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CEL-SCI Corporation (NYSEMKT:CVM) Is Finally Getting Some Reprieve

CEL-SCI Corporation (NYSEMKT:CVM) Is Finally Getting Some Reprieve
Written by
Chris Sandburg
Published on
August 15, 2017
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It's taken around six months, but we are finally seeing some degree of validation on the thesis we put forward as a potential bull argument in CEL-SCI Corporation (NYSEMKT:CVM) back at the start of the year.The company just announced that the FDA had lifted a clinical hold on its lead development program and, on the back of the announcement, is gaining strength. At the end of last week, CEL-SCI went for $2.16 a share. During yesterday's session, the company broke the three-dollar mark and settled to close out at around $2.96 apiece.For those not familiar with this one, CEL-SCI is a biotechnology stock that markets had essentially written off at the end of last year, when the company was informed of a partial clinical hold on a phase 3 study of its lead development asset, a drug called Multikine. The clinical hold was put in place for a variety of reasons as reported by the FDA, including unreasonable and significant risk of illness, the absence of prompt reports to the Independent Data Monitoring Committee (IDMC), errors in the investigator brochure and deficiencies in the protocol.Early this year, management submitted a response for the hold in an attempt to have it lifted, but the FDA responded with yet more deficiencies and compounded the negative sentiment surrounding the stock. The latest announcement comes as a considerable relief for both CEL-SCI and its shareholders, given that the its only other development program is an early stage anal warts study, and should serve to bring about an inflection point in CEL-SCI's market capitalization.So how do things play out from here?The phase 3 program is looking at Multikine as a potential adjuvant to standard of care therapy in head and neck cancer. It is an immuno-oncology asset, but CEL-SCI is taking something of a different approach to treatment than is some of its oncology peers.Specifically, the company is trying to treat patients in advance of treatment with chemotherapy or radiotherapy, whereas many development stage immuno-oncology assets currently aim to treat patients that have already received standard of care. The logic behind the CEL-SCI approach is that treatment when the patient's immune system is strong (and not ravaged by chemotherapy) should have more of an impact than later on in a cancer's development. It seems reasonable and, as yet, there hasn't been anything to suggest that it is an invalid hypothesis. The clinical hold was rooted in protocol deficiencies as opposed to anything related to the drug's efficacy, so there is still a good chance that this program can complete successfully.CEL-SCI set up the study to enroll 928 patients and to complete when 298 of these patients had died. The primary endpoint is a 10% improvement in overall survival between patients treated with Multikine ahead of an SOC regimen and patients treated with just SOC. Earlier this year, and around the time of the clinical hold, management noted that patients weren't dying at the expected rate and that the company might have to enroll more patients in order to meet its 298 patient death target. More recently, however, the company has stated that this is no longer the case, meaning enrollment is now complete.Estimates put the cost of completion on the current study at around $13 million, and CEL-SCI only has around $1 million on hand right now. This means we are probably going to see an equity raise to get the study finished, and this brings with it a degree of dilution risk on an exposure ahead of topline readout.With that said, however, a 10% improvement in OS isn't too much of a stretch and early to mid-stage data supports an efficacy hypothesis. If the numbers hit press as positive, any value lost through pre-release dilution will be quickly mitigated by share price appreciation.Check out our previous coverage of this one here.We will be updating our subscribers as soon as we know more. For the latest updates on CVM, sign up below!Image courtesy of Ed Uthman via FlickrDisclosure: We have no position in CVM and have not been compensated for this article.

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