed with the UK MHRA on December 20, 2023.

Activities associated with the MAA. In parallel with the drafting of the MAA itself, in 2023 we undertook a large-scale program of preparations for inspections. The regulatory authorities will conduct comprehensive inspections of the CRO, the TMF, the database provider, the sponsor, key trial site hospitals, the contract manufacturer and others. The Company worked throughout most of 2023 with large teams of consultants on preparations for inspection readiness of all parties and the TMF. Multiple mock inspections were arranged and were conducted by former regulatory agency inspectors in Q4. Further inspection readiness preparations are expected to continue to be a major focus of the Company and the large teams of consultants in the first half of 2024. During 2023 the Company also devoted substantial efforts to preparations for launching the two required pediatric clinical trials.

Lawsuit against market makers. The Company continued vigorously pursuing its lawsuit against certain market makers whom the Company believes have engaged in manipulation of its stock. Following the Company’s filing of its Complaint in December 2022, during 2023 the case proceeded through multiple rounds of court filings as described in Item 3 Legal Proceedings above. The Company plans to continue the vigorous pursuit of the case.

Future directions. In the future, we also plan to restart our DCVax®-Direct clinical development program as soon as resources permit.

Critical Accounting Policies and Estimates

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

On an ongoing basis, we evaluate our estimates and judgments, including those related to derivative liabilities, accrued expenses and stock-based compensation. We based our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the reported amounts of revenues and expenses that are not readily apparent from other sources. Actual results could differ from those estimates.

Fair Value Measurements

Fair value is defined as the price that would be received for sale of an asset or paid for transfer of a liability, in an orderly transaction between market participants at the measurement date. U.S. GAAP establishes a three-tier fair value hierarchy that prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). These tiers include:

●Level 1 - defined as observable inputs such as quoted prices for identical instruments in active markets;

●Level 2 - quoted prices for similar assets and liabilities in active markets or inputs that are observable

●Level 3 - inputs that are unobservable (for example, cash flow modeling inputs based on assumptions)

We account for the issuance of common stock purchase warrants issued in connection with the equity offerings in accordance with the provisions of ASC 815, Derivatives and Hedging (“ASC 815”). We classify as equity any contracts that (i) require physical settlement or net-share settlement or (ii) gives the Company a choice of net-cash settlement or settlement in its own shares (physical settlement or net-share settlement). We account for certain common stock warrants outstanding as a liability at fair value and adjust the instruments to fair value at each reporting period. This liability is subject to re-measurement at each balance sheet date until exercised, and any change in fair value is recognized in our consolidated statements of operations. The fair value of the warrants issued by us has been estimated using Monte Carlo simulation and or a Black Scholes model. The warrant liabilities are valued using Level 3 valuation inputs.

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Derivative Financial Instruments

The Company has derivative financial instruments that are not hedges and do not qualify for hedge accounting. Changes in the fair value of these instruments are recorded in other income (expense), net in the Consolidated Statements of Operations and Comprehensive Loss.

Impairment of Long-Lived Assets

The Company assesses its long-lived assets for impairment whenever facts and circumstances indicate that the carrying amounts may not be fully recoverable. To analyze recoverability, the Company projects undiscounted net future cash flows over the remaining lives of such assets. If these projected cash flows are less than the carrying amounts, an impairment loss would be recognized, resulting in a write-down of the assets with a corresponding charge to earnings. The impairment loss is measured based upon the difference between the carrying amounts and the fair values of the assets. Assets to be disposed of are reported at the lower of the carrying amounts or fair value less cost to sell. Management determines fair value using the discounted cash flow method or other accepted valuation techniques.

As of December 31, 2023 and 2022, the undiscounted net future cash flows of the U.K. property were greater than the carrying value. Therefore, no impairment loss was considered necessary.

Sequencing

The Company adopted a sequencing policy under ASC 815-40-35 to determine if reclassification of contracts from equity to liabilities is necessary pursuant to ASC 815 due to the Company’s inability to demonstrate if it has sufficient authorized shares. Certain contracts were classified as liabilities as the result of the instruments containing a potentially indeterminable number of shares and, most recently, due to the Company entering into agreements providing for the potential issuance of more shares than authorized. While temporary agreements are in place to keep the potential exercises beneath the number authorized, certain instruments are classified as liabilities, after allocating available authorized shares on the basis of the earliest grant date of potentially dilutive instruments. Pursuant to ASC 815, issuance of stock-based awards to the Company’s employees, non-employees or directors are not subject to the sequencing policy.

On January 9, 2023, the Company filed a Certificate of Amendment of its Seventh Amended and Restated Certificate of Incorporation (the “Certificate of Amendment”) with the Secretary of the State of Delaware, which effected an increase in the Company’s authorized shares of common stock, from 1.2 billion to 1.7 billion, par value $0.001 per share. As a result of this increase in authorized shares, the liability-classified warrants were reclassified to equity. Approximate 141 million warrants to purchase shares of the Company’s common stock were classified as liabilities through January 8, 2023.

Modification of Equity Classified Warrants

A change in the terms or conditions of a warrant is accounted for as a modification. For a warrant modification accounted for under ASC 815, the effect of a modification shall be measured as the difference between the fair value of the modified warrant over and the fair value of the original warrant immediately before its terms are modified, with each measured on the modification date. The accounting for any incremental fair value of the modified warrants over the original warrants is based on the specific facts and circumstances related to the modification. When a modification is directly attributable to an equity offering, the incremental change in fair value of the warrants is accounted for as an equity issuance cost. When a modification is directly attributable to a debt financing, the incremental change in fair value of the warrants is accounted for as a debt discount or debt issuance cost. For all other modifications, the incremental change in fair value is recognized as a deemed dividend.

Convertible Notes under Fair Value Option

We account for certain convertible notes issued from August to October 2023 on an instrument-by-instrument basis under the fair value option (“FVO”) election of ASC Topic 825, Financial Instruments (“ASC 825”). The convertible notes accounted for under the FVO election are each debt host financial instruments containing embedded features wherein the entire financial instrument is initially measured at its issue-date estimated fair value and then subsequently remeasured at estimated fair value on a recurring basis at each reporting period date. Changes in the estimated fair value of the convertible notes are recorded as a component of Other (expense) income in the consolidated statements of operations, except that the change in estimated fair value attributable to a change in the instrument-specific credit risks is recognized as a component of other comprehensive income. As a result of electing the FVO, issuance costs related to the convertible notes are expensed as incurred.

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Stock Based Compensation

Share-based compensation cost is recorded for all option grants and awards of non-vested stock based on the grant date fair value of the award using the Black-Scholes option-pricing model and is recognized over the service period required for the award.

We estimate the fair value of stock option grants using the Black-Scholes option pricing model and the assumptions used in calculating the fair value of stock-based awards represent management’s best estimates and involve inherent uncertainties and the application of management’s judgment.

Expected Term - The expected term of options represents the period that the Company’s stock-based awards are expected to be outstanding based on the simplified method, which is the half-life from vesting to the end of its contractual term.

Expected Volatility - The Company computes stock price volatility over expected terms based on its historical common stock trading prices.

Risk-Free Interest Rate - The Company bases the risk-free interest rate on the implied yield available on U. S. Treasury zero-coupon issues with an equivalent remaining term.

Expected Dividend - The Company has never declared or paid any cash dividends on its common shares and does not plan to pay cash dividends in the foreseeable future, and, therefore, uses an expected dividend yield of zero in its valuation models.

We recognize forfeitures when they occur.

