CEL-SCI Corporation — FY2022 Form 10-K
Reporting period: Fiscal year ended September 30, 2022; comparisons are to the year ended September 30, 2021. This is an annual filing, not a standalone fourth-quarter report. CEL-SCI is a clinical-stage biotechnology company with no approved products or product sales.
Business context and development
- Lead candidate Multikine completed a 928-patient Phase 3 trial for locally advanced, previously untreated head and neck cancer. CEL-SCI was preparing a Biologics License Application (BLA); the filing does not report that it had been submitted or approved.
- The trial did not meet its primary overall-survival endpoint in the combined study population. CEL-SCI reported a prespecified analysis of the surgery-plus-radiation subgroup: five-year overall survival was 62.7% with Multikine versus 48.6% for standard care, an absolute difference of 14.1% (p=0.0236; hazard ratio 0.68). The filing says the effect was not seen when chemotherapy was added to the post-surgery treatment.
- CEL-4000, a LEAPS-based rheumatoid arthritis candidate, remained in preclinical development; no LEAPS clinical trials in humans had begun.
Financial results and liquidity
- Revenue: No product revenue; the company reported no commercialized products and did not expect product revenue in the foreseeable future.
- Operating expenses: $36.06 million, versus $36.19 million in FY2021. Research and development was $25.36 million, up 10% from $23.11 million; general and administrative expense was $10.71 million, down 18% from $13.09 million.
- Losses: Operating loss was $36.06 million versus $36.19 million. Net loss was $36.70 million versus $36.36 million; net loss available to common shareholders was $37.63 million versus $36.71 million. Basic and diluted loss per share was $0.87 versus basic loss of $0.90 in FY2021.
- Cash flow: Operating cash use was $18.24 million, compared with $18.79 million in FY2021. Cash and cash equivalents declined to $22.67 million from $36.06 million. FY2022 investing cash flow included $6.15 million from T-bill maturities; no T-bills remained at year-end. The company reported cash use of about $1.6 million per month after considering those maturities.
- Liquidity and obligations: Current assets were $25.44 million and current liabilities $4.66 million. Total liabilities were $18.36 million, including $13.45 million in finance and operating lease liabilities. The filing identifies substantial doubt about the company’s ability to continue as a going concern without additional financing.
- Margins and debt: Operating and profit margins are not meaningful because CEL-SCI had no product revenue and recorded operating losses. The balance sheet reports substantial lease obligations; it does not show a separate conventional borrowing balance in the figures provided.
Changes, outlook, risks and unusual items
- R&D expense rose primarily from stock compensation, depreciation on manufacturing-facility improvements, and preparation for potential commercial production; lower Phase 3 trial costs partly offset the increases. G&A declined mainly because of lower employee stock compensation.
- Non-cash expenses represented about 42% of the operating loss, including $11.4 million of employee stock compensation and $3.8 million of depreciation and amortization. A $0.37 million derivative gain compared with a $0.69 million derivative loss in FY2021. FY2021 also included a $1.69 million non-operating gain related to Ergomed share resales; there was no related activity in FY2022.
- CEL-SCI raised no proceeds from securities sales in FY2022, compared with approximately $47.4 million in net public-offering proceeds and $6.0 million from warrant exercises in FY2021. It said further funding would be required, potentially through warrant exercises, partnerships, or debt or equity financing, with no assurance financing would be available on acceptable terms.
- The company estimated about $0.6 million of additional Phase 3 and clinical-study-report costs; this estimate excludes other potential costs, including commercial-manufacturing preparations. Manufacturing-facility upgrades totaled $11.1 million, with the landlord financing $2.4 million through increased lease payments.
- Key risks include uncertain FDA acceptance of the Phase 3 results and regulatory approval; possible need for another pivotal trial; manufacturing validation and scale-up; dependence on Multikine; continued losses and financing needs; dilution; and COVID-related disruption. CEL-SCI also reported ineffective disclosure controls and material weaknesses in financial-reporting controls related to IT access/segregation of duties and management review controls. Management said the financial statements were fairly stated; the auditor’s opinion was unqualified but included a going-concern uncertainty.
Important facts for investors to verify
- Whether FDA discussions support submitting the current Phase 3 data in a BLA, and whether another pivotal study or additional analyses will be required.
- Whether the reported subgroup survival benefit is accepted by regulators and independently supported by the prespecified analysis, given the missed overall primary endpoint.
- Current cash runway, subsequent financing, and the amount and timing of additional capital needed to pursue the BLA and manufacturing validation.
- Progress and cost to validate the manufacturing facility for commercial production, alongside lease-payment commitments.
- Remediation of the reported internal-control weaknesses and any subsequent changes to liquidity, share count, options, or warrants.