Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T(§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes ¨ No x

As of August 8, 2016, the total number of shares of common stock, par value $0.001 per share, outstanding was 113,742,204.

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

NORTHWEST BIOTHERAPEUTICS, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Northwest Biotherapeutics, Inc. and its subsidiaries NW Bio Europe S.A.R.L, NW Bio Gmbh and Aracaris Capital, Ltd. (collectively, the “Company”, “we”, “us” and “our”) were organized to discover and develop innovative immunotherapies for cancer.

The Company’s platform technology, DCVax®, is currently being tested for the treatment of certain types of cancers through clinical trials in the United States and Europe that are in various phases.

For the six months ended June 30, 2016, the Company recognized net losses of $20.3 million.

During the six months ended June 30, 2016, the Company used approximately $31.8 million of cash in its operating activities. These cash outflows included substantial amounts of accrued costs relating to prior periods of higher activity and expenditures in the Company’s Phase III clinical trial which have subsequently been reduced, and included substantial amounts of legal costs which the Company anticipates may be subject to reimbursement under the Company’s insurance, with further legal expenses going forward being covered by insurance directly. The Company had cash and cash equivalents of $2.1 million and a working capital deficiency (cash and non-cash liabilities combined) of approximately $55.4 million at June 30, 2016. The Company owes an aggregate of $7.6 million of accounts payable and convertible notes to related parties.

Because of recurring operating losses, net operating cash flow deficits, and an accumulated deficit there is substantial doubt about the Company’s ability to continue as a going concern. The financial statements have been prepared assuming the Company will continue as a going concern and do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that might become necessary should the Company not be able to continue as a going concern.

The accompanying unaudited condensed consolidated interim financial statements include the accounts of the Company and its subsidiaries. All material intercompany balances and transactions have been eliminated.

The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with the accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and pursuant to the instructions to Form 10-Q and Article 8 of Regulation S-X of the Securities and Exchange Commission (“SEC”) and on the same basis as the Company prepares its annual audited consolidated financial statements. The condensed consolidated balance sheet as of June 30, 2016, condensed consolidated statements of operations for the three and six months ended June 30, 2016 and 2015, condensed consolidated statements of comprehensive loss for the three and six months ended June 30, 2016 and 2015, condensed consolidated statement of stockholders’ equity (deficit) for the six months ended June 30, 2016, and the condensed consolidated statements of cash flows for the six months ended June 30, 2016 and 2015 are unaudited, but include all adjustments, consisting only of normal recurring adjustments, which the Company considers necessary for a fair presentation of the financial position, operating results and cash flows for the periods presented. The results for the three and six months ended June 30, 2016 are not necessarily indicative of results to be expected for the year ending December 31, 2016 or for any future interim period. The condensed consolidated balance sheet at December 31, 2015 has been derived from audited financial statements; however, it does not include all of the information and notes required by U.S. GAAP for complete financial statements. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements for the year ended December 31, 2015, and notes thereto included in the Company’s annual report on Form 10-K, which was filed with the SEC on March 16, 2016, as amended on April 29, 2016.

NORTHWEST BIOTHERAPEUTICS, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

In preparing condensed 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 assumptions. These estimates and assumptions include valuing equity securities in share-based payment arrangements, valuing environmental liabilities, estimating the fair value of equity instruments recorded as derivative liabilities, and estimating the useful lives of depreciable assets and whether impairment charges may apply.

The Company accounts for certain common stock warrants outstanding as a liability at its 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 the Company's statements of operations. The fair value of the warrants issued by the Company in connection with the conversion transaction has been estimated using a Monte Carlo simulation.

The Company records environmental remediation liabilities for properties acquired. The environmental remediation liabilities are initially recorded at fair value. The liability is reduced for actual costs incurred in connection with the clean-up activities for each property. Upon completion of the clean-up, the environmental remediation liability is adjusted to equal the fair value of the remaining operation, maintenance and monitoring activities to be performed for the property. The amount of the additional liability resulting from the completion of the clean-up, if any, would be included in other income (expense). As of June 30, 2016, the Company estimated that the total environmental remediation costs associated with the purchase of the UK Facility will be approximately $6.2 million. This is a projected potential future cost. No such environmental costs have been incurred to date and none are currently pending. Contamination clean-up costs that improve the property from its original acquisition state will be capitalized as part of the property’s overall development costs. The Company engaged a third party specialist to conduct certain surveys of the condition of the property which included, among other things, a preliminary analysis of potential environmental remediation exposures. The Company determined, based on information contained in the specialist’s report, that it would be required to estimate the fair value of an unconditional obligation to remediate specific ground contamination at an estimated fair value of approximately $6.2 million. The Company computed the fair value of this obligation using a probability weighted approach that measures the likelihood of the following two potential outcomes: (i) a higher probability requirement of erecting a protective barrier around the affected area at an estimated cost of approximately $4.5 million, and (ii) a lower probability requirement of having to excavate the affected area at an estimated cost of approximately $32.0 million. The Company’s estimate is preliminary and therefore subject to change as further studies are conducted, and as additional facts come to the Company’s attention. Environmental remediation efforts are complex, technical and subject to various uncertainties. Accordingly, it is at least reasonably possible that any changes in the Company’s estimate could materially differ from the management’s preliminary assessment discussed herein.

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

Research and development costs are charged to operations as incurred and consist primarily of clinical trial costs, related party manufacturing costs, consulting costs, contract research and development costs, clinical site costs and compensation costs.

For the three months ended June 30, 2016 and 2015, the Company recognized research and development costs of $8.7 million and $27.8 million, respectively. For the six months ended June 30, 2016 and 2015, the Company recognized research and development costs of $22.2 million and $47.4 million, respectively.

NORTHWEST BIOTHERAPEUTICS, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

There have been no material changes in the Company’s significant accounting policies to those previously disclosed in the 2015 Annual Report.

In March 2016, the FASB issued ASU No. 2016-09, Compensation-Stock Compensation (Topic 718), Improvements to Employee Share-Based Payment Accounting. Under ASU No. 2016-09, companies will no longer record excess tax benefits and certain tax deficiencies in additional paid-in capital (“APIC”). Instead, they will record all excess tax benefits and tax deficiencies as income tax expense or benefit in the income statement and the APIC pools will be eliminated. In addition, ASU No. 2016-09 eliminates the requirement that excess tax benefits be realized before companies can recognize them. ASU No. 2016-09 also requires companies to present excess tax benefits as an operating activity on the statement of cash flows rather than as a financing activity. Furthermore, ASU No. 2016-09 will increase the amount an employer can withhold to cover income taxes on awards and still qualify for the exception to liability classification for shares used to satisfy the employer’s statutory income tax withholding obligation. An employer with a statutory income tax withholding obligation will now be allowed to withhold shares with a fair value up to the amount of taxes owed using the maximum statutory tax rate in the employee’s applicable jurisdiction(s). ASU No. 2016-09 requires a company to classify the cash paid to a tax authority when shares are withheld to satisfy its statutory income tax withholding obligation as a financing activity on the statement of cash flows. Under current U.S. GAAP, it was not specified how these cash flows should be classified. In addition, companies will now have to elect whether to account for forfeitures on share-based payments by (1) recognizing forfeitures of awards as they occur or (2) estimating the number of awards expected to be forfeited and adjusting the estimate when it is likely to change, as is currently required. The amendments of this ASU are effective for reporting periods beginning after December 15, 2016, with early adoption permitted but all of the guidance must be adopted in the same period. The Company is currently assessing the impact that ASU No. 2016-09 will have on its condensed consolidated financial statements.