Recently Issued Accounting Standards Not Yet Adopted

Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions

In June 2022, the FASB issued ASU 2022-03, ASC Subtopic 820 “Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions”. The FASB is issuing this Update (1) to clarify the guidance in Topic 820, Fair Value Measurement, when measuring the fair value of an equity security subject to contractual restrictions that prohibit the sale of an equity security, (2) to amend a related illustrative example, and (3) to introduce new disclosure requirements for equity securities subject to contractual sale restrictions that are measured at fair value in accordance with Topic 820.

For public business entities, the amendments in this Update are effective for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years. Early adoption is permitted for both interim and annual financial statements that have not yet been issued or made available for issuance. We will adopt ASU 2022-03 effective January 1, 2024. The Company does not expect that the adoption of this guidance will have a material impact on its consolidated financial statements.

Improvements to Income Tax Disclosures

In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (ASU 2023-09), which improves the transparency of income tax disclosures by requiring consistent categories and greater disaggregation of information in the effective tax rate reconciliation and income taxes paid disaggregated by jurisdiction. It also includes certain other amendments to improve the effectiveness of income tax disclosures. This guidance will be effective for the annual periods beginning the year ended December 31, 2025. Early adoption is permitted. Upon adoption, the guidance can be applied prospectively or retrospectively. We do not expect the adoption of this guidance to have a material impact on its consolidated financial statements.

Results of Operations

Operating costs:

Our operating costs and expenses consist primarily of research and development (R&D) expenses. R&D expenses include clinical trial expenses, and increased costs after completion of a Phase III trial, especially for the extensive preparations, and teams of expert consultants, required for an application for product approval.

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In addition to clinical trial and post-trial costs, our operating costs may include ongoing work relating to our DCVax products, including R&D, product characterization, manufacturing process development, quality control process development, and related matters. Additional substantial costs relate to the development and expansion of manufacturing capacity.

Our operating costs also include the costs of preparations for the launch of new or expanded clinical trial programs, such as our anticipated trials of combination treatment regimens. The preparation costs include payments to regulatory consultants, lawyers, statisticians, sites and others, evaluation of potential investigators, the clinical trial sites and the CROs managing the trials and other service providers, and expenses related to institutional approvals, clinical trial agreements (business contracts with sites), training of medical and other site personnel, trial supplies and other.

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

The foregoing operating costs include the costs for Flaskworks’ ongoing operations and intellectual property filings, and the operations of our subsidiaries in the U.K., the Netherlands and Germany.

Research and development:

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

Because we are a company with no commercial product sales revenue, we do not allocate research and development costs on a project basis. We adopted this policy, in part, due to the unreasonable cost burden associated with accounting at such a level of detail and our limited number of financial and personnel resources.

General and administrative:

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

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For the Years Ended December 31, 2023, 2022 and 2021

We recognized a net loss of $62.6 million, $105.0 million and a net income of $179.1 million for the years ended December 31, 2023, 2022 and 2021, respectively. The net loss of $62.6 million and $105.0 million for the years ended December 31, 2023 and 2022 included a non-cash gain of $1.5 million and a non-cash loss of $25.8 million from change in fair value derivative liabilities and convertible notes, respectively. The net income of $179.1 million for the year ended December 31, 2021 included a non-cash gain of $239.3 million from change in fair value derivative liabilities.

Net cash used in operations was $53.6 million, $52.8 million and $38.3 million for the years ended December 31, 2023, 2022 and 2021, respectively.

Research and development expense

For the years ended December 31, 2023, 2022 and 2021, research and development expense was $27.7 million, $35.5 million and $20.3 million, respectively. The increase in R&D in 2023 and 2022 as compared to 2021 was mainly reflected extensive one-time activities, which were started in mid of 2022 and fully completed as of December 31, 2023.

The R&D expenses in 2023 and 2022 primarily reflected extensive one-time activities (i) to accomplish a number of pre-requisites that are required before making an application for regulatory of DCVax-L, (ii) to prepare the application package and (iii) to prepare other materials, such as the Trial Master File, to be inspection-ready in addition to the application package. The pre-requisites and preparations included developing, submitting and obtaining regulatory approval for a Pediatric Investigation Plan (PIP), preparing and qualifying for manufacturing licenses required for the Sawston facility, completing the technology transfer from the London facility (where the Company had done all its manufacturing before 2022) to the Sawston facility to enable GMP manufacturing to begin in February 2022 at Sawston (while also continuing in the London facility), and six workstreams related to product matters involving Comparability, Stability, Potency, Product Profile, Mechanism of Action and Fill/Finish which are needed for the application package to seek regulatory approval of DCVax-L.

The 2023 and 2022 R&D expenses we incurred for these activities included payments to numerous teams of specialized external consultants and the CRO, as well as to Advent BioServices. The majority of the payments to Advent were for one-time expenses for ten key one-time milestones for pre-requisites and preparations for the MAA application for product approval. These included three milestones for obtaining the three licenses required for the Sawston facility, six milestones for the six product workstreams, and 1 milestone related to preparing key portions of an application for regulatory approval of the DCVax-L product.

During the year ended December 31, 2023, we completed the last three one-time milestones (obtaining a commercial manufacturing license from the MHRA, completion of drafting and submission of the application to MHRA for product approval), and recognized additional $1.5 million in research and development expense.

During the year ended December 31, 2022, we paid $3.0 million for the cash component of seven milestones, and accrued $4.7 million for the cash component of future milestones. We issued 7.5 million shares at fair value of $5.9 million for the stock component of eight milestones, and we accrued $3.6 million for the stock component of future milestones.

General and Administrative Expense

General and administrative expenses were $29.7 million, $33.4 million and $33.4 million for the years ended December 31, 2023, 2022 and 2021, respectively.

The decrease of $3.6 million in 2023 compared to 2022 was mainly related to a decrease of $1.6 million in consulting, legal and professional fees, a decrease of $0.7 million in compensation expenses and a $0.9 million reduction in our director and officer insurance expenses.

Expenses incurred in 2022 and 2021 were consistent with rounding, but there was a slight decrease of approximate $46,000 which was mainly related to a decrease of $7.0 million stock-based compensation that represented the vesting of a portion of previously granted equity-based awards, and that was recognized in general and administrative expense, and offset by an increase of approximately $1.8 million related to legal and professional expenses, an increase of $1.5 million in insurance premiums, an increase of $1.6 million related

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to accrued but unpaid employees’ bonus for 2021 and 2022 performances and an increase of $1.7 million of travel and conference expenses.

Change in Fair Value of Derivatives

We recognized a non - cash income of $3.6 million, a non - cash loss of $25.8 million and a non - cash gain of $239.3 million for the years ended December 31, 2023, 2022 and 2021, respectively. The non - cash loss was primarily due to the increase of our stock price, and the non - cash gain was primarily due to the decrease of our stock price. Our closing stock prices as of December 31, 2023, 2022 and 2021 were as follows:

​ ​ ​ ​ ​ ​ ​ ​

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Change in Fair Value of Convertible Notes

We elected the fair value option to fair value certain convertible notes under the guidance in ASC 825 during the year ended December 31, 2023 (see Note 7). We recognized a non-cash loss of $2.0 million change in fair value of the convertible notes during the year ended December 31, 2023.

Debt Extinguishment

During the year ended December 31, 2023, we issued approximately 37.0 million shares of common stock with a fair value of $24.7 million to certain lenders in lieu of cash payments of $19.1 million of debt, including $1.8 million of accrued interest. We also extinguished Share liabilities of $1.1 million and recognized additional $0.8 million in Share liabilities. We recognized an approximately $5.3 million debt extinguishment loss during the year ended December 31, 2023 from the debt redemption.

