CVM: Fiscal 3Q:20 Results

By John Vandermosten

NYSE:CVM

READ THE FULL CVM RESEARCH REPORT

Upcoming Milestones:

‣ Full review of dataset and safety results

‣Report of selected data from analysis

‣Presentation of results at major oncology conferences

‣Publication of results in journals

Third Quarter Fiscal Year 2020 Operational and Financial Results

CEL-SCI Corporation (NYSE:CVM) reported its fiscal third quarter 2020 operational and financial results for the three month period ending June 30, 2020 and filed the companion 10-Q. Following a near nine year duration of the IT-MATTERS trial that evaluated biologic Multikine in head and neck cancer, the company announced the trial had reached the targeted threshold of 298 events on May 4th of this year. The completion of required events enables the company’s contract research organization (CRO) to begin data evaluation. The study is undergoing database lock and analysis. CEL-SCI will publicize the results once the full analysis has been finalized and results are made available to the firm.

Shifting to the LEAPS platform, CEL-SCI has initiated the development of an immunotherapy targeting SARS-CoV-2 using the company’s patented Ligand Epitope Antigen Presentation System (LEAPS) peptide technology. Initial in vivo experiments demonstrated that after a single injection, LEAPS COVID-19 conjugates induced antibody response faster and in higher titers than expected against a conserved region of SARS-CoV-2, paving the way for challenge studies using live virus at the University of Georgia Vaccine Center.

CEL-SCI and the University of Georgia’s Center for Vaccines and Immunology entered into a collaboration agreement to develop the LEAPS COVID-19 immunotherapy. Initial studies performed through the collaboration will attempt to replicate experiments done with LEAPS against H1N1 flu virus in mice which demonstrated improvement in the animals’ morbidity and mortality. The aim for the therapy is to improve outcomes for those already infected. The LEAPS COVID-19 leverages a highly conserved region of the virus and has both anti-viral and anti-inflammatory attributes, distinguishing it from other potential therapies.

During the third quarter of CEL-SCI’s fiscal year 2020 and compared with the same quarter last year, R&D expense increased by $1.0 million (32%)1 to $3.9 million, driven by a $0.7 million manufacturing facility preparation for commercial production of Multikine, a $0.8 million increase in employee stock compensation, and a $0.3 million increase in depreciation expense offset partially by a decrease of $1.0 million related to the completion of the clinical phase of IT-MATTERS. General and administrative expenses increased approximately $0.8 million (36%) to $3.2 million, driven primarily by higher employee stock compensation. Quarterly net loss amounted to $10.2 million, equivalent to loss per share of ($0.27).

CEL-SCI’s cash increased to $20.1 million from $14.3 million at the end of the prior quarter. Cash burn for the three month period was approximately $4.5 million. This was more than offset by net cash from financing of $10.3 million reflecting proceeds from exercise of warrants and options.

Final Event in IT-MATTERS Trial

After almost a decade, the IT-MATTERS clinical trial had its final event, reported in a press release on May 4, 2020 and is now in the database lock and analysis phase. The event-driven trial for head and neck cancer enrolled its first patients in 2011 in the US, Canada, UK, France and 20 other countries. 928 patients were enrolled, with the final individual added in September 2016. The primary endpoint for the study is an overall survival benefit of 10% over standard of care alone in defined areas of the head and neck. Based on timelines for other trials we have seen, we think CEL-SCI will present findings at a conference before the end of the year.

The trial had three arms including:

1) Multikine plus CIZ followed by SOC

2) Multikine (CIZ-exclusion) followed by SOC

3) SOC therapy as the active comparator

Only the M+CIZ and SOC groups were used to contribute to the event total for the trial. Over the near nine year duration, an independent data monitoring committee (IDMC) provided periodic checks approximately every 6 months to ensure patient interests were met and the trial was conducted ethically. Next steps are for CRO ICON to perform the full data analysis and submit results to management.

Our experience with event-based trials finds that the length of time from final event to topline readout frequently takes from two to three months2 to complete the follow up steps after the last event is reportedManagement did not provide any guidance on expected timeline and we caution investors that coronavirus-related disruptions could extend the period of analysis relative to our estimate. After database lock and analysis, we expect near term future events to include:

‣ Analysis of primary and secondary endpoints

‣ Full review of dataset and safety results

‣ Presentation of results at major oncology conferences

‣ Publication of results in journals

Once the full dataset is available, CEL-SCI will meet with the FDA and other regulatory authorities to develop a plan for the submission of a biologics license application (BLA). Management did not provide any guidance regarding a timeline but we caution investors that unexpected delays due to the global pandemic may extend the final stage thus, the timing of any reporting of data could differ from our expectations. The CROs are fully responsible for the timing for the development of the data analysis and CEL-SCI management is required to disclose material information once available. Therefore, we expect CEL-SCI will share selected data with investors from the full analysis within a few days of it being available to the company.

We believe that one of the major oncology conferences in the last months of 2020 will be targeted for presenting data. While the pandemic has forced the cancellation of many conferences, by fall, we believe that the major annual conferences will be held virtually if not in person. The mid-September European Society for Medical Oncology Congress (ESMO) may be an appropriate venue for CEL-SCI’s Multikine results to be presented. The ESMO Immuno-Oncology Congress in the second week of December may also be suitable.

Summary

CEL-SCI has reported the final event in the IT-MATTERS trial, which is now in the database lock and analysis phase. We believe selected data from the full analysis will be available shortly. During periods absent coronavirus related delays, duration from final event to topline readout has ranged from 48 to 110 days based on our review of other Phase III trial timelines. We have outlined many of the normal steps that are required following the completion of a trial and also reviewed other recent trials to give a sense of how long it takes from the last trial event to topline report. CEL-SCI management has noted the extended duration and geographical diversity of the study which may also contribute to a longer than expected period of analysis. If Multikine is able to meet or surpass its primary endpoint of a 10% increase in overall survival as compared to standard of care alone, we see substantial upside to current levels.

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1. Note that this compares 3Q:20 with restated numbers for the prior year that do not match the historical data in our model as some expenses were reclassified from G&A to R&D.

2. We reviewed six recent Phase III trials and measured the number of days between the report of the last event and when topline was announced. We found an average length of 82 days (just under 3 months) with a range of 48 days to 110 days. Companies included all reported their last event in 2018 or 2019 and included Intec Pharma, Amarin Corp, MedDay, Acasti Pharma, Ritter Pharma and Resverlogix.

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