In April 2016, the FASB issued ASU No. 2016-10, Revenue from Contracts with Customer. The new guidance is an update to ASC 606 and provides clarity on: identifying performance obligations and licensing implementation. For public companies, ASU No. 2016-10 is effective for annual periods, including interim periods within those annual periods, beginning after December 15, 2016. The Company is currently evaluating the impact that ASU No. 2016-10 will have on its condensed consolidated financial statements.

In January 2016, FASB issued ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities. ASU 2016-01 requires equity investments to be measured at fair value with changes in fair value recognized in net income; simplifies the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment; eliminates the requirement for public business entities to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet; requires public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes; requires an entity to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments; requires separate presentation of financial assets and financial liabilities by measurement category and form of financial assets on the balance sheet or the accompanying notes to the financial statements; and clarifies that an entity should evaluate the need for a valuation allowance on a deferred tax asset related to available-for-sale securities in combination with the entity’s other deferred tax assets. ASU 2016-01 will be effective for financial statements issued for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. The Company is currently evaluating the impact that ASU 2016-01 will have on its condensed consolidated financial statements and related disclosures.

In February 2016, FASB issued ASU No. 2016-02, Leases (Topic 842) which supersedes FASB ASC Topic 840, Leases (Topic 840) and provides principles for the recognition, measurement, presentation and disclosure of leases for both lessees and lessors. The new standard requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee. This classification will determine whether lease expense is recognized based on an effective interest method or on a straight-line basis over the term of the lease, respectively. A lessee is also required to record a right-of-use asset and a lease liability for all leases with a term of greater than twelve months regardless of classification. Leases with a term of twelve months or less will be accounted for similar to existing guidance for operating leases. The standard will be effective for annual and interim periods beginning after December 15, 2018, with early adoption permitted upon issuance. The Company is currently evaluating the impact that ASU 2016-02 will have on its condensed consolidated financial statements and related disclosures.

NORTHWEST BIOTHERAPEUTICS, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

The following table classifies the Company’s liabilities measured at fair value on a recurring basis into the fair value hierarchy as of June 30, 2016 and December 31, 2015 (in thousands):

There were no transfers between Level 1, 2 or 3 during the six-month period ended June 30, 2016.

The following table presents changes in Level 3 liabilities measured at fair value for the six-month period ended June 30, 2016. 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).

The Company’s warrant liabilities are measured at fair value using the Monte Carlo simulation valuation methodology. A summary of the weighted average (in aggregate) significant unobservable inputs (Level 3 inputs) used in measuring the Company’s warrant liabilities that are categorized within Level 3 of the fair value hierarchy for the six months ended June 30, 2016 is as follows:

The development and determination of the unobservable inputs for Level 3 fair value measurements and fair value calculations are the responsibility of the Company’s management.

NORTHWEST BIOTHERAPEUTICS, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Property and equipment consist of the following at June 30, 2016 and December 31, 2015 (in thousands):

Depreciation expense was approximately $67,000 and $12,000 for the three months ended June 30, 2016 and 2015. Depreciation expense was approximately $80,000 and $15,000 for the six months ended June 30, 2016 and 2015.

The Company has Convertible Senior Notes of $10.7 million, net of $0.3 million deferred offering cost as of June 30, 2016 with an interest rate of 5% and conversion price of $6.60. The Company has $1.0 million remaining in escrowed interest payments, which is sufficient to fund, when due, the total aggregate amount of the six scheduled semi-annual interest payments during the remaining term of the notes, excluding additional interest, if any.

The following table shows the details of interest expenses related to 2014 Convertible Senior Notes for the three and six months ended June 30, 2016 and 2015, respectively (in thousands):

On June 17, 2016, the Company entered into an extension agreement to renew the second mortgage loan maturity date to August 17, 2017. The effective date of the extension agreement is August 17, 2016 and a renewal fee of approximately $0.2 million, which is not due until the end of the extension period and will be recorded as deferred financing cost.

As of June 30, 2016, the Company had a net mortgage liability of $10.3 million, including deferred financing costs of $0.5 million. Approximately $5.9 million of the mortgage loans are due in November 2016, and the remainder in August 2017.

NORTHWEST BIOTHERAPEUTICS, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

The following table shows the details of interest expenses related to mortgages for the three and six months ended June 30, 2016 and 2015, respectively (in thousands):

Notes payable consist of the following at June 30, 2016 and December 31, 2015 (in thousands):

(1) This $0.934 million note, which was originally due in July 2011 is currently under dispute with the creditor as to the validity of the note payable balance.

(2) This $0.135 million note as of June 30, 2016 consists of two separate 6% notes in the amounts of $0.110 million and $0.025 million. In regard to the $0.110 million note, the Company has made ongoing attempts to locate the creditor to repay or convert this note, but has been unable to locate the creditor to date. In regard to the $0.025 million note, the holder has elected to convert these notes into equity, the Company has delivered the applicable conversion documents to the holder, and the Company is waiting for the holder to execute and return the documents.

(3) This $0.050 million demand note as of June 30, 2016 is held by an officer of the Company. The holder has made no demand for payment, but reserves the right to make a demand at any time.

Options, warrants, and convertible debt outstanding were all considered anti-dilutive for the three and six months ended June 30, 2016, and 2015, due to net losses.

NORTHWEST BIOTHERAPEUTICS, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

The following securities were not included in the diluted net loss per share calculation because their effect was anti-dilutive as of the periods presented (in thousands):

At June 30, 2016 and December 31, 2015, the Company owed Cognate $7.6 million and $5.5 million, respectively, for unpaid invoices for manufacturing, product distribution, product and process development, and related services.

The following table shows a summary of research and development cost from Cognate relating to the DCVax-L and DCVax-Direct programs, product and process development work and preparations for upcoming Phase II trials for the three and six months ended June 30, 2016 and 2015, respectively (in thousands):

The Company recorded $8.2 million of income and $15.8 million of expense for the six-month period ended June 30, 2016 and 2015, respectively, for stock based payment expense to Cognate for the applicable pro rata portion of the ongoing 3-year vesting of the one-time initiation payments under Manufacturing and Services Agreement that were entered into in January 2014. The fair value calculation of these shares was determined using the market price for tradable shares, although the shares issued to Cognate were unregistered non-tradable shares, subject to multiple restrictions, including multi-year vesting and a multi-year lock-up.

Shares and warrants previously issued to Cognate in partial payment of invoices for manufacturing services are under a 3-year lock-up, which has been in place since January 2014. The lock-up prevents Cognate from selling the shares received. During the lock-up, if the Company enters into a transaction with other investors or creditors on more favorable terms than Cognate received, the Company has an ongoing obligation, under the Manufacturing Services Agreement, to conform the terms of Cognate’s shares and warrants to the same terms as the other investors or creditors, under a most favored nation provision.

During the period ended June 30, 2016 the Company entered into two financings with unrelated institutional investors that triggered the most favored nation provision. The first reset in the period ended March 31, 2016 had an effective price of $1.70 and would result in an obligation by the Company to issue 6.0 million shares to Cognate. The second reset occurred in the three month period ended June 30, 2016 had an effective price of $0.96 that resulted in an obligation to issue an additional 12.0 million shares. In total, the Company has an obligation to issue 18 million shares to Cognate as of June 30, 2016 under the most favored nation provision. However, the shares have not been issued, and the Company is in active negotiations with Cognate seeking to modify these arrangements. The Company accounted for the obligation to issue shares in the balance sheet based on the fair market value of the Company’s unrestricted tradable stock at the reporting date.

