CEL SCI CORP quarterly report, Q1 FY2024

CEL-SCI Corporation — Q1 FY2024 Form 10-Q

Reporting period: Three months ended December 31, 2023; balance-sheet comparisons are to September 30, 2023. The company is a clinical-stage biotechnology company developing Multikine for certain head and neck cancers and LEAPS candidates for rheumatoid arthritis. No product candidates are approved for sale, and the filing reports no revenue.

Key financial results

Metric	Q1 FY2024	Prior-year quarter
Revenue	None reported	None reported
Research and development expense	$4.35 million	$5.39 million
General and administrative expense	$2.13 million	$2.26 million
Total operating expenses / operating loss	$6.49 million	$7.65 million
Net loss	$6.71 million	$7.85 million
Net loss per share, basic and diluted	$0.14	$0.18
Net cash used in operations	$4.89 million	$4.67 million

There is no meaningful revenue or profit margin to report. Q1 R&D included $4.33 million for Multikine and $23,257 for LEAPS. The reported net loss was lower year over year; the prior-year quarter included a $171,552 warrant-modification charge below net loss.

Financial position and liquidity

Cash and cash equivalents were $3.24 million at December 31, down from $4.15 million at September 30, 2023. Cash was $18.02 million at December 31, 2022.
Total assets were $28.71 million and total liabilities were $16.06 million. Current assets were $6.15 million versus current liabilities of $4.87 million.
Finance lease obligations totaled $11.30 million present value, including $1.83 million current; operating lease obligations totaled $1.80 million, including $204,000 current. These lease obligations are the principal disclosed financing obligations.
Operating cash use of $4.89 million was partly offset by $4.98 million gross proceeds from a November 2023 common-stock offering. Financing cash flow was $4.05 million after stock issuance costs and finance-lease payments; cash declined by $904,000 for the quarter.
The company states that recurring operating losses and future funding needs create substantial doubt about its ability to continue as a going concern. It expects to require additional capital or long-term financing and cautions that funding may not be available on acceptable terms or at all.
A $2.3 million landlord deposit, posted after the company fell below a cash threshold under its manufacturing-facility lease, remains an asset but is unavailable until the company meets the required minimum cash balance and the deposit is returned.

Material changes and financing

R&D expense decreased 19% year over year, primarily from lower Phase 3 trial costs, lower costs preparing for potential commercialization, and lower employee stock compensation. G&A expense decreased 6%, mainly from lower consulting and employee stock compensation costs.
In November 2023, CEL-SCI sold 2.49 million shares at $2.00 each for approximately $5.0 million gross proceeds. Shares outstanding at December 31 were 50.02 million, compared with 47.42 million at September 30.
On February 9, 2024, after quarter-end, the company sold 3.875 million shares at $2.00 each for approximately $7.75 million gross proceeds, adding further potential dilution.
Cash used in operations increased to $4.89 million from $4.67 million in the prior-year quarter, despite lower reported operating expenses.

Outlook, risks, and notable disclosures

Management expects continued operating losses and does not anticipate significant revenue until licensing arrangements or regulatory approval permit product sales. The filing provides no quantified cash-runway estimate or formal financial guidance.
Management intends to seek conditional or accelerated approval for Multikine, prioritizing Europe and the U.K.; it planned to provide new data to the FDA in Q1 2024, seek regulatory advice in Europe and the U.K., and start a U.S. confirmatory trial as soon as possible in 2024. These are plans, not approvals or assured milestones.
Management highlights subgroup analyses from the Phase 3 trial, including reported five-year survival of 73% for Multikine versus 45% for control in its defined target population. However, the filing acknowledges that the Phase 3 trial’s primary endpoint was not met and that efficacy in this narrower target population has not been tested prospectively. Regulatory acceptance of the subgroup evidence and the proposed pathway is uncertain.
The company reports approximately $64.5 million of direct Phase 3 trial and study-report costs incurred through December 31 and estimates another $0.7 million for the remaining trial and filing costs; the estimate excludes other related costs such as drug manufacturing.
Disclosure controls and procedures were determined to be ineffective as of December 31, 2023 because of material weaknesses previously described in the company’s 2023 Form 10-K. No material change in internal control was reported during the quarter.
The company reported no significant market-risk exposure. It also disclosed related-party interests in Series RR warrants extended in 2022; no equity warrants were exercised in the current quarter.

Most important facts for investors to verify

Cash runway and whether additional financing will be needed sooner or on less favorable terms than management anticipates; also verify the status and availability of the $2.3 million lease deposit.
Regulatory feedback in Europe, the U.K., the U.S., and Canada, and whether the proposed confirmatory trial and accelerated or conditional approval plans proceed.
The Phase 3 primary-endpoint result, the methods and robustness of the target-population subgroup analysis, and the fact that this population has not been tested prospectively.
Actual costs to complete the Phase 3 work and any confirmatory study, including manufacturing and other costs excluded from the $0.7 million estimate.
Impact of the November and February stock offerings, future capital needs, and potential dilution from outstanding options, warrants, and restricted stock.
Remediation of the disclosed material weaknesses in disclosure controls and procedures.