During the year ended December 31, 2023, we issued approximately 56,000 shares of Series C preferred stock with a fair value of $1.0 million to certain lenders in lieu of cash payments of $0.9 million in debt, including $0.1 million of accrued interest. We recognized an approximately $0.1 million debt extinguishment loss.

During the year ended December 31, 2022, we recognized approximately $2.7 million net debt extinguishment loss. We issued approximately 18.1 million shares of common stock at fair value of $13.8 million to certain lenders in lieu of cash payment of $11.3 million debt, including $1.8 million accrued interest. We also extinguished approximately $0.2 million embedded derivative liability upon the conversion. We recognized approximately $2.3 million debt extinguishment loss. Additionally, pursuant to exchange agreements executed various holders, the Company is required to potentially issue additional common stock (the “Share liability”) if the stock price is less than the price defined in the exchange agreement as of the true-up date. We recognized additional $0.7 million debt extinguishment loss related to the Share liability during the year ended December 31, 2022. During the year ended December 31, 2022, we also issued approximately 0.2 million shares of Series C preferred stock at fair value of $3.5 million to certain lenders in lieu of cash payments of $3.4 million debt, including $0.4 million accrued interest. We recognized approximately $0.1 million debt extinguishment loss. We also recognized $0.4 million debt extinguishment gain from PPP loan forgiveness during the year ended December 31, 2022.

During the year ended December 31, 2021, we entered into multiple note extension agreements whereby the maturity dates of the notes were extended for an additional 2-4 months. Certain amendments were accounted for as a debt extinguishment. We recognized $0.2 million debt extinguishment loss from the amendment.

Inducement Expense

During the year ended December 31, 2021, we recorded inducement expense of $0.6 million, which was related to certain warrants exercise.

Interest expense

During the years ended December 31, 2023, 2022 and 2021, we recorded interest expense of $5.2 million, $6.1 million, and $5.0 million, respectively.

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Foreign currency transaction (loss) gain

During the years ended December 31, 2023, 2022, and 2021, we recognized foreign currency transaction income of $2.0 million, a loss of $3.3 million and a loss of $1.7 million, respectively. The gain was due to the weakening of the U.S. dollar relative to the British pound sterling. The loss was due to the strengthening of the U.S. dollar relative to the British pound sterling.

Liquidity and Capital Resources

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

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

Contingent Contractual Payment

The following table summarizes our contractual obligations as of December 31, 2023 (in thousands):

​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ Payment Due by Period

​ ​ ​ ​ ​ Less than ​ 1 to 2 ​ 3 to 5

​ Total 1 Year Years ​ Years

Short term convertible notes payable (1) ​ ​ ​ ​ ​ ​ ​

6% unsecured $ 250 ​ $ 250 ​ $ — ​ $ —

Short term convertible notes payable at fair value (2) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Short term notes payable (3) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Long term notes payable (4) ​ ​ ​ ​ ​ ​ ​ ​

Minimum commitment obligation (6) ​ 5,746 ​ ​ — ​ ​ 5,746 ​ ​ —

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Operating Activities

We used $53.6 million, $52.8 million and $38.3 million in cash for operating activities during the years ended December 31, 2023, 2022 and 2021, respectively. The increase in cash used in operating activities was primarily attributable to an increase in clinical trial related expenditures.

Investing Activities

We spent approximately $3.4 million, $2.9 million and $6.0 million in cash for purchases of equipment in the UK and the build-out of our facility in Sawston, UK during the years ended December 31, 2023, 2022 and 2021, respectively.

Financing Activities

We received approximately $13.3 million and $18.7 million cash from issuances of 1.0 million and 1.2 million shares of Series C convertible preferred stock during the years ended December 31, 2023 and 2022, respectively.

We received approximately $9.5 million and $4.1 million in cash proceeds from issuances of common stock and warrants, in both public and private offerings during the years ended December 31, 2022 and 2021, respectively.

We received approximately $1.7 million, $11.1 million and $20.0 million of cash proceeds from the exercise of warrants and options during the years ended December 31, 2023, 2022 and 2021, respectively.

We received approximately $20.0 million, $5.6 million and $29.7 million in cash proceeds from the issuance of multiple notes payable during the years ended December 31, 2023, 2022 and 2021, respectively.

We received approximately $13.3 million cash proceeds from issuance of convertible notes payable to individual lenders during the year ended December 31, 2023.

We received $5.0 million from issuance of non-dilutive funding agreements during the year ended December 31, 2023.

We made aggregate debt payments of $0.4 million, $5.5 million and $5.8 million during the years ended December 31, 2023, 2022 and 2021, respectively.

We made repayment of $0.2 million of investor advances during the years ended December 31, 2023.

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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Not Applicable.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The full text of our audited consolidated financial statements as of December 31, 2023 and 2022 and for the fiscal years ended December 31, 2023, 2022 and 2021, begins on page F-1 of this Annual Report on Form 10-K.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We, the management of Northwest Biotherapeutics, Inc. (the “Company”), are responsible for establishing and maintaining adequate internal control over financial reporting of the Company.

We maintain disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) that are designed to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time period specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including to our Chief Executive Officer and Principal Financial and Accounting Officer, as appropriate, to allow timely decisions regarding required disclosure.

As required by Rule 13a-15 under the Exchange Act, our management, including our Chief Executive Officer and Principal Financial and Accounting Officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of December 31, 2023. In making this assessment, the Company’s management used the criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”).

Based on our evaluation, management concluded that, because of a material weakness identified relating to valuation of the Company’s debt and derivative liabilities, which primarily involved applying an incorrect valuation method using the market price actually paid for certain convertible notes rather than a Monte Carlo formula, which resulted in a revision of prior period financial statement within the current annual report (see Note 14), our internal control over financial reporting was not effective as of December 31, 2023.

Management’s Report on Internal Control Over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting. The Company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. In addition, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management of the Company, including our CEO and Principal Financial and Accounting Officer, assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2023. Based on this assessment, we determined that our internal control over financial reporting was not effective as of December 31, 2023 due solely to the material weakness over the valuation of debt and derivative liabilities which primarily involved applying an incorrect valuation method using the market price actually paid for certain convertible notes rather than using a Monte Carlo valuation formula. As a result, a correction for the quarter ended September 30, 2023 has been made for less than $5 million (see Note 14).

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Management took corrective action during the quarter ended December 31, 2023. The Company believes the weakness has been addressed, but it will need to be tested in the first quarter of 2024, before the weakness can be considered fully remediated.

Cherry Bekaert, LLP, the Company’s independent registered public accounting firm, was appointed by the Company’s Board of Directors and ratified by the Company’s stockholders. They were engaged to render an opinion regarding the fair presentation of the Company’s consolidated financial statements as well as conducting an audit of internal control over financial reporting for the period ending December 31, 2023. Their reports included at F-2 of this Form 10-K are based upon audits conducted in accordance with the standards of the Public Company Accounting Oversight Board (United States).

Changes in Internal Control Over Financial Reporting

Other than the material weakness described above, there were no changes in our internal control over financial reporting during the fiscal quarter ended December 31, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

ITEM 9B. OTHER INFORMATION

None.

ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

None.

​

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PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The information required by Item 10 is hereby incorporated by reference from our 2024 Proxy Statement under the captions “Election of Directors” and “Code of Ethics.” To the extent that we do not file the 2024 Proxy Statement prior to the end of the 120-day period following December 31, 2023, we will amend this Annual Report on Form 10-K to provide the required information.

