CVM: FY21 Results; IO Revenues Analysis

By John Vandermosten, CFA



Fiscal Year 2021 Operational and Financial Results

CEL-SCI Corporation (NYSE:CVM) announced fiscal year 2021 results, filing Form 10-K with the SEC on December 22, 2021.

Highlights for the fourth quarter ended September 30, 2021 and to date include:

➢ Phase III results investor call and discussion – June/July 2021

Letter to Shareholders – July 2021

➢ Commercial-scale buildout of Multikine manufacturing facility completed – October 2021

CEL-SCI recognized no income and incurred operating expenses totaling $36.2 million for the fiscal year. This resulted in a net loss available to common shareholders of ($36.7) million, or ($0.93) per share.

For the fiscal year ending September 30, 2021 compared to the same ended September 30, 2020:

➢ Expenses for R&D increased by 30% to $23.1 million from $17.8 million driven by a $0.5 million in expenses to prepare for the potential filing of a Biologics License Application (BLA) and commercial manufacture of Multikine, approximately $2.4 million increase in employee stock compensation expense, and an approximate $2.7 million increase in expenses related to the Phase 3 clinical trial;

➢ G&A expenses increased by 12% to $13.1 million from $11.7 million driven by a $1.1 million increase in employee stock compensation costs, most of which related to the options granted under the 2021 Non-Qualified Stock Option Plan and an approximately $0.3 million net increase in other general and administrative costs;

➢ Gain on derivative instruments was a loss of ($0.7) million compared to ($0.3) million;

➢ Other non-operating gains were $1.7 million compared to $0.9 million;

➢ Net interest expense was ($1.1) million compared with ($1.0) million;

➢ Net loss available to common shareholders totaled ($36.7) million versus ($30.3) million or ($0.93) and ($0.82) per share, respectively.

As of September 30, 2021, cash, equivalents and US Treasury Bills totaled $42.1 million. Cash burn for the fiscal year amounted to approximately ($27.8) million versus ($17.9) million in the prior year. CEL-SCI carries lease obligations, both financial and operating, valued at approximately $13.2 million and $2.0 million, respectively, excluding current portion. The amounts are related primarily for the manufacturing facility (San Tomas) lease as well as office headquarters and R&D laboratory. CEL-SCI holds no debt on its balance sheet.

Completion of Multikine Manufacturing Facility (San Tomas) Buildout

Concurrent with CEL-SCI’s submission of a BLA for Multikine, CEL-SCI announced on October 22, 2021 the completion of its commercial-scale buildout of its Multikine cGMP1 manufacturing facility. The construction began in 2020, supported by a $11 million investment, and expanded the San Tomas facility, adding various upgrades to bring the facility in line with the FDA’s cGMP regulations. The facility’s production capacity has been doubled, and renovations also have been made in anticipation of the additional personnel required for a second manufacturing shift. CEL-SCI staff recently moved back into the renovated facility.

Immunotherapy Revenue Analysis

In order to update our pricing and revenue assumptions for Multikine and for other immunotherapies, we conducted an analysis on revenue data available through EvaluatePharma. The data were, downloaded, cleaned and analyzed. We aligned total IO revenues that were patent protected or approved under exclusivity, aligning them by year of first commercialization. The effort yielded revenue arcs over the life of a product, as well as summary statistics on their size.

Our data query sought all revenues for branded immuno-oncology drugs over the 2010 to 2021 period. We excluded products that had insufficient data and combined revenues for products that were marketed by multiple companies. The data were further cleaned so that immunotherapies with two or fewer years of revenues and 12 or greater years of revenues were excluded as the former did not contribute materially to the development of the revenue arc, and the latter contained data that do not reflect the current pricing environment. We excluded the first year of revenues as this in likely all cases did not represent a full year of product marketing.

As expected, dispersion among revenue amounts increased as the time series progressed. A majority of revenues are clustered beneath $500 million per year while there are only a few drugs that are generating over $1 billion per year.

