Shares of Cel-Sci (Amex:CVM) saw 1234.68% times the normal trading average on Thursday after the firm announced a registered direct offering with an institutional investor that grossed proceeds of approximately $5.76 million for the firm.
Over 9 million shares traded during the day for the biotechnology company whose market cap now stands at $116M.
The sole investor approached the company about purchasing approximately 16M shares of the company at a slight discount from where shares closed the previous day after seeing the recent surge of interest in the company.
According to the filings, the financing featured 75% warrant coverage at a premium higher than where shares have been trading ($0.50) and the terms include 3 year warrants as opposed to the usual 5 year warrants seen in other healthcare investment deals of this size and scope.
Company officials say the investor conducted several deep diligence discussions with the firm that included a tour of CEL-SCI's state-of-the-art "Cold-Fill" manufacturing facility which was built for tens of millions of dollars outside of Baltimore in 2009 specifically to manufacture the firm’s lead investigational therapy, Multikine® (Leukocyte Interleukin, Injection).
“Instead of taking a bigger financing, we felt a smaller financing was in order here,” said Geert Kersten, CEL-SCI's Chief Executive Officer.. “As we have previously said, given what is happening in the Phase III study, we have decided to expand the clinical sites.”
CEL-SCI’s immunotherapeutic agent being developed as a potential first-line treatment for advanced primary head and neck cancer and attention has been rising in recent weeks after certain doctors involved in treating patients with the drug in those studies reportedly began to observe significant results in certain patients.
In late December, CEL-SCI and one of their partners in the study, Teva Pharmaceuticals Industries decided to expand the Phase III study into additional countries where high incidences of head and neck cancer could bring more patients into medical testing facilities. The Multikine Phase III study is currently being run in 8 countries, including the US, on 3 continents.
"The decision to expand comes with substantial expense," Kersten explains. "But we are very much encouraged by some of the early observations and our team decided that all resources should be put into pushing forward as quickly as possible in order to complete the study and definitively establish Multikine’s clinical effectiveness.”
Observers familiar with the key pivotal trial say that clinical trial enrollment in the U.S. had seen some of the slowest inflow of cases in the world since in head and neck cancer, the number of patients appears lower than most other diseases. In order to expedite enrollment, clinicians decided to target countries where enrollment could occur faster.
Still, the tightly monitored protocols and regulators of the study require that everything is done in accordance to the Helsinki Convention standards regardless of location. In addition, doctors at the MD Anderson Cancer Center who are helping to monitor the investigation pay attention to critical details like ensuring that every patient’s radiation levels conform to set standards and are administered correctly. Even the chemotherapy which is being used was purchased by CEL-SCI and is distributed to each center under strict covenants. All of this in order to eliminate variability and ensure that the trials are conducted properly.
As expected, the trial is already the largest head and neck cancer clinical study ever conducted and is also thought to be the first Phase III study in the world in which immunotherapy is given to patients first, i.e. prior to receiving any conventional treatment for cancer, including surgery, radiation and/or chemotherapy.
Shares of the company are currently trading 56% under their previous 52 week high of $0.79 and accumulation has been increasing since early January.
Author Barbara Bauer, PhD is a freelance contributor
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