ITEM 11. EXECUTIVE COMPENSATION

Information required by this item will be contained in the Proxy Statement and is incorporated herein by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS-EQUITY COMPENSATION PLAN INFORMATION

Information required by this item will be contained in the Proxy Statement and is incorporated herein by reference.

ITEM 13. CERTAIN RELATIONSHIPS, RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE

Information required by this item will be contained in the Proxy Statement and is incorporated herein by reference.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

Information required by this item will be contained in the Proxy Statement and is incorporated herein by reference.

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

The Exhibits listed below are identified by numbers corresponding to the Exhibit Table of Item 601 of Regulation S-K. The Exhibits designated by an asterisk (*) are management contracts or compensatory plans or arrangements required to be filed pursuant to Item 15.

​

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EXHIBIT INDEX

ExhibitNumber Description

4.1 Description of Securities

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10.81 ​ Equity Compensation Plan, dated May 29, 2020.

10.83 ​ Agreement to acquire Flaskworks, L.L.C, August 28, 2020.

21.1 Subsidiaries of the Registrant.

23.1 Independent Registered Public Accounting Firm’s Consent.

101.INS Inline XBRL Instance Document.

101.SCH Inline XBRL Schema Document.

101.CAL Inline XBRL Calculation Linkbase Document.

101.DEF Inline XBRL Definition Linkbase Document.

101.LAB Inline XBRL Label Linkbase Document.

101.PRE Inline XBRL Presentation Linkbase Document.

*Confidential information in this exhibit has been omitted and filed separately with the SEC pursuant to a confidential treatment request.

​

ITEM 16.FORM 10–K SUMMARY

None.

​

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this Annual Report on Form 10-K to be signed on its behalf by the undersigned, thereunto duly authorized.

​

​ NORTHWEST BIOTHERAPEUTICS, INC.(Registrant)

Date: March 5, 2024 By: /s/ Linda F. Powers

​ ​ Linda F. Powers,

​

Pursuant to the requirements of the Securities Exchange Act of 1934, this Annual Report on Form 10-K has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

​

​ ​

Signature Title Date

/s/ Linda F. Powers ​ President and Chief Executive Officer ​ March 5, 2024

Linda F. Powers ​ Principal Executive Officer ​ ​

​ ​ Principal Financial and Accounting Officer ​ ​

​ ​ ​ ​ ​

/s/ Alton L. Boynton ​ Director ​ March 5, 2024

Alton L. Boynton ​ ​ ​ ​

​ ​ ​ ​ ​

/s/ Navid Malik ​ Director ​ March 5, 2024

Dr. Navid Malik ​ ​ ​ ​

​ ​ ​ ​ ​

/s/ Jerry Jasinowski ​ Director ​ March 5, 2024

Jerry Jasinowski ​ ​ ​ ​

​ ​ ​ ​ ​

/s/ J. Cofer Black ​ Director ​ March 5, 2024

J. Cofer Black ​ ​ ​ ​

​

​

​

​

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Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

NORTHWEST BIOTHERAPEUTICS, INC.

INDEX TO THE CONSOLIDATED FINANCIAL STATEMENTS

Reports of Independent Registered Public Accounting Firm (PCAOB ID 00677) F-2

​

Consolidated Balance Sheets as of December 31, 2023 and 2022 F-5

​

​

​

​

Notes to the Consolidated Financial Statements F-10

​

​

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders

Northwest Biotherapeutics, Inc.

Bethesda, Maryland

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying balance sheets of Northwest Biotherapeutics, Inc. and Subsidiaries (the “Company”) as of December 31, 2023 and 2022, and the related consolidated statements of operations, comprehensive income, stockholders’ deficit, and cash flows for each of the years in the three-year period ended December 31, 2023, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America.

We also have audited the Company’s internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company did not maintain, in all material respects, effective internal control over financial reporting as of December 31, 2023, based on the COSO criteria because a material weakness in internal control over financial reporting existed as of that date as the Company did not maintain effective control over the valuation of debt and derivatives.

A material weakness is a control deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis. The material weakness referred to above is described in the Management’s Report on Internal Control Over Financial Reporting appearing under Item 9A. We considered this material weakness in determining the nature, timing, and extent of audit tests applied in our audit of the 2023 consolidated financial statements, and our opinion regarding the effectiveness of the Company’s internal control over financial reporting does not effect our opinion on those consolidated financial statements.

Substantial Doubt about the Company’s Ability to Continue as a Going Concern

The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 2 to the consolidated financial statements, the Company has recurring losses and negative cash flows from operations that raise substantial doubt about its ability to continue as a going concern. Management’s evaluations of the events and conditions and management’s plans regarding those matters are also described in Note 2. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinions

The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control over Financial Reporting included in Item 9A—Controls and Procedures in the Company’s 2023 Annual Report on Form 10-K. Our responsibility is to express an opinion on the Company’s consolidated financial statements and an opinion on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included

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evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Critical Audit Matter Description

As disclosed in Notes 4, 5, 7, 10, and 11 to the consolidated financial statements, the Company had various debt, derivative, mezzanine equity and equity transactions, including both related party and non-related party stock-based compensation and convertible notes elected to be carried at fair value, where management evaluated required accounting considerations, significant estimates, and judgements around certain features, the possibility of conversion or redemption, and the valuation of certain components of the financings, including the valuation around certain freestanding and embedded derivatives. Certain features were initially measured at fair value and have been subsequently remeasured to fair value at each reporting period.

There is no current observable market for these types of features and, as such, the Company determined the fair value of the freestanding instruments or embedded derivatives using the Black-Scholes-Merton model or the Monte Carlo option pricing model, as applicable, to measure the fair value of the debt and/or equity instrument both with and without the derivative liability features. As a result, a high degree of auditor judgment and effort was required in performing audit procedures to evaluate the various components of these instruments.

How the Critical Audit Matter was Addressed in the Audit

Our principal audit procedures performed to address this critical audit matter included the following:

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/s/ Cherry Bekaert LLP

We have served as the Company’s auditor since 2021.

Cherry Bekaert LLP

Tampa, Florida

March 5, 2024

​

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NORTHWEST BIOTHERAPEUTICS, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share data)

​ ​ ​ ​ ​ ​ ​

​ December 31, December 31,

ASSETS ​ ​ ​

Current assets: ​ ​

Cash and cash equivalents ​ $ 2,126 ​ $ 6,965

Prepaid expenses and other current assets ​ 1,999 ​ 2,460

​ ​ ​ ​ ​ ​ ​

Non-current assets: ​ ​ ​ ​

Property, plant and equipment, net ​ 17,278 ​ 13,418

Construction in progress ​ ​ — ​ ​ 2,028

Right-of-use asset, net ​ ​ 4,183 ​ ​ 4,189

Indefinite-lived intangible asset ​ ​ 1,292 ​ ​ 1,292

​ ​ ​ ​ ​ ​ ​

LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ DEFICIT ​ ​ ​ ​

Current liabilities: ​ ​ ​ ​

Accounts payable and accrued expenses ​ $ 10,244 ​ $ 10,687

Convertible notes, net ​ 3,765 ​ 135

Convertible notes at fair value ​ 12,771 ​ —

Contingent payable derivative liability ​ ​ 9,188 ​ ​ 8,668

Investor advances ​ ​ 7 ​ ​ 2,566

Share liability ​ ​ 483 ​ ​ 678

Lease liabilities ​ ​ 314 ​ ​ 354

​ ​ ​ ​ ​ ​ ​

Non-current liabilities: ​ ​ ​ ​

Notes payable, net of current portion, net ​ 20,312 ​ 5,991

Lease liabilities, net of current portion ​ ​ 4,454 ​ ​ 4,370

Contingent payment obligation ​ ​ 4,950 ​ ​ —

​ ​ ​ ​ ​ ​ ​

COMMITMENTS AND CONTINGENCIES (Note 12) ​ ​ ​ ​

​ ​ ​ ​ ​ ​ ​

Mezzanine equity: ​ ​ ​ ​ ​ ​

Stockholders’ deficit: ​ ​ ​ ​

Stock subscription receivable ​ (79) ​ (79)

