By Randall Osborne
Aiming at the next round of clinical trials for a cancer therapy and an AIDS vaccine, Cel-Sci Corp. finished a private placement of $10 million in convertible preferred stock.
"It goes a long way," said Geert Kersten, CEO of Cel-Sci. The Alexandria, Va.-based company now has $16 million in cash, with a burn rate of about $5.5 million per year, he said.
Under the terms of the financing, Cel-Sci issued 10,000 shares of convertible preferred stock to institutional investors. The stock is convertible for the first nine months into shares of common stock at $8.28 per share, which is a premium to Cel-Sci's closing price of $7.25 the day before the financing closed.
After nine months, the stock will be convertible at the lower of $8.28 or the market price, based on the price of two days out of 10 days before conversion.
Investors also received an aggregate of 1.1 million four-year warrants to purchase more shares at $8.625 and $9.315. Cel-Sci will file a registration statement for resale of the shares acquired on conversion of the convertible preferred stock and warrants.
The company's cancer therapy, called Multikine, is a natural mixture of cytokines, which are regulators of the immune system. Phase I/II trials are under way in the U.S. and Canada for head and neck cancer patients who have failed previous therapies.
A Phase II study is about to begin in Israel for pre-surgery head and neck cancer patients, who are also the subject of Phase I/II trials in Canada. The cancers are persistent, disfiguring and deadly, Kersten said.
"In nearly every case, you get surgery," he said. "Unlike some other tumors, they are not ulcerated, so it's not clearly delineated where the tumor ends. Sometimes, an inch outside the tumor are more cells, so your tongue, jawbone, lips, everything in the way gets taken out. Even then, in 50 percent of cases, you get a recurrence."
Cel-Sci is testing Multikine to see if it can reduce tumor size in two weeks. "In the first few patients, we've showed no toxicity, tumor reductions and increased ability to swallow and chew," Kersten said. The Israeli study is expected to finish in the second quarter of next year, and the Canadian study in the third.
HIV Vaccine Trials Difficult In US
Cel-Sci's AIDS vaccine, HGP-30, is a synthetic copy of a conserved part of the p17 core protein of HIV. It has been shown to protect animals against HIV infection, and caused humans to produce antibodies that recognize the most prevalent subtypes of the virus. The vaccine focuses on a part of the rapidly mutating AIDS virus that remains constant.
"We're ready to start Phase II in Africa," Kersten said. "It's been tested in more than 60 individuals in the U.S., and now all of our work is moving into the Third World. It doesn't make any sense to develop it in the U.S.; the Phase III would take 20 years."
Also under development is Cel-Sci's Ligand Epitope Antigen Presentation System (LEAPS). The heteroconjugate technology combines T cell-binding ligands with small, disease-associated peptide antigens, and is intended to selectively stimulate the immune system to fight infections and cancer.
LEAPS is being tested against herpes simplex, AIDS, malaria and tuberculosis antigens. Cel-Sci earlier this month signed a final agreement with the National Cancer Institute to develop an immunotherapeutic response to prostate and breast cancers in animal models.
"It has not been tested in humans yet, but we've been able to corroborate data from one species to another," Kersten said.
Cel-Sci's shares (AMEX:HIV) closed Monday at $6.562, down $0.062. *