Cel-Sci: Multikine Immunotherapy And Market Assessment

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About: CEL-SCI Corporation (CVM)
by: First Genesis Consulting
Summary

Cel-Sci stock has appreciated over 30% in the last 3 weeks on IDMC recommendation that the Phase 3 study should continue until the requisite number of events have occurred.

Multikine is an innovative immunotherapeutic approach in clinical development for advanced primary head and neck squamous cell carcinoma, a fatal disease with limited therapeutic options.

As first-line therapy, multikine is designed to boost/enhance the anti-tumor responses of the immune system prior to standard of care treatment.

HNSCC accounts for ~4% of all cancers in the United States. Clinical success with multikine therapy would be a medical breakthrough for patients affected by this disease.

The top-line data readout for Multikine in Phase 3 HNSCC is expected possibly in 2019.

Market Assessment

Cel-Sci Corporation (CVM) is a small-cap market ($186M) clinical stage cancer biopharmaceutical company. Multikine, a cocktail combination of cytokines and chemokines, is a prospective neoadjuvant treatment and an investigational drug candidate in clinical development for newly diagnosed advanced primary head and neck cancer (HNSCC).

On April 1st, Cel-Sci announced that after evaluation of the data of the 928 patients in the Phase 3 HNSCC study:

The IDMC recommendation is to continue the trial until the appropriate number of events have occurred.

This news set off a rally with the stock appreciating up to $6.27 on April 9, 2019. They say no news is good news. Perhaps!. Some investors interpreted the continuation of the trial as potential good news that the HNSCC patients were responding to the immunotherapy and living longer. I understand the speculation because IDMC could have told Cel-Sci to stop the study due to medical futility. Cancer studies are very unpredictable, and I have explained in all my articles on my bullish thesis for the multikine immunotherapy. Cel-Sci is a high risk great reward play.

Objectively, my outlook is that we cannot draw any specific conclusions on the potential clinical benefits of the multikine therapy in the Phase 3 trial. This is because the study is blinded and there is no way to accurately discern if placebo patients are progressing at a faster rate, pathologically, versus the treated patients.

However, the recommendation by IDMC to let the show go on shows that there are no safety or tolerability signals associated with multikine immunotherapy. This is important since no matter how effective a therapeutic agent may be, any perceived safety signal could limit its therapeutic application. What's next? We wait until the top-line data is announced possibly in 2019.

Institutional Investors, Insiders Purchase, And Analyst Ratings

The latest 13F filings revealed Institutional ownership to be low at 8.19% with 43 Institutional holders holding 2,436,691 total shares. Top holders are Vanguard Group Inc. and Blackrock Inc. Zacks Small-Cap recommends a hold with a 12-month consensus price target of $14.

While I believe that the likelihood of clinical success could be high. In the last decade, Cel-Sci has been financially and clinically challenged in getting to the conclusion of this global Phase 3 HNSCC trial. HNSCC is a disease with limited/ineffective therapies. Clinical success would be huge since multikine could have broad therapeutic application in other cancers. Clinical failure would financially destroy this company making its survival very grim.

Multikine is its lead investigative drug candidate that has been in clinical development for a long time. Furthermore, the historical clinical development of multikine immunotherapy is a classic example of the challenges (i.e. funding issues, FDA hold, clinical trial delay due to ineffective CRO) that could occur in clinical trials. Cel-Sci has multiple shots on goal, but multikine immunotherapy is the most advanced. Drug candidates utilizing the LEAPS technology are in pre-clinical/early phase trials.

Like most clinical-stage biopharma, Cel-Sci has no regular revenue stream. Cel-Sci reported a net income of $1.2M at the end of the Q4/2018. It reported receiving $2.1M through the exercise of warrants to purchase shares of the Company's common stock in Q1/2019.

Market Outlook

Cancer Immunotherapies have captured close to 50% of the overall oncology drugs market. The clinical differentiation exhibited by Multikine Immunotherapeutic approach in HNSCC should make the clinical and financial potential enormous if the primary clinical endpoint is met.

Disclosure: I am/we are long CVM. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: As always, my articles are meant to facilitate your understanding. Readers are expected to form their own trading plan, do their own research and take responsibility for their own actions. Investing in common stock can result in partial or total loss of capital. Please implement due diligence and invest wisely.