Accumulated other comprehensive income ​ 1,536 ​ 3,145

​

See accompanying notes to the consolidated financial statements

​

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NORTHWEST BIOTHERAPEUTICS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(in thousands, except per share data)

​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ For the years ended

​ ​ December 31,

Revenues: ​ ​ ​ ​ ​ ​

Operating costs and expenses: ​ ​ ​ ​ ​ ​ ​

Other income (expense): ​ ​ ​ ​ ​ ​ ​

Change in fair value of derivative liabilities ​ ​ 3,644 ​ (25,821) ​ 239,347

Change in fair value of share liabilities ​ ​ (78) ​ ​ 33 ​ ​ —

Change in fair value of convertible notes ​ ​ (2,021) ​ ​ — ​ ​ —

Loss from extinguishment of debt ​ ​ (5,403) ​ (2,691) ​ (165)

Inducement expense ​ ​ — ​ ​ — ​ ​ (647)

Foreign currency transaction gain (loss) ​ ​ 2,008 ​ (3,304) ​ (1,696)

Deemed dividend related to warrant modification ​ ​ (1,774) ​ ​ — ​ ​ —

​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Other comprehensive income (loss) ​ ​ ​ ​ ​ ​ ​ ​ ​

Foreign currency translation adjustment ​ ​ (1,609) ​ 2,788 ​ 1,505

​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Net (loss) income per share applicable to common stockholders ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​

See accompanying notes to the consolidated financial statements

​

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NORTHWEST BIOTHERAPEUTICS, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT

(in thousands)

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ Mezzanine equity ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated ​ ​

​ ​ Series C Covertible ​ ​ ​ ​ ​ ​ ​ Additional ​ ​ ​ ​ ​ ​ ​ Other ​ Total

Issuance of common stock for cash — ​ — 6,272 ​ 6 ​ 4,064 ​ — ​ — ​ — ​ 4,070

Cumulative translation adjustment — ​ — — ​ — ​ — ​ — ​ — ​ 1,505 ​ 1,505

Net loss ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ (105,032) ​ ​ — ​ ​ (105,032)

Net loss ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ (62,599) ​ ​ — ​ ​ (62,599)

Warrants modfication ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 2,454 ​ ​ — ​ ​ — ​ ​ — ​ ​ 2,454

​

See accompanying notes to the consolidated financial statements

​

​

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NORTHWEST BIOTHERAPEUTICS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ For the years ended

​ ​ December 31,

Cash Flows from Operating Activities: ​ ​ ​ ​ ​ ​

Change in fair value of share liability ​ ​ 78 ​ (33) ​ —

Change in fair value of convertible notes ​ ​ 2,021 ​ ​ — ​ ​ —

Loss from extinguishment of debt ​ ​ 5,403 ​ 2,691 ​ 165

Inducement expense ​ ​ — ​ ​ — ​ ​ 647

Amortization of operating lease right-of-use asset ​ ​ 208 ​ 248 ​ 262

Changes in operating assets and liabilities: ​ ​ ​ ​ ​ ​

Prepaid expenses and other current assets ​ ​ 501 ​ (397) ​ 3,475

Other non-current assets ​ ​ (12) ​ 625 ​ (179)

Accounts payable and accrued expenses ​ ​ 50 ​ 3,492 ​ 77

Related party accounts payable and accrued expenses ​ ​ (4,476) ​ 3,354 ​ (674)

Cash Flows from Investing Activities: ​ ​ ​ ​ ​ ​ ​

Net cash used in investing activities ​ ​ (3,437) ​ (2,902) ​ (6,015)

Cash Flows from Financing Activities: ​ ​ ​ ​ ​ ​

Proceeds from issuance of common stock ​ ​ — ​ ​ 9,465 ​ ​ 4,070

Proceeds from exercise of warrants and options ​ ​ 1,717 ​ 11,105 ​ 19,975

Proceeds from investor advance ​ ​ 7 ​ ​ 2,566 ​ ​ 250

Proceeds from issuance of notes payable, net ​ ​ 20,000 ​ 5,600 ​ 29,665

Proceeds from issuance of convertible notes payable, net ​ ​ 13,339 ​ — ​ —

Proceeds from contingent payment obligation ​ ​ 4,950 ​ — ​ —

Repayment of notes payable ​ ​ (385) ​ (5,489) ​ (5,828)

Repayment of investor advances ​ ​ (200) ​ ​ — ​ ​ —

​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Cash and cash equivalents, beginning of the year ​ ​ 6,965 ​ 15,169 ​ 9,983

Cash and cash equivalents, end of the year ​ $ 2,126 ​ $ 6,965 ​ $ 15,169

​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Supplemental disclosure of cash flow information ​ ​ ​ ​ ​ ​ ​

Interest payments on notes payable ​ $ (55) ​ $ (912) ​ $ (1,730)

​

See accompanying notes to the consolidated financial statements

​

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NORTHWEST BIOTHERAPEUTICS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ For the years ended

​ ​ December 31,

Cashless warrants and stock options exercise ​ $ 21 ​ $ 34 ​ $ 20

Exercise common stock warrants by debt redemption ​ $ — ​ $ 277 ​ $ —

Series C convertible preferred stock conversion ​ $ 18,915 ​ $ — ​ $ —

Capital expenditures included in accounts payable ​ $ 178 ​ $ 699 ​ $ 33

Issuance of common shares to settle accrued service liability ​ $ — ​ $ — ​ $ 73

Reclassification between shares payable and equity ​ $ — ​ $ 250 ​ $ —

Deemed dividend related to warrant modification ​ $ 1,774 ​ $ — ​ $ —

Debt discout related to warrant modificaiton ​ $ 394 ​ $ — ​ $ —

​

See accompanying notes to the consolidated financial statements

​

​

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NORTHWEST BIOTHERAPEUTICS, INC.

Notes to the Consolidated Financial Statements

1. Organization and Description of Business

Northwest Biotherapeutics, Inc. and its wholly owned subsidiaries Flaskworks, Northwest Biotherapeutics Limited (formerly known as Aracaris Ltd), Aracaris Capital, Ltd, Northwest Biotherapeutics B.V., and NW Bio GmbH (collectively, the “Company”, “we”, “us” and “our”) were organized to discover and develop innovative immunotherapies for cancer. The Company has developed DCVax® platform technologies for both operable and inoperable solid tumor cancers. The Company has wholly owned subsidiaries in Boston, the U.K., the Netherlands and Germany. On August 28, 2020, the Company acquired Flaskworks, LLC (“Flaskworks”), a company that has developed a system designed to close and automate the manufacturing of cell therapy products such as DCVax®. On July 24, 2023, the Company’s wholly-owned U.K. subsidiary changed its name from Aracaris Ltd to Northwest Biotherapeutics Limited.