Our estimates for Multikine in global revenues for the first full year of revenues is $360 million and a peak in year eight of $1.7 billion. In the early stages of our estimates, we were closer to the mean, but as the products matured, our estimates fell behind both the mean and the median of this group. We attribute a material proportion of the difference to several high revenue products in the checkpoint inhibitor class which over time have been approved in multiple indications. This compares with our addressable market which is a subset of the head and neck cancer market. We use the results from this analysis to check the reasonableness of our estimates. While we appear to be close to the average in the early years, our model falls well behind both the mean and the median as the time series progresses. If Multikine is approved in a wider set of indications, we see further upside in the later years of our forecast. Another factor that should be considered when comparing our future estimates and the revenues provided above is inflation. There is an approximate 10 year difference between the average revenues above and the timing for our Multikine revenue estimate. Even at a 3% annualized inflation rate, this would generate a 34% difference over a 10 year time period.

Data Readout Refresher From the IT MATTERS Trial

On June 28, 2021, CEL-SCI reported selected data from the IT-MATTERS trial. While details for the primary endpoint were not provided, an important subset of the population in the Multikine arm produced a statistically significant 14.1% improvement in overall survival (OS) relative to standard of care (SoC). The p-value for the 5-year result was 0.0236 and the Hazard Ratio (HR) was 0.683 in a population representing about 40% of all advanced primary squamous cell carcinoma of the head and neck (SCCHN) patients. No safety issues were reported in the study population. We summarize below the key data provided by the company:

Additional detail provided by the company in a discussion following the July 1st Annual Shareholder Meeting identified a total of 923 patients in the intent to treat (ITT) group which were broken down into three divisions: Low risk, which did not receive chemotherapy, high risk, which did receive chemotherapy and exclusions, which captured patients who had been randomized, received Multikine, but did not elect to move on to SoC. Group sizes were 380 (41.2%) for the low risk (no chemo) group, 467 (50.6%) for the high risk (administered chemo) group and 76 in the exclusion group.

The cancer patient population exhibiting the response in the trial was at the advanced (stage III and IV) primary (not yet treated) SCCHN. Safety for the trial population which was treated with Multikine, did not raise any safety concerns and matched the favorable results demonstrated in earlier trials. No safety issues were found related to drug administration with no detection of late adverse effects.

Few details were released regarding the primary endpoint except that the press release noted that the study did not achieve the 10% improvement in OS in the combined study groups. We anticipate that this information will be made available later.

CEL-SCI, while blinded to the study, developed several prospective statistical analyses for the population prior to data lock. The company believes that the early identification of the Multikine neoadjuvant population exhibiting a 14.1% OS advantage at five years will be amenable to the FDA as it reviews the data. In an area of unmet need, such as head and neck cancer, the bar is lower for determined endpoints and we anticipate a near-term meeting with the FDA will provide additional clarity. Safety is a strong point with Multikine, which showed no safety issues in the Phase III trial nor in previous studies compared with SoC and with other immunotherapies that are associated with cytokine storm and other negative side effects. We think it is likely that the agency will look favorably upon a new treatment for an unmet need that is safe. To this point, we highlight the case of aducanumab, which demonstrated minimal, if any, efficacy, but was approved by the FDA given the substantial unmet need. We discuss the FDA’s thinking on this matter in a recent article here which may apply to CEL-SCI’s application.

Now that the company has made its announcement, key drivers for valuation include the FDA’s willingness to accept the data available for a Biologic License Application (BLA) consideration. Additional data and information may be required prior to acceptance. The company has reached out to the FDA and contacted representatives from both the offices of oncology products and rare disease. We will update investors on these meetings, their outcomes and impact on valuation when details are made available.