Shares payable to related party for the three and six months ended June 30, 2016 was $1.7 and $10.5 million, respectively and recorded in research and development expense in the statement of operations.

NORTHWEST BIOTHERAPEUTICS, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

On February 29, 2016, the Company entered into a Securities Purchase Agreement (the “Agreement”) with certain institutional investors (the “Purchasers”), for a registered direct offering (the “Offering”) of 5,882,353 shares (the “Shares”) of the Company’s Common Stock at the purchase price of $1.70 per share, and Series A Warrants (the “Series A Warrants”) to purchase an additional 2,941,177 shares of Common Stock at an exercise price of $2.25 per share. The Series A Warrants will become exercisable on the six month anniversary of issuance and expire five years thereafter.

In addition, the Company granted the Purchasers a sixty (60) day overallotment option in the form of Series B Warrants to purchase an additional 5,882,353 shares of Common Stock at an exercise price of $3.00 per share (the “Series B Warrants”). The Series B Warrants was exercisable immediately and was to expire within sixty (60) days. However, on May 2, 2016, the Company and the investors agreed to extend this warrant exercise period by twenty-one (21) days, from May 2 to May 23, 2016. The Company and the Purchasers consummated the purchase and sale of the Securities on March 3, 2016 (the “Closing”) and the Company raised gross proceeds of $10 million and net proceeds of approximately $9.2 million, after deducting placement agent fees, attorneys’ fees and other expenses. Subsequent to the reporting period, the Series B Warrants were extended an additional twenty-one (21) days to May 23, 2016.

In a concurrent private placement, each Purchaser also received Series C Warrants (the “Series C Warrants”) to purchase up to 2,941,177 shares of Common Stock. The Series C Warrants vest and become exercisable only if, and to the extent that, the Series B Warrants held by such Purchaser are exercised. The Series C warrants will be issuable and exercisable for one-half share of Common Stock per each Series B Warrant exercised. The Series C Warrants have an exercise price of $4.00 per share, shall be exercisable on the six-month anniversary of issuance and will expire five years thereafter.

In connection with the Offering and the concurrent private placement, the Company engaged H.C. Wainwright & Co., LLC (the “Placement Agent”) to act as its exclusive placement agent. The Company agreed to pay the Placement Agent a cash placement fee equal to 7% of the aggregate purchase price for the common stock sold in the registered offering. The Placement Agent also received Common Stock purchase warrants (the “Compensation Warrants”) to purchase up to 294,118 shares of Common Stock, or 5% of the aggregate number of shares of common Stock sold in the registered offering, at an exercise price of $2.125, or 125% of the public offering price per share in the registered offering, which are exercisable six months following issuance and terminate on February 29, 2021.

On May 15, 2016, the Company entered into an agreement with a holder (the “Holder”) of the Company’s existing Series A, B and C Warrants, pursuant to which the Holder agreed to exercise all of the Holder’s Series B Warrants to purchase 4,411,764 shares of Common Stock. In consideration, the Company agreed to reduce the exercise price of the Series B Warrants to $0.96 per share, the Company’s closing price on the prior trading day, for gross proceeds of approximately $4,235,000, and agreed to issue new Series D Common Stock Purchase Warrants (the “Series D Warrants”) to purchase up to 2,205,882 shares of Common Stock at an exercise price of $1.00 per share (subject to customary adjustments such as for stock splits and dividends), with an exercise period of five years, commencing six months after issuance.

The Holder’s exercise of the Series B Warrants to purchase 4,411,764 shares of Common Stock triggered the existing outstanding Series C Warrants to become vested and exercisable for up to 2,205,882 shares of Common Stock. The Company agreed to reset the exercise price of the Series A and Series C Warrants to $1.00 per share.

In connection with the offering and the concurrent private placement, the Company engaged H.C. Wainwright & Co., LLC (the "Placement Agent") to act as its exclusive placement agent. The Company agreed to pay the Placement Agent a cash placement fee equal to 7% of the aggregate purchase price for the common stock sold. The Placement Agent also received Common Stock purchase warrants (the "Compensation Warrants") to purchase up to 220,588 shares of Common Stock, or 5% of the aggregate number of shares of common Stock sold, at an exercise price of $1.20, or 125% of the public offering price per share, which are exercisable six months following issuance and terminate on May 15, 2021.

NORTHWEST BIOTHERAPEUTICS, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

The modification of the warrant exercise price increased the value of the warrants by approximately $2.6 million. This cost was recorded as a deemed dividend in additional paid-in capital due to the absence of retained earnings. This cost is included in modification of warrants and increased the net loss available to common shareholders on the condensed, consolidated statements of operations.

The following is a summary of warrant activity for the six months ended June 30, 2016 (in thousands, except per share data):

In 2014, as previously reported, the Company received demand letters from three purported individual shareholders seeking to inspect our corporate books and records pursuant to Section 220 of the Delaware General Corporation Law. The demand letters were all substantially similar, and claimed that their purpose is to investigate possible mismanagement and breaches of fiduciary duty by the Company’s directors and officers. They requested a range of documents. On November 13, 2014, one of the purported shareholders filed a complaint in the Delaware Court of Chancery seeking to enforce her books and records demand. The Company reached negotiated agreements and provided limited records, under confidentiality agreements. On July 16, 2015, the parties filed, and the court entered, a stipulation dismissing the case.

On June 19, 2015, two of the purported shareholders filed a complaint purportedly suing on behalf of a class of similarly situated shareholders and derivatively on behalf of the Company in the Delaware Court of Chancery. The lawsuit names Cognate BioServices, Inc., Toucan Partners, Toucan Capital Fund III, our CEO Linda Powers and the Company’s Board of Directors as defendants, and names the Company as a “nominal defendant” with respect to the derivative claims. The complaint generally objects to certain transactions between the Company and Cognate and the Toucan entities, in which Cognate and the Toucan entities provided services and financing to the Company, or agreed to conversion of debts owed to them by the Company into equity. The complaint seeks unspecified monetary relief for the Company and the plaintiffs, and various forms of equitable relief, including disgorgement of allegedly improper benefits, rescission of the challenged transactions, and an order forbidding similar transactions in the future. On September 1, 2015, the Company and other named defendants filed motions to dismiss. In response, the plaintiffs filed an amended complaint on November 6, 2015. The Company and the other named defendants filed motions to dismiss plaintiffs’ amended complaint on January 19, 2016. The plaintiffs filed an answering brief in opposition to the motion to dismiss on April 4, 2016. The Company and the other defendants filed reply briefs on May 18, 2016. Oral argument has been set for October 11, 2016. The Company intends to continue to vigorously defend the case.