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

The Company has completed a Phase 3 clinical trial of its DCVax®-L product for glioblastoma brain cancer, has publicly reported the results in a peer reviewed publication in a medical journal as well as at a medical conference, and has submitted an application for regulatory approval of the product in the U.K.

2. Financial Condition, Going Concern and Management Plans

The Company has incurred annual net operating losses since its inception. The Company had a net loss of $62.8 million for the year ended December 31, 2023. The Company used approximately $53.6 million of cash in its operating activities during the year ended December 31, 2023.

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

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

​

3. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying consolidated financial statements of the Company were prepared in accordance with generally accepted accounting principles in the U.S. (“U.S. GAAP”) and include the assets, liabilities, revenues and expenses of the wholly owned subsidiaries in Germany, United Kingdom and Netherlands. All intercompany transactions and accounts have been eliminated in consolidation.

Consolidation

The Company’s policy is to consolidate all entities in which it can vote a majority of the outstanding voting stock. In addition, the Company consolidates entities that meet the definition of a variable interest entity (“VIE”) for which the Company is the primary beneficiary, if any. The primary beneficiary is the party who has the power to direct the activities of a VIE that most significantly impact the entity’s economic performance and who has an obligation to absorb losses of the entity or a right to receive benefits from the entity that could potentially be significant to the VIE.

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NORTHWEST BIOTHERAPEUTICS, INC.

Notes to the Consolidated Financial Statements

As of December 31, 2023 and 2022, the Company did not consolidate any VIE’s as the Company has concluded that it is not the primary beneficiary.

Use of Estimates

In preparing consolidated financial statements in conformity with U.S. GAAP, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of expenses during the reporting period. Due to inherent uncertainty involved in making estimates, actual results reported in future periods may be affected by changes in these estimates.

On an ongoing basis, the Company evaluates its estimates and judgments, including valuing equity securities in share-based payment arrangements, estimating the fair value of financial instruments recorded as derivative liabilities, useful lives of depreciable assets and whether impairment charges may apply. The Company bases its estimates on historical experience and on various other assumptions that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the reported amounts of revenues and expenses that are not readily apparent from other sources. Actual results could differ from those estimates.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentration of credit risk consist of cash accounts in a financial institution, which at times may exceed the Federal depository insurance coverage (“FDIC”) of $250,000. As of December 31, 2023, of the total $2.1 million in cash and cash equivalents, $36,000 was held by foreign subsidiaries. As of December 31, 2022, of the total $7.0 million in cash and cash equivalents, $0.4 million was held by foreign subsidiaries. The Company had not experienced losses on these accounts and management believes the Company is not exposed to significant risks on such accounts.

Property, Plant and Equipment

Property and equipment are stated at cost. Depreciation and amortization are provided for using straight-line methods, in amounts sufficient to charge the cost of depreciable assets to operations over their estimated service lives. Repairs and maintenance costs are charged to operations as incurred.

Costs for capital assets not yet placed into service are capitalized as construction in progress on the consolidated balance sheets and will be depreciated once placed into service. In October 2021, approval was received from the UK Human Tissue Authority (“HTA”) of a license for collection and processing of human cells and tissues for medical purposes at the Company’s Sawston, UK facility. In December 2021, approval was received from the UK Medicines and Healthcare Products Regulatory Agency (“MHRA”) of a license for manufacture at the Sawston facility of GMP (clinical grade) cell therapy products for compassionate use and trials. All costs associated with the facility buildout (Phase 1A) were reclassified from construction in progress to leasehold improvements, and the costs began to be amortized over the estimated useful life of the asset and/or leasehold lease. The Company incurred additional construction works related to Phase 1B build out during the year ended December 31, 2022, which was completed and placed in use in 2023.

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NORTHWEST BIOTHERAPEUTICS, INC.

Notes to the Consolidated Financial Statements

The Company assesses its long-lived assets for impairment whenever facts and circumstances indicate that the carrying amounts may not be fully recoverable. To analyze recoverability, the Company projects undiscounted net future cash flows over the remaining lives of such assets. If these projected undiscounted net future cash flows are less than the carrying amounts, an impairment loss would be recognized, resulting in a write-down of the assets with a corresponding charge to earnings. The impairment loss is measured based upon the difference between the carrying amounts and the fair values of the assets.

Goodwill and Intangible Assets

Goodwill is the excess of purchase price over the fair value of identified net assets of businesses acquired. The Company’s intangible asset with an indefinite life is related to in-process research and development (“IPR&D”) programs acquired in the Flaskworks Acquisition, as the Company expects future research and development on these programs to provide the Company with substantial benefit for a period that extends beyond the foreseeable horizon. Intangible assets with indefinite useful lives are measured at their respective fair values as of the acquisition date. The Company does not amortize goodwill and intangible assets with indefinite useful lives. Intangible assets related to IPR&D projects are considered to be indefinite lived until the completion or abandonment of the associated R&D efforts. If and when development is complete, which generally occurs if and when regulatory approval to market a product is obtained, the associated assets would be deemed finite lived and would then be amortized based on their respective estimated useful lives at that point in time.

The Company has one operating segment and one reporting unit. The Company reviews goodwill and indefinite-lived intangible assets at least annually for possible impairment. Goodwill and indefinite-lived intangible assets are reviewed for possible impairment between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of the reporting unit or the indefinite-lived intangible assets below their carrying values. No impairment charge was recognized for the year ended December 31, 2023 and 2022.

Fair Value of Financial Instruments

ASC 820, Fair Value Measurements, provides guidance on the development and disclosure of fair value measurements. Under this accounting guidance, fair value is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability.

The accounting guidance classifies fair value measurements in one of the following three categories for disclosure purposes:

Level 1: Quoted prices in active markets for identical assets or liabilities.

Level 2: Inputs other than Level 1 prices for similar assets or liabilities that are directly or indirectly observable in the marketplace.

Level 3: Unobservable inputs which are supported by little or no market activity and values determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant judgment or estimation.

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NORTHWEST BIOTHERAPEUTICS, INC.

Notes to the Consolidated Financial Statements

The Company accounts for the issuance of common stock purchase warrants issued in connection with the equity offerings in accordance with the provisions of ASC 815, Derivatives and Hedging (“ASC 815”). The Company classifies as equity any contracts that (i) require physical settlement or net-share settlement or (ii) gives the Company a choice of net-cash settlement or settlement in its own shares (physical settlement or net-share settlement). The Company accounts for certain common stock warrants outstanding as a liability at fair value and adjusts the instruments to fair value at each reporting period. This liability is subject to re-measurement at each balance sheet date until exercised, and any change in fair value is recognized in its Consolidated Statements of Operations and Comprehensive Loss. The fair value of the warrants issued by the Company has been estimated using Monte Carlo simulation and or a Black Scholes model. The warrant liabilities are valued using Level 3 valuation inputs (see Note 4).

Derivative Financial Instruments

The Company has derivative financial instruments that are not hedges and do not qualify for hedge accounting. Changes in the fair value of these instruments are recorded in other income (expense), on a net basis in the Consolidated Statements of Operations and Comprehensive Loss.

