CEL-SCI Corporation — Form 10-K Summary
Reporting period: Fiscal year ended September 30, 2021. CEL-SCI is a clinical-stage biotechnology company with no approved products and no product sales. Its lead candidate is Multikine for advanced primary head-and-neck cancer; its LEAPS-based CEL-4000 candidate for rheumatoid arthritis remains preclinical.
Financial performance and liquidity
| Metric | FY 2021 | FY 2020 |
|---|---|---|
| Revenue from product sales | None | None |
| Grant income | $0 | $0.56 million |
| Research and development expense | $23.11 million | $17.84 million |
| General and administrative expense | $13.09 million | $11.70 million |
| Operating loss | $36.19 million | $28.99 million |
| Net loss | $36.36 million | $30.26 million |
| Net loss per basic share | $0.90 | $0.82 |
| Net cash used in operations | $18.79 million | $15.28 million |
No meaningful revenue margin is reported because the company had no product sales. R&D expense rose about 30%, principally from Phase 3 trial costs, stock-based compensation, and preparation for a potential BLA and commercial manufacturing; G&A expense rose about 12%, also partly reflecting stock compensation.
At year-end, cash and cash equivalents were $36.06 million and U.S. Treasury bills were $6.15 million, versus $15.51 million in cash and no Treasury bills a year earlier. Total current assets were $45.27 million and current liabilities $3.94 million. Cash increased by $20.55 million, while operating and investing activities used $18.79 million and $15.18 million, respectively; financing provided $54.52 million, mainly from stock offerings and warrant exercises.
Total liabilities were $19.34 million, including $13.83 million of finance lease liabilities and $2.02 million of non-current operating lease liabilities. The filing reports no material conventional borrowing balance. Total future minimum finance-lease payments were $18.66 million before $4.83 million of imputed interest. CEL-SCI reported accumulated deficit of $418.20 million.
Material developments and comparison
- In June 2021, CEL-SCI announced results from its 9.5-year Phase 3 Multikine study. In the prespecified surgery-plus-radiation subgroup, five-year overall survival was 62.7% with Multikine versus 48.6% for control, an absolute 14.1 percentage-point difference (n=380; two-sided p=0.0236; HR=0.68).
- The combined trial population did not meet the primary endpoint of a 10% overall-survival improvement. The company attributed the subgroup difference to the lack of benefit when chemotherapy was added; FDA approval is not assured, and the filing notes the regulator will assess the totality of evidence.
- The trial was fully enrolled in September 2016, reached its primary endpoint in April 2020, database lock in December 2020, and was unblinded in June 2021. CEL-SCI said it was preparing a Biologics License Application and estimated approximately $1.1 million of remaining Phase 3 and clinical study report costs, excluding other related expenses.
- CEL-SCI raised approximately $54.0 million net through common-stock sales and warrant and option exercises in FY 2021, compared with $25.8 million in FY 2020. Common shares outstanding increased to 43.21 million from 38.73 million.
- Property and equipment rose to $13.66 million from $5.84 million, reflecting manufacturing-facility upgrades. Approximately $10.5 million of an estimated $10.7 million upgrade had been incurred by year-end.
Outlook, risks, and unusual items
- Management expects substantial continuing losses and operating cash use, with no product revenue expected in the foreseeable future. It states that additional financing will be needed to bring Multikine toward market, potentially through equity, debt, warrant exercises, or partnerships; availability and terms are uncertain.
- Management identified conditions raising substantial doubt about the company’s ability to continue as a going concern, but concluded the doubt was alleviated for more than 12 months from the financial statement date because available cash was expected to cover budgeted requirements. This conclusion does not remove the longer-term funding risk.
- Key risks include FDA acceptance and approval of the Multikine data, possible need for further clinical studies, manufacturing validation and scale-up, capital availability and shareholder dilution, reimbursement and market acceptance, competition, reliance on CROs, and COVID-19-related disruption. CEL-SCI said COVID-19 delayed Phase 3 data lock and manufacturing-facility expansion.
- Derivative-instrument losses were $0.69 million, versus $0.35 million in FY 2020, reflecting fair-value changes tied to the stock price. Other non-operating gain was $1.69 million, largely associated with Ergomed’s resale of shares issued in the prior year to settle clinical research costs; no shares were issued to Ergomed in FY 2021.
- CEL-SCI reported $13.69 million of employee equity-based compensation, versus $10.11 million in FY 2020. The 2021 performance-based options had conditions tied to filing a marketing application or the share price exceeding $42.00.
- The manufacturing lease entails escalating rent and landlord financing of upgrade costs at a stated 13.75% interest rate; the company also maintains significant long-term operating and finance lease commitments. The filing describes a lease discount-rate correction as immaterial to the prior-year statements.
- The independent auditor issued an unqualified opinion on the financial statements. Management reported effective disclosure controls and internal control over financial reporting; the auditor did not express an opinion on internal controls.
Most important facts for investors to verify
- Whether the FDA will accept the Phase 3 subgroup analysis as adequate support for a BLA despite the combined trial missing its primary endpoint, and whether additional studies will be required.
- The primary-source trial data, subgroup definition and prespecification, patient numbers, statistical methods, and consistency of the reported survival results.
- Actual remaining BLA, regulatory, manufacturing-validation, and commercialization costs compared with the company’s estimates and available liquidity.
- Cash burn and financing needs after September 30, 2021, including potential dilution from new equity issuance, options, and warrants.
- Manufacturing-facility readiness, lease obligations and escalators, and the terms and remaining balance of landlord-funded improvements.
- That CEL-SCI has no approved product or product-sales revenue; its business value remains dependent primarily on Multikine’s regulatory and commercial prospects.