Disclaimer: VFC has no affiliation with Cel-Sci Corp or with any third parties associated with the companies. VFC has received no compensation for this blog post, although there may be an unrelated advertisement or two at various locations on this blog. VFC does not offer advice or investment services and nothing you read here should be construed as such. VFC is just a guy with an opinion and access to a computer and a keyboard; bringing discussion and ideas to the table. #AhYeah.
Cel-Sci Corp (CVM): Is the short attack over?
The ever-so-volatile shares of Cel-Sci - which ran from under $3 to over $8 in just a few months earlier this year - are back to trading in the mid-$4 range after a recent short attack killed the rally. Interestingly, the attack was swift and quickly drove the share price down, whereas sometimes these things are a little more gradual and protracted over time. Part of the reason for the quick action may be due to the timeline (or lack of a definitive timeline) relating to the Phase III Multikine trial. Previous estimations have noted that the trial would be complete in the first half of 2019, and if that is still the case, then news could come at any time. That would drive those on the short side to want to act quickly, or start covering, as it would be dangerous to be short - should the results come in positive. Should they be negative, tho, it would be a bad day for longs.
As previously discussed, Multikine is being investigated in a global Phase III trial as an immunotherapeutic treatment against head and neck cancer. Multikine trains the patient's immune system to attack the cancer prior to the patient receiving Standard of Care (SOC) treatment. That is key, because SOC treatments beats up and weakens the immune system, so harnessing the immune system early in treatment is a compelling quality of Multikine.
Let's not rehash items we've already discussed too much, but last week we discussed that CVM may be trading in a 'wait and see' mode right now, as volume dried up and betting solely on trial results could be a speculative and risky proposition. We've seen the LEAPS technology come to the forefront again, but investors are generally aware that LEAPS is in the very early stages of development and would likely not be able to help support the CVM share price should Multikine fail in trials. Due to these facts, it was apparent that shorts were in control of trading during the downturn and there was not enough long volume to counter the attack - although the last couple of trading days may have seen that change at around the $4.40 level.
During the run-up to the eight dollar mark, we heard quite a bit from the company in terms of 'Letters to the Shareholders' and a couple of positive PRs (links provided in my previous blog post), but not much during the drop. Company CEO Geert Kersten didn't remain silent, tho, picking up another batch of CVM shares in a purchase made on 3 June. Longs will say this is positive, as Geert continues to put his money where his mouth is (he holds over a millions shares), while shorts will say it was a small purchase and he must be trying to lure in gullible longs with his purchase. VFC's Take is that this is the CEO's way of still speaking to the investment community even without any PR-able news to issue - and that nothing has changed in regards to an investment in CVM right now. It's still a Multikine results play at mid-$4s, just as it was at mid-$8s.
Regardless of how rich the CEO is, over a million shares invested in the company is a lot of money to anyone, so it's apparent he believes in Multikine and is not strictly putting on a show, as shorts would argue. Those who have listened to the webcasts or attended recent Cel-Sci presentations have interesting takes on the CEO's body language and tone during the presentations, but it's up to each investor to judge that on their own and decide how relevant that is to their investment.
The Cel-Sci website has also recently announced three new operational positions. Again, longs see this as a positive, while shorts will say "Ok, just three?" Truth is, the company is correct to prepare for the future in the event of a positive outcome, but since trial results should not be leaked at any point, it's tough to gauge what any of this actually means, unless one were to believe results are being leaked.
The Good: Percentage-wise, shares are still up pretty significantly on the year, even with the recent drop from over eight. If bad news had leaked to cause the drop, shares would have bottomed a lot further than they have, in my opinion. It's more likely that shorts that enjoy playing volatile nature of the sector jumped in at an opportune time. If CVM finds support in the mid $4s, it could be a decent signal that short covering is taking place and positions are consolidating for the endgame. It would also indicate, in my opinion, that there is adequate interest on the buy side from entities speculating on positive results. Although I believe the majority of big players will wait for results before jumping in head first or steering clear. CEO buying is a positive, imo, new positions are also a decent sign, although only to a certain extent because assumption should be that no one is receiving leaked results that would indicate it's time to start banking on approval. Institutional interest increase of last quarter is still positive.
The Bad: The bottom will likely fall out if the results miss. The swift drop likely scared away some investors who were looking to play the endgame results. Drop will likely have scared off potential new investors who may assume was caused by leaked negative news. Still a lot of uncertainty about when results will come. Still not certain the short games are over. CVM is still a 'one trick pony' for the time being. Still no real analyst coverage.
Bottom Line: Regardless of volatility, CVM is still a Multikine results play. Nothing has changed. Investors were offered another demonstration of why it is wise to play the speculative nature of the biotech sector and take at least some 'trading shares' money off the table in quick runs like we saw, even while maybe holding onto a core position - because you just never know. In my opinion, we are getting pretty close to something. The quick downturn and volume uptick over the last two days (although somewhat modest in the grand scheme of things) looks like positions are being set up for news coming pretty soon. Just my opinion, tho, as we await the magic 298.
Disclosure: Long CVM, will trade volatility.