Convertible Notes under Fair Value Option

The Company accounts for certain convertible notes issued from August to October 2023 on an instrument-by-instrument basis under the fair value option (“FVO”) election of ASC Topic 825, Financial Instruments (“ASC 825”). The convertible notes accounted for under the FVO election are each debt host financial instruments containing embedded features wherein the entire financial instrument is initially measured at its issue-date estimated fair value and then subsequently remeasured at estimated fair value on a recurring basis at each reporting period date. Changes in the estimated fair value of the convertible notes are recorded as a component of Other (expense) income in the consolidated statements of operations, except that the change in estimated fair value attributable to a change in the instrument-specific credit risks is recognized as a component of other comprehensive income. As a result of electing the FVO, issuance costs related to the convertible notes are expensed as incurred.

Contingent Payable Derivative Liability

During the year ended December 31, 2019, the Company entered into a settlement agreement with Cognate BioServices, resolving past matters and providing for the restart of DCVax®-Direct Production.

As part of this overall settlement, the Company also provided a contingent note payable (the “Contingent Payable Derivative”) of $10.0 million, which is only payable upon the Company’s first financing after DCVax product approval in or outside the U.S. If such product approval has not been obtained by the seventh anniversary of the agreement, such Contingent Payable Derivative will expire without becoming payable.

On a quarterly basis, management makes estimates for key performance milestones and uses the expected dates as the inputs for valuation. The fair value of the Contingent Payable Derivative has been estimated using Monte Carlo simulation, which are valued using Level 3 valuation inputs.

Leases

The Company recognizes a lease asset for its right to use the underlying asset and a lease liability for the corresponding lease obligation. The Company determines whether an arrangement is or contains a lease at contract inception. Operating leases with a duration greater than one year are included in right-of-use assets, lease liabilities, and lease liabilities, net of current portion in the Company’s consolidated balance sheets. Right-of-use assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. In determining the net present value of lease payments, the Company uses its incremental borrowing rate based on the information available at the lease commencement date. The incremental borrowing rate represents the interest rate the Company would incur at lease commencement to borrow an amount equal to the lease payments on a collateralized basis over the term of a lease. The Company considers a lease term to be the non-cancelable period that it has the right to use the underlying asset.

The operating lease right-of-use assets also include any lease payments made and exclude lease incentives. Lease expense is recognized on a straight-line basis over the expected lease term. Variable lease expenses are recorded when incurred.

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NORTHWEST BIOTHERAPEUTICS, INC.

Notes to the Consolidated Financial Statements

Foreign Currency Translation and Transactions

The Company has operations in the United Kingdom and Netherlands in addition to the U.S. The Company translated its assets and liabilities into U.S. dollars using end of period exchange rates, and revenues and expenses are translated into U.S. dollars using weighted average rates. Foreign currency translation adjustments are reported as a separate component of accumulated other comprehensive income (loss) within stockholders’ equity deficit.

The Company converts receivables and payables denominated in other than the Company’s functional currency at the exchange rate as of the balance sheet date. The resulting transaction exchange gains or losses related to intercompany receivable and payables, are included in other income and expense.

Comprehensive Loss

The Company reports comprehensive loss and its components in its consolidated financial statements. Comprehensive loss consists of net loss and foreign currency translation adjustments, affecting stockholders’ equity deficit that, under U.S, GAAP, is excluded from net loss.

Revenue Recognition

The Company recognizes revenue in accordance with the terms stipulated under the applicable service contract. In various situations, the Company receives certain credits against invoices for manufacturing of patient treatments by its contract manufacturer. These payments are assessed and recognized in accordance with ASC 606 in the period when the performance obligation had been met.

Accrued Outsourcing Costs

Substantial portions of our preclinical studies and clinical trials are performed by third-party laboratories, medical centers, contract research organizations and other vendors (collectively “CROs”). These CROs generally bill monthly or quarterly for services performed, or bill based upon milestones achieved. For clinical studies, expenses are accrued when services are performed. The Company monitors patient enrollment, the progress of clinical studies and related activities through internal reviews of data that is tracked by the CROs under contractual arrangements, correspondence with the CROs and visits to clinical sites.

Research and Development Costs

Research and development costs are charged to operations as incurred and consist primarily of clinical trial related costs (including costs for collection, validation and analysis of trial results), related party manufacturing costs, consulting costs, contract research and development costs, clinical site costs and compensation costs.

Income Taxes

The Company evaluates its tax positions and estimates its current tax exposure along with assessing temporary differences that result from different book to tax treatment of items not currently deductible for tax purposes. These differences result in deferred tax assets and liabilities on the Company’s Consolidated Balance Sheets, which are estimated based upon the difference between the financial statement and tax bases of assets and liabilities using the enacted tax rates that will be in effect when these differences reverse. In general, deferred tax assets represent future tax benefits to be received when certain expenses previously recognized in the Company’s Consolidated Statements of Comprehensive Loss become deductible expenses under applicable income tax laws or loss or credit carryforwards are utilized. Accordingly, realization of the Company’s deferred tax assets is dependent on future taxable income against which these deductions, losses and credits can be utilized.

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NORTHWEST BIOTHERAPEUTICS, INC.

Notes to the Consolidated Financial Statements

The Company must assess the likelihood that the Company’s deferred tax assets will be recovered from future taxable income, and to the extent the Company believes that recovery is not more likely than not, the Company must establish a valuation allowance. Management judgment is required in determining the Company’s provision for income taxes, the Company’s deferred tax assets and liabilities and any valuation allowance recorded against the Company’s net deferred tax assets. Excluding foreign operations, the Company recorded a full valuation allowance at each balance sheet date presented because, based on the available evidence, the Company believes it is more likely than not that it will not be able to utilize all of its deferred tax assets in the future. The Company intends to maintain the full valuation allowance until sufficient evidence exists to support the reversal of the valuation allowance.

Stock-Based Compensation

The Company measures stock-based compensation to employees, consultants, and Board members at fair value on the grant date of the award. Compensation cost is recognized as expense on a straight-line basis over the requisite service period of the award. For awards that have a performance condition, compensation cost is measured based on the fair value of the award on the grant date, the date performance targets are established, and is expensed over the requisite service period for each separately vesting tranche when achievement of the performance condition becomes probable. The Company assess the probability of the performance conditions being met on a continuous basis. Forfeitures are recognized when they occur. Prior to January 1, 2019, share-based compensation cost for non-employees was re-measured at every reporting period.

The Company estimates the fair value of stock option grants that do not contain market-based vesting conditions using the Black-Scholes option pricing model and the assumptions used in calculating the fair value of stock-based awards represent management’s best estimates and involve inherent uncertainties and the application of management’s judgment.

Expected Term - The expected term of options represents the period that the Company’s stock-based awards are expected to be outstanding based on the simplified method, which is the half-life from vesting to the end of its contractual term.

Expected Volatility - The Company computes stock price volatility over expected terms based on its historical common stock trading prices.

Risk-Free Interest Rate - The Company bases the risk-free interest rate on the implied yield available on U. S. Treasury zero-coupon issues with an equivalent remaining term.

Expected Dividend - The Company has never declared or paid any cash dividends on its common shares and does not plan to pay cash dividends in the foreseeable future, and, therefore, uses an expected dividend yield of zero in its valuation models.

The Company is also required to make estimates as to the probability of achieving the specific performance conditions. If actual results are not consistent with the Company’s assumptions and judgments used in making these estimates, the Company may be required to increase or decrease compensation expense, which could be material to the Company’s consolidated results of operations.

Debt Extinguishment

The Company accounts for the income or loss from extinguishment of debt by comparing the difference between the reacquisition price and the net carrying amount of the debt being extinguished and recognizes this as gain or loss when the debt is extinguished. The gain or loss from debt extinguishment is recorded in the consolidated statements of operations under “other income (expense)” as loss from extinguishment of convertible debt.