NORTHWEST BIOTHERAPEUTICS, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

On November 19, 2015, a third purported shareholder who had sought corporate books and records filed a complaint in the U.S. District Court for the District of Maryland, claiming to sue derivatively on behalf of the Company. The complaint names the Company's Board of Directors, Toucan Capital Fund III, L.P., Toucan General II, LLC, Toucan Partners, LLC, and Cognate as defendants, and names the Company as a nominal defendant. The complaint claims that the plaintiff made a demand on the Company's Board of Directors to commence an action against the Company's directors and its CEO and that the plaintiff commenced the derivative action after not receiving a response to the demand letter within an allegedly "sufficient time." The complaint further claims that the Company purportedly overcompensated Cognate and Toucan for certain services and loans in payments of stock, and that the Company's CEO, Ms. Powers, benefited from these transactions with Cognate and Toucan, which she allegedly owns or controls. The complaint asserts that the alleged overpayments unjustly enriched Ms. Powers, Toucan, and Cognate. The Complaint also claims that the Company's directors breached their fiduciary duties of loyalty and good faith to the Company by authorizing the payments to Cognate. Finally, the complaint claims that Ms. Powers, Cognate, and Toucan aided and abetted the directors' breaches of fiduciary duties by causing the board to enter into the agreements with Cognate. The plaintiff seeks an award of unspecified damages to the Company and seeks equitable remedies, including disgorgement by Ms. Powers, Toucan, and Cognate of the allegedly improper benefits received as a result of the disputed transactions. The plaintiff also seeks costs and disbursements associated with bringing suit, including attorneys' fees and expert fees. On February 2, 2016, plaintiff and defendants filed a joint motion to stay the proceedings pending an investigation by a special committee of the Company's Board of Directors into the allegations asserted in the demand letter and underlying the lawsuit. The court entered the stay on March 18, 2016.

On August 26, 2015, a purported shareholder of the Company filed a putative class action complaint in the U.S. District Court for the District of Maryland. The lawsuit names the Company and Ms. Powers as defendants. On December 14, 2015, the court appointed two lead plaintiffs. The Lead Plaintiffs filed an amended complaint on February 12, 2016, purportedly on behalf of all of those who purchased common stock in NW Bio between January 13, 2014 and August 21, 2015. The amended complaint generally claims that the defendants violated Section 10(b) and Section 20(a) of the Securities Exchange Act of 1934 by making misleading statements and/or omissions on a variety of subjects, including the status and results of the Company’s DCVax trials. The amended complaint seeks unspecified damages, attorneys’ fees, and costs. The Company and Ms. Powers filed a motion to dismiss plaintiffs’ amended complaint on April 12, 2016. The plaintiffs filed an opposition to the motion to dismiss on June 13, 2016. The Company and Ms. Powers filed a reply in support of their motion to dismiss on July 28, 2016. The Company intends to vigorously defend the case.

On December 7, 2015, the Company received a letter on behalf of shareholders demanding to inspect certain corporate books and records pursuant to Section 220 of the Delaware General Corporation Law. The demand letter claimed that its purpose was to investigate: (1) allegedly improper transactions, misconduct, and mismanagement by directors and an officer of the Company; (2) the possible breach of fiduciary duty by certain directors and officers of the Company; and (3) the independence and disinterestedness of the Company’s board, to determine whether a pre-suit demand would be necessary before commencing any derivative action on behalf of the Company. The Company has appointed a special committee of its Board of Directors consisting of independent and disinterested directors to investigate the allegations set forth in the demand letter, as well as the allegations asserted in the litigation summarized above. The Company also is in ongoing discussions with the shareholders demanding corporate books and records.

On July 4, 2016, the Company entered into a Securities Purchase Agreement (the “Agreement”) with certain investors (the “Purchasers”), for a registered direct offering (the “Offering”) of 7,400,000 shares of the Company’s common stock, par value $0.001 per share (the “Common Stock”) at the purchase price of $0.50 per share, and warrants (the “Warrants”) to purchase an additional 3,700,000 shares of Common Stock at an exercise price of $0.60 per share (the “Warrant Shares”, collectively with the Common Stock and the Warrants, the “Securities”). The Warrants shall expire in five years.

The Company and the Purchasers consummated the purchase and sale of the Securities (the “Closing”) on July 6, 2016. The Company raised gross proceeds of $3,700,000 and net proceeds of approximately $3,300,000, after deducting aggregate placement agent fees of $296,000, attorneys’ fees, and other expenses.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and the notes to those statements included with this report. In addition to historical information, this report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Such forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those projected. The words “believe,” “expect,” “intend,” “anticipate,” and similar expressions are used to identify forward-looking statements, but some forward-looking statements are expressed differently. Many factors could affect our actual results, including those factors described under “Risk Factors” in our Form 10-K for the year ended December 31, 2015 and in Part II Item 1A of this report. These factors, among others, could cause results to differ materially from those presently anticipated by us. You should not place undue reliance on these forward-looking statements.

We are a biotechnology company focused on developing immunotherapy products to treat cancers more effectively than current treatments, without toxicities of the kind associated with chemotherapies, and, through a proprietary batch manufacturing process, on a cost-effective basis, initially in the United States, Canada and Europe.

We have developed a platform technology, DCVax®, which uses activated dendritic cells to mobilize a patient's own immune system to attack their cancer. The DCVax technology is expected to be applicable to all solid tumor cancers, and is embodied in several distinct product lines. One of the product lines (DCVax®-L) is designed to cover all solid tumor cancers in which the tumors can be surgically removed. Another product line (DCVax®-Direct) is designed for all solid tumor cancers which are considered inoperable and cannot be surgically removed. We believe the broad applicability of DCVax to many cancers provides multiple opportunities for commercialization and partnering.

Our DCVax platform technology involves dendritic cells, the master cells of the immune system, and is designed to reinvigorate and educate the immune system to attack cancers. The dendritic cells are able to mobilize the overall immune system, including T cells, B cells and antibodies, natural killer cells and many others. Such mobilization of the overall immune system provides a broader attack on the cancer than mobilizing just a particular component, such as T cells alone, or a particular antibody alone. Likewise, our DCVax technology is designed to attack the full set of biomarkers, or antigens, on a patient’s cancer, rather than just a particular selected target or several targets. Clinical experience indicates that when just one or a few biomarkers on a cancer are targeted by a drug or other treatment, sooner or later the cancer usually develops a way around that drug, and the drug stops working. We believe that mobilizing the overall immune system, and targeting the full set of biomarkers on the patient’s cancer, contributes to the effectiveness of DCVax.

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 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 may differ from these estimates.

Our critical accounting policies and significant estimates are detailed in our Annual Report on Form 10-K for the year ended December 31, 2015. Our critical accounting policies and significant estimates have not changed substantially from those previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2015.

Operating costs and expenses consist primarily of research and development expenses, including clinical trial expenses which increase when we are actively participating in clinical trials and are especially high when we are in a large ongoing international Phase III trial, as well as undertaking product and process development, and preparing for multiple Phase II trials.

Research and development expense was $8.7 million for the three months ended June 30, 2016 versus $27.8 million for the three months ended June 30, 2015.

During the quarter ended June 30, 2016, our research and development expenses were greatly reduced compared with the quarter ended June 30, 2015, as we are now past the peak cost periods in the Phase III trial of DCVax-L for GBM brain cancer, we expect the costs related to the Phase III trial to continue declining further as the trial moves toward completion, and we have completed the Phase I trial of DCVax-Direct.

We are currently pursuing preparations for multiple Phase II trials. We expect that our research and development operating costs will remain at a substantially reduced level until the Phase II clinical trials are ready to proceed with enrollment and execution. We have implemented lower levels of fundraising while our research and development costs have been substantially lower. We plan to increase our fundraising activities as the upcoming Phase II trials become ready for enrollment and execution.

Our operating costs include ongoing development work relating to our DCVax products and their manufacturing, such as the development, testing and optimization of different product preparations and methods, the design, engineering, sourcing, production, testing, modification and validation of manufacturing automation systems, disposable sets to be used with the manufacturing automation systems, and manufacturing processes, product ingredients, product release assays, and other matters, as well as development of standard operating procedures (SOPs), batch production records, and other necessary materials.

