CEL-SCI Corporation — Form 10-Q Summary
Reporting period: Fiscal first quarter, three months ended December 31, 2021; comparator is the three months ended December 31, 2020. Balance-sheet comparisons are to September 30, 2021. CEL-SCI is a development-stage biotechnology company focused primarily on Multikine, an investigational immunotherapy, and preclinical LEAPS technology. It reported no product revenue.
Financial performance and position
| Metric | Quarter ended Dec. 31, 2021 | Prior-year quarter |
|---|---|---|
| Revenue | None reported | None reported |
| Research and development expense | $6.08 million | $5.41 million |
| General and administrative expense | $2.76 million | $3.32 million |
| Total operating expenses / operating loss | $8.84 million | $8.73 million |
| Net loss | $8.78 million | $7.94 million |
| Net loss available to common shareholders | $8.78 million | $8.02 million |
| Basic and diluted loss per share | $0.20 | $0.21 |
| Net cash used in operating activities | $4.81 million | $3.83 million |
Operating expenses increased about 1% year over year. R&D rose approximately 12%, primarily due to employee stock compensation and manufacturing-facility depreciation, partly offset by lower clinical-study and other R&D costs. G&A declined approximately 17%, mainly reflecting lower employee stock compensation. Net loss increased; the prior-year common-shareholder loss included an $85,779 warrant-modification charge. Derivative gains were $365,000, versus $933,000 a year earlier, and net interest expense was approximately $273,000. Profit margins are not meaningful because the company had no revenue and incurred losses.
At December 31, cash and cash equivalents were $37.11 million, versus $36.06 million at September 30; current assets were $41.87 million and current liabilities $3.33 million. Working capital was approximately $38.53 million. The company also reported $1.91 million in short-term deposits, subsequently returned in January 2022, and no Treasury bills remaining after their December maturity. Total liabilities were $18.32 million, principally including finance lease obligations of approximately $13.64 million and operating lease obligations of approximately $2.74 million. These lease obligations are not conventional borrowings.
Cash from operations was used primarily to fund operations and the Phase 3 program. Investing activities provided $6.11 million, mainly from Treasury-bill maturities; financing activities used $257,000, including finance-lease payments, partly offset by warrant and option exercises. Cash increased by $1.05 million during the quarter. Stock-based compensation was $3.26 million for employees and $218,000 for nonemployees. Shares outstanding were 43.26 million at quarter-end.
Material developments, outlook and risks
- Multikine trial: Management reported five-year overall survival of 62.7% in the Multikine-plus-surgery-and-radiation arm versus 48.6% in its control arm, an absolute difference of 14.1% (reported p=0.0236; HR=0.68). However, the combined study population did not meet the primary endpoint of a 10% overall-survival improvement; the company said adding chemotherapy in the other treatment arm negated the observed benefit. The separate-arm analysis was described as prespecified and conducted before unblinding.
- Regulatory and commercial status: Multikine remains investigational, and its safety and efficacy have not been established for any use. FDA approval is uncertain; the filing describes a goal of seeking approval for the surgery-and-radiation patient population, not an approval or assurance of filing success. CEL-SCI has no approved products and cannot predict when it will generate product revenue.
- Funding and going concern: The company continues to incur losses and expects to need additional capital, potentially through warrant exercises, partnerships, debt or equity financings. It cautioned that funding may not be available on acceptable terms or at all and that operations could be curtailed if it cannot raise sufficient funds. The financial-statement note identifies conditions that raise substantial doubt about going concern, while management says cash on hand is sufficient for budgeted requirements and alleviates that doubt for more than 12 months from the statements’ date. This does not remove longer-term financing and commercialization risks.
- Trial and facility costs: Direct costs for the Phase 3 trial and clinical study report were approximately $62.6 million through December 31, 2021. Management estimated a further $1.2 million for remaining trial and report costs, excluding other related costs such as drug manufacturing; the estimate was based on information then available from CROs. Ergomed had provided approximately $11.7 million of its $12 million committed contribution through discounted services. A manufacturing-facility upgrade cost approximately $11.1 million; the landlord agreed to finance $2.4 million, of which about $1.6 million had been received at quarter-end.
- Other items and risks: The quarter included an approximately $31,000 patent impairment charge. COVID-19’s full operational and financial impact remained uncertain. The company said it had no significant market-risk exposures. Management reported disclosure controls and internal control over financial reporting were effective as of December 31, 2021.
Important facts for investors to verify
- Review the full Phase 3 results and regulatory pathway, including the failed combined-population primary endpoint, subgroup methodology, and any subsequent FDA interactions or filing plans.
- Assess cash burn, the timing and amount of future financing needs, and whether funding sources are available without substantial dilution or unfavorable terms.
- Confirm actual remaining trial, clinical-report, manufacturing and facility costs against management’s estimates.
- Monitor lease obligations, landlord financing receipts and repayment terms, and any changes in the company’s going-concern assessment.
- Track share dilution from outstanding options and warrants, including performance-based options granted to officers that vest upon specified marketing approval.