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NORTHWEST BIOTHERAPEUTICS, INC.

Notes to the Consolidated Financial Statements

Sequencing

The Company adopted a sequencing policy under ASC 815-40-35 whereby in the event that reclassification of contracts from equity to liabilities is necessary pursuant to ASC 815 due to the Company’s inability to demonstrate it has sufficient authorized shares. This was previously the result of certain financial instruments with a potentially indeterminable number of shares and most recently due to the company committing more shares than authorized. While temporary suspensions are in place to keep the potential exercises beneath the number authorized, certain instruments are classified as liabilities, after allocating available authorized shares on the basis of the earliest grant date of potentially dilutive instruments. Pursuant to ASC 815, issuance of stock-based awards to the Company’s employees, nonemployees or directors are not subject to the sequencing policy.

Modification of Equity Classified Warrants

A change in the terms or conditions of a warrant is accounted for as a modification. For a warrant modification accounted for under ASC 815, the effect of a modification shall be measured as the difference between the fair value of the modified warrant over and the fair value of the original warrant immediately before its terms are modified, with each measured on the modification date. The accounting for any incremental fair value of the modified warrants over the original warrants is based on the specific facts and circumstances related to the modification. When a modification is directly attributable to an equity offering, the incremental change in fair value of the warrants is accounted for as an equity issuance cost. When a modification is directly attributable to a debt financing, the incremental change in fair value of the warrants is accounted for as a debt discount or debt issuance cost. For all other modifications, the incremental change in fair value is recognized as a deemed dividend.

Income (Loss) per Share

Basic income (loss) per share is computed on the basis of the weighted average number of shares outstanding for the reporting period. Diluted income (loss) per share is computed on the basis of the weighted average number of common shares plus dilutive potential common shares outstanding using the treasury stock method. Diluted weighted average shares reflect the dilutive effect, if any, of potential common shares. To the extent their effect is dilutive, employee equity awards and other commitments to be settled in common stock are included in the calculation of diluted income per share based on the treasury stock method. Potential common shares are excluded from the calculation of dilutive weighted average shares outstanding if their effect would be anti-dilutive at the balance sheet date based on a treasury stock method or due to a net loss.

Recently Issued Accounting Standards Not Yet Adopted

Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions

In June 2022, the FASB issued ASU 2022-03, ASC Subtopic 820 “Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions”. The FASB is issuing this Update (1) to clarify the guidance in Topic 820, Fair Value Measurement, when measuring the fair value of an equity security subject to contractual restrictions that prohibit the sale of an equity security, (2) to amend a related illustrative example, and (3) to introduce new disclosure requirements for equity securities subject to contractual sale restrictions that are measured at fair value in accordance with Topic 820.

For public business entities, the amendments in this Update are effective for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years. Early adoption is permitted for both interim and annual financial statements that have not yet been issued or made available for issuance. The Company will adopt ASU 2022-03 effective January 1, 2024. The Company does not expect that the adoption of this guidance will have a material impact on its consolidated financial statements.

Improvements to Income Tax Disclosures

In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (ASU 2023-09), which improves the transparency of income tax disclosures by requiring consistent categories and greater disaggregation of information in the effective tax rate reconciliation and income taxes paid disaggregated by jurisdiction. It also includes certain other amendments to improve the effectiveness of income tax disclosures. This guidance will be effective for the annual periods beginning the year ended December 31, 2025. Early adoption is permitted. Upon adoption, the guidance can be applied prospectively or retrospectively. The Company does not expect the adoption of this guidance to have a material impact on its consolidated financial statements.

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NORTHWEST BIOTHERAPEUTICS, INC.

Notes to the Consolidated Financial Statements

4. Fair Value Measurements

In accordance with ASC 820 (Fair Value Measurements and Disclosures), the Company uses various inputs to measure the fair value of liabilities related to certain embedded conversion feature associated with convertible debt, share liability, and contingent payable to Cognate BioServices on a recurring basis to determine the fair value of these liabilities. The Company also elects the FVO for certain eligible financial instruments, such as convertible notes, in order to simplify the accounting treatment.

The following table classifies the Company’s liabilities measured at fair value on a recurring basis into the fair value hierarchy as of December 31, 2023 and December 31, 2022 (in thousands):

​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ Fair value measured at December 31, 2023

​ ​ ​ Quoted prices in active Significant other Significant

​ ​ Fair value at ​ markets ​ observable inputs ​ unobservable inputs

​ ​ December 31, 2023 ​ (Level 1) ​ (Level 2) ​ (Level 3)

Warrant liability ​ $ 944 ​ $ — ​ $ — ​ $ 944

Contingent payable derivative liability ​ ​ 9,188 ​ ​ — ​ ​ — ​ ​ 9,188

Convertible notes at fair value ​ ​ 12,771 ​ ​ ​ ​ ​ ​ ​ ​ 12,771

Share liability ​ 483 ​ ​ ​ ​ ​ 483

​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ Fair value measured at December 31, 2022

​ ​ ​ Quoted prices in active Significant other Significant

​ ​ Fair value at ​ markets ​ observable inputs ​ unobservable inputs

​ ​ December 31, 2022 ​ (Level 1) ​ (Level 2) ​ (Level 3)

Warrant liability ​ $ 80,559 ​ $ — ​ $ — ​ $ 80,559

Embedded redemption option ​ 807 ​ — ​ — ​ 807

Contingent payable derivative liability ​ 8,668 ​ — ​ — ​ 8,668

Share liability ​ ​ 678 ​ ​ ​ ​ ​ ​ ​ ​ 678

​

​

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NORTHWEST BIOTHERAPEUTICS, INC.

Notes to the Consolidated Financial Statements

There were no transfers between Level 1, 2 or 3 during the years ended December 31, 2023 and 2022.

The following table presents changes in Level 3 liabilities measured at fair value for the years ended December 31, 2023 and 2022. Both observable and unobservable inputs were used to determine the fair value of positions that the Company has classified within the Level 3 category. Unrealized gains and losses associated with liabilities within the Level 3 category include changes in fair value that were attributable to both observable (e.g., changes in market interest rates) and unobservable (e.g., changes in unobservable long- dated volatilities) inputs (in thousands).

​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Convertible ​ ​ ​

​ ​ Warrant ​ Embedded ​ Contingent Payable ​ Share ​ Notes At ​ ​ ​

​ Liability Redemption Option Derivative Liability Liability Fair Value Total

Additional warrant liability ​ ​ 184 ​ ​ 7 ​ ​ — ​ ​ — ​ ​ — ​ ​ 191

Additional share liability ​ ​ — ​ ​ — ​ ​ — ​ ​ 711 ​ ​ — ​ ​ 711

Debt redemption ​ ​ — ​ ​ (213) ​ ​ — ​ ​ — ​ ​ — ​ ​ (213)

Additional share liability ​ ​ — ​ ​ — ​ ​ — ​ ​ 818 ​ ​ — ​ ​ 818

Redemption of share liability ​ ​ — ​ ​ — ​ ​ — ​ ​ (1,091) ​ ​ — ​ ​ (1,091)

A summary of the weighted average (in aggregate) significant unobservable inputs (Level 3 inputs) used in measuring the Company’s warrant liabilities and embedded conversion feature (excluding the piggy-back right, which was based on key milestone estimates, see Note 8 for piggy-back rights) that are categorized within Level 3 of the fair value hierarchy as of December 31, 2023, January 9 2023 (the reclassification date) and December 31, 2022 is as follows:

​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ Share Contingent Payable Warrant