It has been a rocky couple of years for Cel-Sci, but the company is asking shareholders not to give up just yet. In a letter published Tuesday, Cel-Sci CEO Geert Kersten wrote that the "key inflection point" for its lead asset, an immunotherapy for head and neck cancers, is on the horizon, and that the company should be worth more than it is.
The letter comes just a few days after the Vienna, Virginia-based company announced that the New York Stock Exchange had accepted its plan to get back into its good graces. The exchange had notified Cel-Sci in July that it could be delisted for failing to meet its requirements. Cel-Sci reported a stockholders’ equity deficit as of March 31, 2018 and had net losses in its 5 most recent fiscal years ended Sept. 30, 2017. It has until Jan. 14, 2019 to get back in compliance.
Cel-Sci has three assets in its pipeline, including Multikine, a leukocyte interleukin injection, and two candidates based on its Ligand Epitope Antigen Presentation System (LEAPS) technology: a treatment for pandemic flu and a vaccine for the treatment of rheumatoid arthritis. Multikine is in phase 3 for head and neck cancers and is also being tested in patients with HIV and HPV.
Kersten started his letter by outlining the company’s "singular goal"—getting to the final readout of its phase 3 trial in head and neck cancer. The last patient in that trial enrolled in September 2016. Cel-Sci expects topline data in early 2019, based on published survival data. If all goes well, Kersen wrote, the company will pursue regulatory submissions worldwide. And if approved, the drug could fill a treatment gap—the FDA hasn’t cleared a new drug for advanced primary squamous cell carcinoma (cancer) of the head and neck in about 60 years, he said—and allow the company to tap into the 650,000 patients diagnosed with this cancer.
Essentially, the letter was a plea to shareholders to sit tight and that value is coming.
"CEL-SCI is a cancer immunotherapy company that has a market cap of about $20 million. That makes little sense," Kersten wrote. "We think that this is in large part due to the fact that we have all been waiting for Phase 3 data for 8.5 years. That is a long time. But, the last patients were enrolled almost two years ago and the final read out of the Phase 3 study is near."
For evidence that Cel-Sci should be worth more, he pointed to late-stage cancer immunotherapy companies that had not yet gotten FDA approval and had been sold "for $7 billion to almost $12 billion" in the past 18 months. He also mentioned the $1.6 billion acquisition of a cancer immunotherapy player with phase 3 studies that were not yet complete, an allusion to Eli Lilly’s Armo Biosciences buyout, announced in May.
Before closing out, Kersten reminded shareholders that Cel-Sci emerged victorious from a legal battle with the CRO that ran its phase 3 study from 2011 to 2013. The arbitrator found that the CRO, inVentiv Health, now known as Syneos Health, misled Cel-Sci with its projections for patient enrolment in that trial. Cel-Sci was awarded $2.9 million in damages.
The arbitrator found that inVentiv misled the small biotech with its projections for patient enrollment in a phase 3 head and neck cancer study from 2011 to 2013, and awarded Vienna, Virginia-based Cel-Sci $2.9 million in damages. Kersten suggested the arbitration was a turnoff for potential investors:
"Many investment funds and analysts did not like the legal risk of this arbitration and now that the arbitration has been resolved in our favor, this should no longer be an impediment to investors and should result in renewed investment interest in CEL-SCI. With the arbitration behind us, we move forward with a clean slate."
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