By Brady Huggett

Cel-Sci Corp. entered a $10 million equity financing agreement with an undisclosed private investor, and will use the funds to develop its anticancer product, Multikine.

The financing gives Cel-Sci the right to periodically draw down funds for the next two years, with the draw amount limited to 4.5 percent of the volume-weighted average stock price for the preceding 90 days. Shares will be sold to the private investor at an 11 percent discount to market price.

Cel-Sci CEO Geert Kersten said the money will be used to help the "small but targeted" company get Multikine into Phase III trials for head and neck cancer in 2002.

Cel-Sci, of Vienna, Va., has about $7.5 million in cash, Kersten told BioWorld Today, and about 21 million shares outstanding. The company has a burn rate of approximately $8 million annually. It has streamlined itself of late, shaping into what Kersten believes is the best model for those in the biotechnology industry.

"I'm a 'show me the beef' kind of guy," he said. "I think the purpose of a biotech company is to work on one thing, and it if works, it's huge."

To facilitate this, Cel-Sci has dropped its AIDS vaccine, HGP-30, from the line-up, leaving Multikine to lead the way to market. Multikine has been tested in a total of 150 patients with no signs of toxicity, Kersten said, and is in several Phase II dosing studies now.

Multikine works best in patients with primary advanced cancers, Kersten said. He described the depleted immune system of patients who have had rounds of other cancer therapies as "a lunar landscape." Multikine uses the body's own immune system to fight tumors, so having a fresh front for the battle is important, he said.

Multikine consists of a mixture of naturally occurring cytokines - including interleukins, interferons, chemokines and colony-stimulating factors - administered to the patient, but not into the tumor itself. The drug is given to the surrounding tissue and awakens the immune system to the presence of the tumor.

"Suddenly, you are getting an inflammatory response in that area, and the tumor is chewed up," Kersten said. "It's a simplistic approach." By administering Multikine to the surrounding area, it also can help fight the chance of cancer recurring.

"Our goal is to eliminate the [cancer] cells around the tumor," Kersten said. "When a surgeon misses the tissue around it, if the cancer comes back, the outcome is very dim."

Kersten said Multikine may be able to help in virally induced cancers as well. A study is due to start in Maryland soon with women who have both human papillomavirus and HIV. Because HIV damages the immune system, the women usually end up dying of cancer.

"If we show something in that population, we may have found a short cut [to market]," he said. "There is nothing out there for cervical cancer."

At one point, it seemed Cel-Sci might be the target of a takeover. In August 1999, Cel-Sci received an odd fax from a company called Cel-Sci Acquisition, from the British Virgin Islands. Cel-Sci Acquisition offered to buy Cel-Sci for $7.75 per share, about $5 more per share than it was trading for at the time. Kersten shrugged the offer away, saying he believed it was not legitimate. He asked that the company show that it did indeed have the roughly $124 million it would need to take over Cel-Sci at that price, and he also asked the Securities and Exchange Commission to investigate. Since then, he said, he hasn't heard another word and Cel-Sci Acquisition has sunk back beneath the surface. (See BioWorld Today, Aug. 20, 1999.)

"I think it was someone just playing with the stock," he said. "People are so gullible out there."

Cel-Sci's stock (AMEX:CVM) closed at $1.55 Thursday, unchanged. n

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