CVM - Cel-Sci: Would-Be Cancer Giant Taking Baby Steps

2023-07-25 11:16:57 ET

Summary

• Cel-Sci is struggling to commercialize its Multikine cancer therapy; it recently closed on a small but expensive financing.
• The company has completed its initial end of phase 3 meeting with the FDA; it issued an inconclusive report.
• Cel-Sci is a battleground stock which carries heavy risk of loss.

I have reported periodically on CEL-SCI ( CVM ) as it pursues its long quest to commercialize its Multikine cancer therapy. My most recent article was 03/2023's " Cel-Sci: Stuck On Its First Next Step " .

In this article I will report on its progress since Step.

The Cel-Sci vision is no less than a new pretreatment idiom for cancer therapy.

Maximilian de Clara, Cel-Sci's founder in 1983, developed Multikine therapy as a cocktail of cytokines. Its purpose is to act as a first line treatment to help the body's immune system combat cancers before its perturbation by traditional therapies such as chemotherapy and radiation.

The initial clinical trials underlying Cel-Sci's Multikine were conducted 1n the 1980's in England. After undergoing Herculean challenges it advanced Multikine to a phase 3 trial ( NCT01265849) in 2010.

As I described in "Cel-Sci's Pivotal Phase 3 Results Are In: The Drama Continues (" Drama "), Cel-Sci reported initial results in 06/28//2021. While its announcement characterized the results as positive, its share price action screamed, as it continues to do.

Share opened at $26.90 on 06/28/2021. As the day wore on they plummeted down to $9.00. They have meandered since with a strongly negative bias. As I write on 07/23/2023 they trade at $1.97.

If anyone has any doubts about Cel-Sci management's ongoing optimism about is future, check out CEO Gersten's 05/23/2023 panegyrical " interview ("Interview"). Management is unabashed.

A recent financing added modestly to Cel-Sci's liquidity.

Cel-Sci's balance sheet from its Q1, 2023 10-Q (p. 3) provides the latest available (already dated) snapshot of its overall liquidity:

Cel-Sci's liquidity is an ongoing concern for its shareholders. Its recent F-8 announcing the 07/20/2023 closing of its financing is a small step forward:

On July 20, 2023, CEL-SCI ... closed on an underwritten public offering (“Offering”) and issued 2,500,000 shares of common stock at a public offering price of $2.00 per share ...The closing of the Offering took place on July 20, 2023. The Company received approximately $4,500,000 in net proceeds from the Offering, after deducting underwriting discounts and commissions and estimated offering expenses....

The financing was a [baby] step in the right direction. It was a costly one. The company sold 2.5 million shares at an offering price of $2.00. It only netted ~$4.5 million after deducting underwriting discounts, commissions and expenses.

Cel-Sci's chart of its share price and its share count show a troubled situation:

In my initial 08/2019 Cel-Sci article, " CEL-SCI: A Risky Bet ", I labeled its chart at the time as "World Class Ugly". I challenged readers to find a worse chart than the one in World Class Ugly. Insofar as its shares were trading at $7.86 at the time, compared to its $1.97 — 07/23/2023 price as I write, this chart above meets my own challenge.

Multikine recently completed its initial end of phase 3 meeting with the FDA.

As described above Multikine's path has been a torturous one. What about its future? Sifting through the ever present clouds that obscure the fortune teller's craft, I strongly intuit that for Cel-Sci, its past is prologue.

It has heroically struggled through a ten year ordeal with its 928 patient, largest ever head and neck cancer clinical trial. Check out its 04/2023 presentation slide 13:

Now that Cel-Sci has made this monumental effort it is time to see if its ambitions exceeded its ability to perform. The next step is for the FDA to grade its performance:

1. Will Cel-Sci ever assemble the data package necessary to submit a BLA?
2. If it does, will the FDA accept the BLA?
3. Has Cel-Sci correctly tabulated the trial data on these 928 patients from 100 hospitals in 20 countries on 3 continents over 10 years?

Its performance record is far from stellar. Cel-Sci has excuses for why its effort has taken as long as it has. The FDA may not be as understanding as Cel-Sci bulls would prefer. When it is not satisfied its response in so many cases is to issue a CRL.

The first indication we have to date on how Cel-Sci is doing with the FDA came with Cel-Sci's 07/14/2023 release . As always Cel-Sci put a positive gloss in its announcement headline:

CEL-SCI Concludes Positive Meeting With U.S. FDA Concerning Multikine’s Approval for Head & Neck Cancer

A positive meeting sounds hopeful; but what actually happened? The body of the release is quite vague. It states:

CEL-SCI believes the agency was collaborative and positive. Preliminary feedback from the FDA included that the selection criteria developed by CEL-SCI could be used to determine which patients should receive Multikine. Based on the feedback received at this recent meeting, CEL-SCI is preparing additional information.

Moving down further in the release comes to statement that is concerning. It provides:

The Company believes that it is even further along the regulatory path in Canada , as Health Canada already advised CEL-SCI earlier this year that it would be appropriate to request advance consideration for approval of Multikine under the Notice of Compliance with Conditions (NOCC) policy. If Health Canada grants the NOCC, then it is possible that CEL-SCI could begin commercialization in Canada as early as 2024.

Cel-Sci's presentation slide 10 listing the incidence of head and neck cancer does not mention Canada. In fact the presentation makes no mention of Canada at all. The fact that Cel-Sci's release issued in connection with its FDA meeting pivots to a discussion of Canada is discouraging for bulls who are interested in a path to FDA approval.

Conclusion

The bull case for Cel-Sci envisions that it can ultimately succeed in its quest for regulatory approval of Multikine. Cel-Sci is primed for such an outcome. As noted in the Interview it has already built, and recently doubled its production capacity in anticipation of regulatory approval.

Once Multikine gets approval Cel-Sci can open with capacity to manufacture product it would price at nearly $2 billion. Not bad for a company with a market cap of <$100 million.

The bull case is certainly alluring. However it is a siren call. With its several (3) reverse splits and its constantly falling share price, Cel-Sci has cost its shareholders dearly over its long existence. Adventurous types may go ahead under the banner of nothing ventured, nothing gained,

Having reviewed Cel-Sci's recent developments as discussed in this article there is nothing to suggest that its shares are likely to reverse course. Its future is far more likely to resemble a falling knife than a rising star. Investors should steer clear from this one.

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