Our operating costs also include the costs of continuing our ongoing Phase III trial in the US, UK, Germany and Canada (with DCVax-L for brain cancer), early access programs in Europe, and preparations for multiple Phase II trials. The preparation costs include product and process development, upfront payments to the clinical trial sites and the CROs managing the trials and other service providers, and legal, regulatory and expert expenses related to regulatory approvals, institutional approvals and clinical trial agreements with each site, database development, training of medical and other site personnel, trial supplies and other. Additional substantial costs relate to the expansion of manufacturing facilities and capacity, in both the US and Europe.

Discovery and preclinical research and development expenses include costs for external technical and regulatory advisers, scientific or medical personnel and others, costs of laboratory supplies and equipment used in 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 pre-revenue company, 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 expenses include both cash and non-cash measures. The non-cash expenses include stock-based compensation and depreciation. The cash expenses include administrative personnel related salary and benefit expenses, cost of facilities, insurance and travel, property and equipment. The cash expenses also include large amounts of legal fees and related expenses, and substantial intellectual property costs.

For the three months ended June 30, 2016 and 2015, we recognized a net loss of $14.2 million and a net loss of $66.8 million, respectively. For the three-month period ended June 30, 2016, the Company recorded additional income of $3.9 million related to the change in fair value of derivative liability. For the period ended June 30, 2015, the Company recorded a $25.7 million expense related to the change in fair value of derivative liabilities.

Research and development expense was $8.7 million for the three months ended June 30, 2016 versus $27.8 million for the three months ended June 30, 2015. The decrease was primarily due to a reduction in clinical trial related expenses, due to being past the peak activity and costs in the Phase III trial of DCVax-L and having completed the Phase I trial of DCVax-Direct.

For the three months ended June 30, 2016 and 2015, we made cash payments for the two periods, respectively, of approximately $4.8 million, and $13.1 million to Cognate. At June 30, 2016 and 2015, we owed Cognate $7.6 million and $4.2 million, respectively, for unpaid invoices for DCVax-L and DCVax-Direct programs, product and process development work and preparations for upcoming Phase II trials.

For the three months ended June 30, 2016 and 2015, we incurred non-cash equity based benefit and expense (restricted common stock and warrants) for the applicable pro rata portion of the ongoing vesting (in equal monthly installments over 3 years) of the one-time initiation payments of shares and warrants under the four agreements the Company entered into with Cognate in January 2014. The Company recorded $3.0 million of income and $9.4 million expense for the three months ended June 30, 2016 and 2015. The income for the three months ended June 30, 2016 was due to the drop in share price since April 1, 2016. The fair value calculation of these shares was determined using the market price for tradable shares; however, the shares issued to Cognate were unregistered non-tradable shares subject to multiple restrictions including multi-year vesting and multi-year lock-up. The ongoing installments also included lock-up warrants (for a 3-year lock-up of Cognate shares) and most favored nation warrants.

General and administrative expense was $6.5 million (cash and non-cash expenses combined) for the three months ended June 30, 2016 versus $11.4 million for the three months ended June 30, 2015. The decrease in general and administrative expenses can be attributed mainly to substantial reductions in the use of external consultants and to the $3.4 million stock compensation that was recorded in the 2^nd quarter of 2015.

During the three months ended June 30, 2016 and 2015 we recognized a non-cash gain of $3.9 million and a non-cash loss of $25.7 million, respectively. The change in the fair value of the derivative liability during the quarter was due to a decrease in our stock price compared to the prior year quarter.

Interest expense (including non-cash elements such as amortization of debt discount and debt issuance cost) of $0.7 million and $1.6 million for the three months ended June 30, 2016 and 2015, respectively. The decrease is due to the reduction in outstanding debt in 2016.

During the three months ended June 30, 2016 and 2015, we recognized foreign currency transaction loss of $2.4 million and $0.7 million, respectively. The increase is due to the strengthening of the U.S. dollar relative to the British pound sterling.

For the six months ended June 30, 2016 and 2015, we recognized a net loss of $20.3 million and a net loss of $113.3 million, respectively. For the period ended June 30, 2016 and 2015, the Company recorded additional income of $17.5 million and additional expense of $48.9 million, respectively, related to the change in fair value of its derivative liability.

Research and development expense was $22.2 million for the six months ended June 30, 2016 versus $47.4 million for the six months ended June 30, 2015. The decrease was primarily due to decreased non-cash manufacturing and services costs as described below.

For the six months ended June 30, 2016 and 2015, we made cash payments for the two periods, respectively, of approximately $10.1 million, and $21.3 million to Cognate. At June 30, 2016 and 2015, we owed Cognate $7.6 million and $4.2 million, respectively, for unpaid invoices for DCVax-L and DCVax-Direct programs, product and process development work and preparations for upcoming Phase II trials.

For the six months ended June 30, 2016 and 2015, we incurred non-cash equity based benefit and expense (restricted common stock and warrants) for the applicable pro rata portion of the ongoing vesting (in equal monthly installments over 3 years) of the one-time initiation payments of shares and warrants under the four agreements the Company entered into with Cognate in January 2014. The Company recorded $8.2 million of income and $15.8 million expense for the six months ended June 30, 2016 and 2015. The income in March 2016 was due to the drop in share price from December 31, 2015. The fair value calculation of these shares was determined using the market price for tradable shares; however the shares issued to Cognate were unregistered non-tradable shares subject to multiple restrictions including multi-year vesting and multi-year lock-up. The ongoing installments also included lock-up warrants (for a 3-year lock-up of Cognate shares) and most favored nation warrants.

General and administrative expense was $10.7 million (cash and non-cash expenses combined) for the six months ended June 30, 2016 versus $14.8 million for the six months ended June 30, 2015. The decrease in general and administrative expenses can be attributed mainly to substantial reductions in the use of external consultants and to the $3.4 million stock compensation that was recorded in the 2nd quarter of 2015.

During the six months ended June 30, 2016 and 2015, we recognized a non-cash gain of $17.5 million and a non-cash loss of $48.9 million, respectively. The change in the fair value of the derivative liability during the six months ended June 30, 2016 was due to a decrease in our stock price compared to December 31, 2015.

Interest expense (including non-cash elements such as amortization of debt discount and debt issuance cost) $1.4 million and $2.4 million for the six months ended June 30, 2016 and 2015, respectively. The decrease is due to the reduction in outstanding debt in 2016.

We have experienced recurring losses from operations. During the six months ended June 30, 2016 and 2015, net cash outflows from operations were $31.8 million and $44.7 million, respectively.

At June 30, 2016, current assets totaled $4.5 million, compared to $24.1 million at December 31, 2015. Current assets less current liabilities produces working capital deficit (cash and non-cash liabilities combined) in the amount of $55.4 million at June 30, 2016, compared to a deficit of $40.8 million at December 31, 2015.

During the six months ended June 30, 2016 and 2015, net cash outflows from operations were $31.8 million and $44.7 million, respectively.

During the six months ended June 30, 2016 and 2015, we used $4.0 million and $2.0 million to capitalize costs related to the UK facility and UK facility purchase, respectively.

