By Karen Pihl-Carey

A company in the British Virgin Islands has offered to acquire Cel-Sci Corp. for about $124 million cash, but Cel-Sci officials question the motives and legitimacy of the company.

Cel-Sci Acquisition Inc. was formed solely to take over Vienna, Va.-based Cel-Sci, whose top pipeline products are the cancer drug Multikine and an AIDS vaccine, said Robert Brucee, a spokesman for the acquisition company.

Brucee said his group believes Cel-Sci has the most promising AIDS vaccine in development and is "the premiere biotechnology company in existence today." He also said the stock is greatly undervalued.

Cel-Sci stock (AMEX:HIV) has been trading between about $1.50 and $3 during the past year, with a 52-week high of $3.50. But Cel-Sci Acquisition offered $7.75 per share on July 20 for all common shares, which number about 16.3 million, according to Cel-Sci financial results released Monday. The stock closed down 43.75 cents Thursday, or 14.6 percent, to close at $2.562.

Days following the July 20 faxed offer passed and the company received no response from Cel-Sci. On Wednesday, about four weeks after the initial offer, it publicly announced its offer by disclosing the original letter and two more that followed, all signed by Daniel F. Martino, an attorney representing Cel-Sci Acquisition. One letter urged Cel-Sci to inform its shareholders of the proposal.

"The truth of the matter is Cel-Sci has never attempted to contact us since the offer was submitted," said Brucee, an associate of Martino's at Estudio Martino & Asociados in Buenos Aires, Argentina. "Not one phone call, not one fax, not one email, not one letter."

But Cel-Sci issued a press release later on Wednesday saying it did, in fact, attempt to reach Martino. Both numbers tried were either busy or nobody answered, said Cel-Sci CEO Geert Kersten. Earlier this week, a call was answered by somebody who spoke only Spanish, and no message could be relayed, he said.

"Actually, I thought initially it wasn't a real number," Kersten told BioWorld Today. "Finally, when we couldn't get them on the phone, we sent them an e-mail. Actually, we sent it out two days ago before they sent out the press release. [Our] corporate attorney said, 'Show us you've got the money.' If the offer is real and the money is really there, then that's all they need to show and we can discuss it. But if it's a crank, then I've already spent too much time on it."

Brucee said they did not receive the e-mail until Wednesday, after Cel-Sci Acquisition sent out its press release. He suggested the e-mail could have been manipulated to read one day earlier.

"Dr. Martino represents a number of international companies," Brucee said. "He told me this morning he's never had someone complain they couldn't reach him."

Brucee believes Cel-Sci's press release on Wednesday was a defensive strategy meant to place doubt about Cel-Sci Acquisition's offer in the minds of shareholders.

"We're for real and our intentions are very, very serious," Brucee said. "We tried to keep this amicable. We have been met with silence."

The silence, Kersten explained, is the way his company would treat any offer from an unknown company that came across on a fax machine from Argentina. Cel-Sci, he said, receives two or three such offers a month and doesn't invest much time in them until the offering company proves itself to be legitimate by showing him where the money comes from.

"What if their game plan had been or is to run the stock up to manipulate it in some way?" he asked. "I don't know. Until I know, I'm not going to play into anyone's hands. I'm not going to cause undue volatility on the stock. Bottom line is show us you've got the money and we can talk."

Kersten said Cel-Sci's potential for shareholder value is much greater than $7.75 per share. The company's drug, Multikine, is in Phase II clinical trials for head and neck cancer and, in an Israeli study, was shown to reduce tumors in all 10 patients. One patient's tumor completely disappeared, the company said. The drug also is being tested in prostate cancer and HIV.

The results of ongoing clinical trials in more than 130 patients will be disclosed in six to nine months and will form the basis for a pivotal study of Multikine in head and neck cancer, Kersten said.

Cel-Sci's second product, an HGP-30 AIDS vaccine, is in Phase II trials. Much of the target market is Third World countries, since preclinical studies showed the vaccine perceives HIV subtypes A, B, C, and E in blood from mice. The company is ahead of the rest of the world in developing a global vaccine, Kersten said, adding that the World Bank recently said it would purchase up to $5 billion worth of the first vaccine on the market.

Another company, HIV-Vac Inc., of Toronto, is developing an intracellular vaccine designed to prevent the disease, as well as prevent the onset of AIDS in HIV-positive patients. HIV-Vac expects clinical trials to be under way soon and to get government approvals in two to three years. VaxGen Inc., of Brisbane, Calif., has its AIDS vaccine candidate in Phase III trials in North America and Thailand.

But Cel-Sci Acquisition wants to put its money on Cel-Sci.

"From our own research, we believe the company does in fact have an AIDS vaccine," Brucee said. "They know what they have. We think we know what they have. And they probably think our offer is much too low."

The offer was supposed to expire Aug. 24, but Cel-Sci Acquisition extended it to Sept. 30.

Cel-Sci stock hasn't traded in the high $7 range since late in 1997, and steadily has declined since.

Kersten explained Thursday's stock decline by saying, "Obviously, the market doesn't think it's a real offer either."

If Cel-Sci Acquisition proves to be legitimate, Kersten said, the offer will be brought before the board and then to shareholders. He said it was too early to give his own recommendation.

"We'll look for the best situation, the best long-term value for the shareholders," he said.