On a day full of wicked swing trading for CEL-SCI Corporation (CVM), the late-stage oncology company, on Monday it announced two critical developments that will help it not only survive, but likely turn another page in its storied history as one of Wall Street's first immunotherapy companies.
Officials at the NYSE started the day by halting trading on the stock based on what they considered significant news: CEL-SCI had signed a Cooperative Research and Development Agreement (CRADA) with the Naval Medical Center, San Diego. When trading resumed, the stock jumped over 10% to a high of $1.35 (shares had been attacked by shorting to as low as $1 during the previous session last Friday).
For a few moments after the halt was lifted, it looked like investors truly understood the significance of the credibility shot that CEL-SCI and its Multikine drug had just gotten from the U.S. Navy.
Pursuant to the agreement, the US Naval Medical Center, San Diego will conduct a Human Subjects Institutional Review Board approved Phase I dose escalation study of CEL-SCI's investigational immunotherapy Multikine (Leukocyte Interleukin, Injection) in HIV/HPV co-infected men and women with peri-anal warts.
There are two important things to put into perspective here. First, traders should understand that genital human papillomavirus (HPV) infections are the most common sexually transmitted infection in both men and women. Usually HPV infection does not cause any signs or symptoms of disease, but some types of HPV cause peri-anal condyloma and anal intraepithelial neoplasia.
Usually, HPV is eliminated by a healthy immune system within two years without treatment. However, certain high risk papilloma viruses may cause persistent infection and cause cancer, particularly in immunocompromised individuals. Men and women who have HIV (Human Immunodeficiency Virus) are at a higher risk of getting these cancers, which include cancers of the cervix, vulva, vagina, penis and anus. Recently it has been discovered that some head and neck cancers are also related to HPV.
Those who follow CEL-SCI know that head and neck cancers have been pretty much the focus of their principal product, Multikine, which is in the middle of a Phase III clinical trial. Unfortunately, it has also been the supposedly miraculous one-trick pony that has divided investors and caused great debate in the investment community. For one thing, there has been much discussion and drama involving the "lack of speed" in patient enrollment for the trial and whether or not the company would even make it to the finish line given recent warnings and a recently approved extension to regain compliance with the Exchange's continued listing standards .
It appears that the listing part of the puzzle is about to be solved for the company as well, since as of the commencement of trading on September 25, 2013, the company underwent a 1 for 10 reverse stock split and after hours on Monday, they announced that they plan to offer and sell common stock and warrants, subject to market and other conditions, in an underwritten public offering.
Looking at this as a trader, my instinct is to wait until the offering is complete and then jump in with both feet for a great trade. This money raise will likely happen very shortly and given the reaction after hours when the stock dropped nearly 12% to $1.07, there will be blood on the streets after the offering is completed and that is when smart traders take advantage of low prices.
I'm not saying that I would stay in once I ride the trade back up, but this news from the Navy does give me some pause to think that there may be something to this immunotherapeutic agent consisting of a mixture of cytokines that produce an anti-tumor immune response known as Multikine.
The Navy, of all organizations, does incredible due diligence and doesn't just hand these Cooperative Research and Development Agreements to everyone. Why did the Navy approach CEL-SCI to use Multikine? Did they see a visual and pathological evidence of clearance of these types of lesions after Multikine was given to HIV+/HPV co-infected women with cervical dysplasia/neoplasia in a Phase I study conducted at the University of Maryland? The assumption made by some experts in the HIV field is that the disease in HIV infected men and women in the peri-anal and anal canal requires a special plan of attack using a drug that does not yet exist.
If Multikine turns out to be that drug; and one would sense that we will likely see some results during this Phase I dose escalation study quickly, then this could be a game changer for the company. It seems reasonable, given how Multikine is supposed to work, to assume that there should be a response and if there is, we could also see a much more rapid approval path for this unmet medical need as well.
Despite its recent woes, CEL-SCI may have just turned into something more interesting than a slow news flow Phase III drug developer. Smart traders should now be watching closely for a bottoming out of prices following details about the underwritten public offering, and taking special note that this CRADA with the Naval Medical Center, San Diego represents a huge opportunity in a growing unmet medical need.
All three things may add up to a great quick trade despite all the division and debate that has haunted the Multikine Phase III study which is still enrolling patients with advanced primary, not yet treated, head and neck cancer on 3 continents around the world.