During the six months ended June 30, 2016 and 2015, our financing activities provided net proceeds after expenses of $13.1 million and $51.7 million, respectively. The $13.1 million in the six months ended June 2016 consisted of $9.2 million from registered direct offering and $3.9 million from warrants exercised for cash. The $51.7 million in the six months ended June 2015 consisted of $5 million in net mortgage loan proceeds, proceeds of $6.8 million from the exercise of warrants, and proceeds of $40.0 million from issuance of common stock.

Our financial statements indicate there is substantial doubt about our ability to continue as a going concern as we are dependent on our ability to obtain ongoing financing and ultimately to generate sufficient cash flow to meet our obligations on a timely basis. We can give no assurance that our plans and efforts to achieve the above steps will be successful.

Other factors affecting our ongoing funding requirements include the number of staff we employ, the number of sites and number of patients still undergoing treatment in our Phase III brain cancer trial, the costs of further product and process development work relating to our DCVax products, the costs of preparations for multiple Phase II trials, the costs of expansion of manufacturing, the cost of pursuing our Hospital Exemption program and potential reimbursements in Germany, and unanticipated developments. The extent of resources available to us will determine which programs can move forward and at what pace.

The Company’s common stock is listed on The Nasdaq Capital Market (“Nasdaq”) under the symbol “NWBO.” One of the requirements for continued listing on Nasdaq is maintenance of a minimum closing bid price of $1.00 per share. On June 24, 2016, the Company received a letter (the “Notice”) from the Listing Qualifications Staff of The NASDAQ Stock Market LLC (“Nasdaq”) notifying the Company that, based upon the closing bid price of the Company’s common stock, $0.0001 par value per share (the “Common Stock”) for the 30 consecutive business days preceding receipt of such letter, the Common Stock no longer met the requirement to maintain a minimum closing bid price of $1.00 per share, as set forth in Nasdaq Listing Rule 5550(a)(2).

In accordance with Nasdaq Listing Rule 5810(c)(3)(A), the Company has been granted a period of 180 days, or until December 21, 2016, to regain compliance with the minimum bid price requirement. To regain compliance, the closing bid price of the Company’s common stock must meet or exceed $1.00 per share for at least 10 consecutive business days during this 180-day period.

The Company intends to monitor the closing bid price of its common stock on an ongoing basis, and consider a range of available options to regain compliance with the share price listing standard. The Company could remedy the deficiency, either now or at a later date, through a reverse stock split. However, the Company currently plans to regain compliance by focusing on progress in its operational programs.

In the event the Company does not regain compliance by December 21, 2016, the Company may be eligible for a second 180-day grace period if it meets the initial listing standards (with the exception of the bid price and market value of publicly held shares requirements) for The Nasdaq Capital Market, and provides written notice to Nasdaq of its intention to cure the deficiency during the second 180-day grace period, by effecting a reverse stock split, if necessary, and satisfying any other applicable requirements. If the Company does not regain compliance within the allotted compliance period(s), Nasdaq will provide notice that the Company’s common stock will be subject to delisting. At that time, the Company would be entitled to a hearing before a Nasdaq Listing Qualifications Panel (the “Panel”). The hearing request would automatically stay any suspension or delisting action until the issuance of the hearing decision and the expiration of any additional extension period granted by the Panel.

On April 26, 2016, the Company received a letter (the “Letter”) from the Nasdaq Staff indicating that the Staff had reviewed certain stock issuances by the Company to Cognate BioServices, Inc. (“Cognate”), and had determined that those issuances did not comply with Nasdaq Listing Rules 5635(c) and (d), as described more fully below in Item 1A. Risk Factors.

The Company has been in discussions with the Nasdaq Staff about potential approaches to remedy the non-compliance with these rules, and the Company is now working toward regaining compliance as quickly as possible.

Since our inception, we have not engaged in any off-balance sheet arrangements, as defined in the rules and regulations of the SEC.

Market risk represents the risk of loss that may result from the change in value of financial instruments due to fluctuations in its market price. Market risk is inherent in all financial instruments. Market risk may be exacerbated in times of trading illiquidity when market participants refrain from transacting in normal quantities and/or at normal bid-offer spreads. Our exposure to market risk is directly related to derivatives, debt and equity linked instruments related to our financing activities.

Our assets and liabilities are overwhelmingly denominated in U.S. dollars. We do not use foreign currency contracts or other derivative instruments to manage changes in currency rates. We do not now, nor do we plan to, use derivative financial instruments for speculative or trading purposes. However, these circumstances might change.

The primary quantifiable market risk associated with our financial instruments is sensitivity to changes in interest rates. Interest rate risk represents the potential loss from adverse changes in market interest rates. We use an interest rate sensitivity simulation to assess our interest rate risk exposure. For purposes of presenting the possible earnings effect of a hypothetical, adverse change in interest rates over the 12-month period from our reporting date, we assume that all interest rate sensitive financial instruments will be impacted by a hypothetical, immediate 100 basis point increase in interest rates as of the beginning of the period. The sensitivity is based upon the hypothetical assumption that all relevant types of interest rates that affect our results would increase instantaneously, simultaneously and to the same degree. We do not believe that our cash and equivalents have significant risk of default or illiquidity.

The sensitivity analyses of the interest rate sensitive financial instruments are hypothetical and should be used with caution. Changes in fair value based on a 1% or 2% variation in an estimate generally cannot be extrapolated because the relationship of the change in the estimate to the change in fair value may not be linear. Also, the effect of a variation in a particular estimate on the fair value of financial instruments is calculated independent of changes in any other estimate; in practice, changes in one factor may result in changes in another factor, which might magnify or counteract the sensitivities. In addition, the sensitivity analyses do not consider any action that we may take to mitigate the impact of any adverse changes in the key estimates.

Based on our analysis, as of June 30, 2016, the effect of a 100+/- basis point change in interest rates on the value of our financial instruments and the resultant effect on our net loss are considered immaterial.

Our Company’s finance and accounting functions are performed by an external firm on a contract services basis. This firm specializes in providing finance and accounting functions for biotech companies, and the founders and senior managers are highly experienced former partners of national accounting firms. The number and seniority of personnel in the external firm performing the finance and accounting functions for the Company were increased during 2015. In addition, during the quarter ended December 31, 2015, the Company retained a full-time controller. Further, during the quarter ended June 30, 2016, the Company engaged a second external firm: one that specializes in Sarbanes-Oxley matters and helping public companies improve their disclosure controls and procedures. Together with these two external firms and our controller, we conducted an evaluation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended.

Based on the evaluation of our disclosure controls and procedures, our principal executive, financial and accounting officer concluded that during the period covered by this report, our Company’s processes for internally reporting material information in a systematic manner to allow for timely filing of material information were significantly improved compared with prior periods, but were not effective, due to inherent limitations from being a small company, and there remain some material weaknesses as described below. We have been working together with the two external firms and our controller to further mitigate the remaining weaknesses, as also described below.

As of the date of this filing, the Company has completed remediation or made substantial progress on six of the seven material weaknesses identified in the Company’s annual report on Form 10-K, filed in March 2016.

During the quarter ended June 30, 2016, we conducted a comprehensive entity-wide risk assessment to evaluate and ultimately report on risks to financial reporting throughout the organization. Following this assessment, we undertook an action plan to strengthen internal controls and procedures.

We completed remediation of two material weaknesses identified in the Company’s 10-K for 2015 related to (1) insufficient segregation of duties, oversight of work performed and lack of compensating controls in the Company’s finance and accounting functions due to limited personnel and (2) the lack of an effective anti-fraud program designed to detect and prevent fraud relating to (i) an effective whistle-blower program or other comparable mechanism and (ii) an ongoing program to manage identified fraud risks.