Multikine Near Term Milestones

➢ Release of subset data for IT MATTERS – June 28, 2021

➢ Establish internal SCCHN KOL advisory committee – 2021

➢ Development of clinical study report – 2022

➢ Request meeting with FDA to determine path forward – 2022

➢ Development of paper for publication in peer reviewed journal – 2022

➢ Presentation of data package to review with FDA – 2022

➢ Address FDA Comments – 2022

➢ Submission of BLA to FDA – 2022


Prior to our fairness check above where we compare our revenue estimates with historical IO revenues, we updated our model to reflect the change in pricing that has occurred since our initial estimates. Every year, drugmakers increase pricing and multiple independent sources calculate the average. In most years, the pricing increase is in excess of broader inflation. We reviewed average drug cost increase over the 2018 – 2022 period and increased our estimates accordingly. We previously had estimated a course of Multikine therapy costing $120,000 in the first year of commercialization based on a review of the immunotherapy drug pricing in 2018. Now that we have several years of inflation data observed across the pharmaceutical and biologics universe, our estimate has been increased. After adjusting our $120,000 per course of therapy estimate by the 22% cumulative increase in pricing observed over the last four years, we calculate a per patient therapy cost of $146,000 in the first year of commercialization. These numbers are corroborated by other research that appeared in JAMA Oncology finding an approximately 5% annual price increase for oncology drugs in the United States.6

The updated estimate of treatment cost to our model generates a $1 increase in our target price to $13 per share. We maintain our previous addressable market, timing and penetration estimates which are outlined in the valuation section of our June 29th report available here.


CEL-SCI reported fiscal year 2021 results on December 22, 2021. CEL-SCI recognized no income and incurred operating expenses totaling $36.2 million for the fiscal year. This resulted in a net loss available to common shareholders of ($36.7) million, or ($0.93) per share. As of September 30, 2021, cash totaled $42.1 million. Cash burn for the fiscal year amounted to approximately ($27.8) million versus ($17.9) million in the prior year.

During the final quarter of the fiscal year, CEL-SCI announced the completion of the renovations of its San Tomas facility, the manufacturing facility for Multikine. Upgrades were made to not only bring the facility into compliance with the FDA’s cGMP regulations, but production capacity was doubled and accommodations were made for a second manufacturing shift. CEL-SCI staff recently moved back into the newly-renovated facility.

We conduct an analysis on immuno-oncology revenues based on data sourced from EvaluatePharma. Our processing of the data selected immuno-oncology drugs that have sufficient history to provide a guide for follow on products in this category. We aggregated each drug’s revenue, time-aligning them to generate a mean and median for the group as a reasonableness check on our estimates. We observed that our estimates for global Multikine sales were slightly below the mean in the first full year of sales, but increased at a slower rate to peak as we do not add forecasted revenues for multiple indications as is the case with many of the other products.

CEL-SCI reached the final event in the IT-MATTERS trial in May 2020 and released selected data for a key treatment arm in June 2021. The data demonstrated a 14.1% 5-year survival advantage for patients in the Multikine, surgery and radiotherapy treatment arm. Efforts now are centered on further analysis of the data, scheduling a pre-BLA meeting with the FDA and preparing a manuscript for publication of the study in a journal. There are a number of favorable factors that support the approval of Multikine, which we have listed above. Other cancer drugs have been approved on weaker data such as overall response rate and with less statistical significance than now presented by Multikine. In a disease where a majority of the treatments are toxic or are associated with serious side effects, CEL-SCI’s candidate provides a favorable safety profile with no serious side effects, a must in a space where the first goal is to do no harm.

We have updated our model to reflect current pricing for immuno-oncology drugs based on drug price inflation observed over the last four years. The effort resulted in a 22% cumulative increase in price which we applied to our $120,000 per course of therapy estimate based on 2018 and earlier data used in our initiation.

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1. Current Good Manufacturing Practice

2. Compiled by Zacks Analyst, EvaluatePharma. Comparator immuno-oncology drugs include Bavencio, Blincyto, Emplicity, Imfinzi, Keytruda, KIymriah, Libtayo, Opdivo, Provenge, Tecartus, Tecentriq, Tyvyt, Yervoy and Yescarta.

3. The 0.68 Hazard Ratio was better than and below the pre-specified cutoff of 0.721

4. Compiled by Zacks’ analysts from company press release.

5. Source: CEL-SCI July 2021 Corporate Presentation

6. Kerstin N. Vokinger, MD, JD, PhD, LLM; Thomas J. Hwang, AB; Paola Daniore, MSc; et al Analysis of Launch and Postapproval Cancer Drug Pricing, Clinical Benefit, and Policy Implications in the US and Europe. JAMA Oncol. 2021;7(9):e212026. doi:10.1001/jamaoncol.2021.2026

7. Source: Zacks’ analysts compiled data from various independent sources which calculate annual drug price inflation based on pricing information provided by the manufacturers.