We have made substantial progress on remediation of four of the remaining five material weaknesses identified in the Company’s 10-K for 2015:

We plan to continue taking steps to improve our internal control system and to address the remaining deficiencies, but the timing of such steps is uncertain and our ability to retain or attract qualified individuals to undertake these functions is also uncertain. Other than the changes described above, there has been no change in our internal controls over financial reporting that occurred during the fiscal quarter ended June 30, 2016, that has materially affected, or is reasonably expected to materially affect, our internal controls over financial reporting.

On June 19, 2015, two of the purported shareholders filed a complaint purportedly suing on behalf of a class of similarly situated shareholders and derivatively on behalf of the Company in the Delaware Court of Chancery. The lawsuit names Cognate BioServices, Inc., Toucan Partners, Toucan Capital Fund III, our CEO Linda Powers and the Company's Board of Directors as defendants, and names the Company as a "nominal defendant" with respect to the derivative claims. The complaint generally objects to certain transactions between the Company and Cognate and the Toucan entities, in which Cognate and the Toucan entities provided services and financing to the Company, or agreed to conversion of debts owed to them by the Company into equity. The complaint seeks unspecified monetary relief for the Company and the plaintiffs, and various forms of equitable relief, including disgorgement of allegedly improper benefits, rescission of the challenged transactions, and an order forbidding similar transactions in the future. On September 1, 2015, the Company and other named defendants filed motions to dismiss. In response, the plaintiffs filed an amended complaint on November 6, 2015. The Company and the other named defendants filed motions to dismiss plaintiffs' amended complaint on January 19, 2016. The plaintiffs filed an answering brief in opposition to the motion to dismiss on April 4, 2016. The Company and the other defendants filed reply briefs on May 18, 2016. Oral argument has been set for October 11, 2016. The Company intends to continue to vigorously defend the case

Other than the following additional risk factor, the risk factors described in our most recent Annual Report on Form 10-K and other filings continue to apply as described therein:

If we fail to comply with Nasdaq listing rules, or remedy non-compliance, we could be subject to adverse action by Nasdaq

As the Company previously reported on Form 8-K, on April 26, 2016, the Company received a letter (the “Letter”) from the Nasdaq staff indicating that the Nasdaq Staff had reviewed certain stock issuances by the Company to Cognate BioServices, Inc. (“Cognate”), and had determined that those issuances did not comply with Nasdaq Listing Rules 5635(c) and (d). When a listed company fails to be in compliance with the listing rules of Nasdaq, there is a range of potential actions which may follow. The Company is in ongoing discussions with the Nasdaq Staff about potential approaches to remedy the non-compliance with these rules and the Company has submitted a remediation plan to Nasdaq, which is currently under review by Nasdaq. However, there can be no assurance as to whether we will be able to reach agreement with Nasdaq or regain compliance with Nasdaq listing rules. If we do not, then the Nasdaq Staff could issue a letter of reprimand, or could initiate a process to delist the Company’s common shares. If Nasdaq were to issue a letter of reprimand or initiate delisting proceedings against us, it could have a material adverse effect on the trading price and liquidity of our common stock. As also discussed below, in the event the Staff were to initiate delisting proceedings, the Company would be entitled to a hearing before a Nasdaq Listing Qualifications Panel (the “Panel”). The hearing request would automatically stay any suspension or delisting action until the issuance of the hearing decision and the expiration of any additional extension period granted by the Panel.

As the Company previously reported on Form 8-K, on June 24, 2016, the Company received a letter (the “Notice”) from the Nasdaq Staff notifying the Company that, based upon the closing bid price of the Company’s common stock, $0.0001 par value per share (the “Common Stock”) for the 30 consecutive business days preceding receipt of such letter, the Common Stock had no longer met the requirement to maintain a minimum closing bid price of $1.00 per share, as set forth in Nasdaq Listing Rule 5550(a)(2).

In the event the Company does not regain compliance by December 21, 2016, the Company may be eligible for an a second 180-day grace period if it meets the initial listing standards (with the exception of the bid price and market value of publicly held shares requirements) for The Nasdaq Capital Market, and provides written notice to Nasdaq of its intention to cure the deficiency during the second 180-day grace period, by effecting a reverse stock split, if necessary, and satisfying any other applicable requirements. If the Company does not regain compliance within the allotted compliance period(s), the Nasdaq Staff will provide notice that the Company’s common stock will be subject to delisting. At that time, the Company would be entitled to a hearing before a Panel. The hearing request would automatically stay any suspension or delisting action until the issuance of the hearing decision and the expiration of any additional extension period granted by the Panel. Even if the Company regains compliance, there can be no assurance that we will be able to remain in compliance in the future. In particular, our share price may continue to decline for a number of reasons, including many that are beyond our control.

If we fail to comply with Nasdaq’s continued listing standards, we may be delisted and our common stock will trade, if at all, only on the over-the-counter market, such as the OTCQB or OTCQX markets or the Pink Current information tier In addition, delisting of our common stock could depress our stock price or limit liquidity of our common stock and materially adversely affect our ability to raise capital on terms acceptable to us, or at all. Further, delisting of our common stock would likely result in our common stock becoming a “penny stock” under the Securities Exchange Act.

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Large accelerated filer ¨	Accelerated filer x	Non-accelerated filer ¨	Smaller reporting company ¨
(do not check if a smaller reporting company)

PART I - FINANCIAL INFORMATION		3

Item 1.	Condensed Consolidated Interim Financial Statements (Unaudited)

	Condensed Consolidated Balance Sheets as of June 30, 2016 and December 31, 2015	3

	Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2016 and 2015	4

	Condensed Consolidated Statements of Comprehensive Loss for the three and six months ended June 30, 2016 and 2015	5

	Condensed Consolidated Statement of Stockholders’ Equity (Deficit) for the six months ended June 30, 2016	6

	Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2016 and 2015	7

	Notes to Condensed Consolidated Financial Statements	9

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	23

Item 4.	Controls and Procedures	23

PART II - OTHER INFORMATION		23

Item 1.	Legal Proceedings	24

Item 1A.	Risk Factors	25

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	26

Item 3.	Defaults Upon Senior Securities	26

Item 4.	Mine Safety Disclosures	26

Item 5.	Other Information	26

Item 6.	Exhibits	27

SIGNATURES		28

	June 30,			December 31,
	2016			2015
ASSETS
Current assets:
Cash and cash equivalents	$	2,143		$	21,813
Restricted cash - interest payments held in escrow		883			886
Prepaid expenses and other current assets		1,473			1,402
Total current assets		4,499			24,101

Non-current assets:
Property, plant and equipment, net		46,892			46,157
Restricted cash - interest payments held in escrow, net of current portion		77			349
Other assets		141			190
Total non-current assets		47,110			46,696

Total assets	$	51,609		$	70,797

COMMITMENTS AND CONTINGENCIES

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable	$	12,318		$	11,721
Accounts payable to related party		7,575			5,455
Accrued expenses (includes related party of $13 and $11 as of June 30, 2016 and December 31, 2015, respectively)		1,341			1,309
Convertible notes, net (includes related party note of $50 as of June 30, 2016 and December 31, 2015)		185			185
Note payable - in dispute		934			934
Mortgage loan (net of deferred financing cost of $466 and $468 as of June 30, 2016 and December 31, 2015, respectively)		10,339			11,144
Environmental remediation liability		6,200			6,200
Shares payable to related party		10,480			-
Derivative liability		10,527			27,982
Total current liabilities		59,899			64,930

Non-current liabilities:
Convertible note (net of deferred financing cost of $317 and $457 as of June 30, 2016 and December 31, 2015, respectively)		10,683			10,543
Total non-current liabilities		10,683			10,543

Total liabilities		70,582			75,473

Commitments and Contingencies

Stockholders' equity (deficit):
Preferred stock ($0.001 par value); 40,000,000 shares authorized; 0 shares issued and outstanding as of June 30, 2016 and December 31, 2015, respectively		-			-
Common stock ($0.001 par value); 450,000,000 shares authorized; 106,167,204 and 95,858,087 shares issued and outstanding as of June 30, 2016 and December 31, 2015, respectively		106			96
Additional paid-in capital		635,550			630,613
Accumulated deficit		(655,543	)		(635,262	)
Accumulated other comprehensive gain (loss)		914			(123	)
Total stockholders' equity (deficit)		(18,973	)		(4,676	)
Total liabilities and stockholders' equity (deficit)	$	51,609		$	70,797

	For the three months ended						For the six months ended
	June 30,						June 30,
	2016			2015			2016			2015
Revenues:
Research grant and other	$	157		$	391		$	393		$	585
Total revenues		157			391			393			585
Operating costs and expenses:
Research and development		8,713			27,799			22,153			47,424
General and administrative		6,467			11,446			10,742			14,846
Total operating costs and expenses		15,180			39,245			32,895			62,270
Loss from operations		(15,023	)		(38,854	)		(32,502	)		(61,685	)
Other income (expense):
Change in fair value of derivative liability		3,930			(25,694	)		17,455			(48,852	)
Interest expense		(729	)		(1,636	)		(1,447	)		(2,429	)
Foreign currency transaction loss		(2,353	)		(661	)		(3,787	)		(312	)
Net loss		(14,175	)		(66,845	)		(20,281	)		(113,278	)
Deemed dividend related to warrant modification		(2,640	)		-			(2,640	)		-
Net loss applicable to common stockholders	$	(16,815	)	$	(66,845	)	$	(22,921	)	$	(113,278	)

Net loss per share applicable to common stockholders - basic and diluted	$	(0.16	)	$	(0.88	)	$	(0.23	)	$	(1.56	)
Weighted average shares used in computing basic and diluted loss per share		103,831			75,619			100,782			72,530

	For the three months ended						For the six months ended
	June 30,						June 30,
	2016			2015			2016			2015
Net loss	$	(14,175	)	$	(66,845	)	$	(20,281	)	$	(113,278	)
Other comprehensive income (loss)
Foreign currency translation adjustment		537			672			1,037			604
Total comprehensive loss	$	(13,638	)	$	(66,173	)	$	(19,244	)	$	(112,674	)

	Common Stock				Additional Paid-in			Accumulated			Cumulative Translation			Total Stockholders'
	Shares		Par value		Capital			Deficit			Adjustment			Equity (Deficit)
Balance January 1, 2016		95,858	$	96	$	630,613		$	(635,262	)	$	(123	)	$	(4,676	)
Issuance of common stock and warrants for cash in a registered direct offering		5,882		6		9,994			-			-			10,000
Offering cost related to registered direct offering		-		-		(756	)		-			-			(756	)
Warrants exercised for cash		4,412		4		4,231			-			-			4,235
Offering cost related to warrants exercise		-		-		(341	)		-			-			(341	)
Modification on warrant exercise price		-		-		2,640			-			-			2,640
Deemed dividend related to warrant exercise price modification		-		-		(2,640	)		-			-			(2,640	)
Common stock issued as compensation		15		-		12			-			-			12
Shares payment due to Cognate BioServices		-		-		(8,203	)		-			-			(8,203	)
Net loss		-		-		-			(20,281	)		-			(20,281	)
Cumulative translation adjustment		-		-		-			-			1,037			1,037
Balance at June 30, 2016		106,167	$	106	$	635,550		$	(655,543	)	$	914		$	(18,973	)

	For the six months ended
	June 30,
	2016		2015
Supplemental schedule of non-cash investing and financing activities:
Accrued exit fee incurred from mortgage loan	$	-	$	51
Accrued renewal fee incurred from mortgage loan	$	301	$	-
Deemed dividend related to modification of warrant	$	2,640	$	-
Cashless warrant exercise on warrant liability	$	-	$	521
Reclassification of warrant liabilities related to warrants exercised for cash	$	-	$	58
Increase in accounts payable related to UK property	$	-	$	257
VAT receivables related to UK property	$	408	$	-
Interest payment on convertible note from escrow	$	-	$	803
Issuance of common stock for debt conversion	$	-	$	4,500
Issuance of common stock for conversion of accrued interest	$	-	$	187
Redeemable security settlement	$	-	$	299

	Warrant
	Liability
Balance - January 1, 2016	$	27,982
Change in fair value		(17,455	)
Balance – June 30, 2016	$	10,527

Date of valuation	June 30, 2016			December 31, 2015
Strike price	$	1.50		$	3.49
Volatility (annual)		85.6	%		86.9	%
Risk-free rate		0.7	%		1.3	%
Contractual term (years)		2.8			3.1
Dividend yield (per share)		0	%		0	%

	June 30,			December 31,
	2016			2015
Leasehold improvements	$	69		$	69
Office furniture and equipment		25			25
Equipment and software		618			598
Construction in progress (property in the United Kingdom)		46,476			45,681
		47,188			46,373
Less: accumulated depreciation		(296	)		(216	)
	$	46,892		$	46,157

	For the three months ended				For the six months ended
	June 30,				June 30,
	2016		2015		2016		2015
Contractual interest	$	137	$	135	$	274	$	351
Accelerated interest due to the conversion of convertible senior notes into common stock		-		563		-		563
Amortization of debt issuance costs		70		107		140		212
Accelerated amortization of debt issuance cost due to the conversion of convertible senior notes into common stock		-		234		-		234
Total interest expense on the convertible senior notes	$	207	$	1,039	$	414	$	1,360

	Number of			Weighted Average
	Warrants			Exercise Price
Outstanding as of December 31, 2015		27,267,441		$	4.40
Warrants granted in a registered direct offering		12,058,825			3.04
Warrants granted to Cognate		3,405,671			1.70
Warrants expired and cancellation		(16,791	)		11.86
Outstanding as of March 31, 2016		42,715,146		$	3.53
Warrants granted in a registered direct offering		2,426,470			1.02
Warrants granted to Cognate		5,329,961			0.96
Warrants exercised for cash		(4,411,764	)		0.96
Warrants expired and cancellation		(1,614,837	)		8.82
Outstanding as of June 30, 2016		44,444,976		$	2.67

31.1		Certification of President (Principal Executive Officer and Principal Financial and Accounting Officer), Pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*

32.1		Certification of President, Chief Executive Officer and Principal Financial and Accounting Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.**

101.INS		XBRL Instance Document.

101.SCH		XBRL Schema Document.

101.CAL		XBRL Calculation Linkbase Document.

101.DEF		XBRL Definition Linkbase Document.

101.LAB		XBRL Label Linkbase Document.

101.PRE		XBRL Presentation Linkbase Document.

	NORTHWEST BIOTHERAPEUTICS, INC

Dated: August 9, 2016	By:	/s/ Linda F. Powers
		Name:	Linda F. Powers

		Title:	President and Chief Executive Officer
			Principal Executive Officer
			Principal Financial and Accounting Officer