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.  

Ten years ago I was lucky enough to receive a tour inside the company's Multikine production facility and meet with some of Cel-Sci's senior representatives.  At the time, some of the same characters that attack the company now were attacking it then, with some of the same verbiage they are using now.  At the time of my visit the facility was awaiting clearance from the FDA for Multikine production and the staff were enthusiastic and confident in the science behind what was - and still is - considered a breakthrough treatment, should it work.  Cancer immunotherapy was still not widely accepted back then, so to see the treatment move mainstream over the years has also been an encouraging journey, one that fits right in with the Multikine story.  

And where are we with that story after a very volatile last few weeks?  I can't help but believe we are close.

Shares of Cel-Sci Corp (CVM) have dropped back to the mid-six dollar range, roughly two bucks lower than where shares traded just days earlier.  As discussed previously, short interest in the stock had been gradually increasing as the share price about quadrupled since early 2019.  I won't re-hash the entire Cel-Sci story here, please see my earlier blog posts for deeper insight.  In short, tho, the company's lead product candidate, Multikine, is in the final stages of a global Phase III trial testing its effect in treating cancer of the head and neck.  Multikine is different from traditional cancer treatments in that it is applied prior to the patient receiving Standard of Care (SoC) treatment, which is key because that is when the body's immune system is strongest; this is a key point, since Multikine harnesses the body's immune system to combat the cancer.  

For investment purposes, the long side of the argument has it that Multikine is working since the trial is still ongoing past previous estimates of completion and since the IDMC recommended the trial continue after a review earlier this year.  Read here for more on the subject.  Two hundred and ninety eight total deaths is the magic number of 'events' that need to occur for the trial to end and according to the most recent company presentation dated this week, that has not yet occurred.  

The short side of the argument focuses on the belief that SoC has improved and all arms of the trial are living longer, hence the extended length of the trial.  The short argument also believes that Multikine does not work, based on a trial halt a few years back when Cel-Sci swapped CROs based on breach of contract and mismanagement of the trail.  While it is not uncommon for these speculative biotechs to attract the shorts, Cel-Sci shorts seem to take it to an extra personal level for some reason.  Biotech blogger Adam Feuerstein, especially, seems to have a vendetta against company CEO Geert Kersten.  

Anyway, with the short interest growing, it was expected that at some point they would come in and play the games that the short sellers play.  The opportune time probably was not during the Russel reconstitution period, but as soon as that was done they said, "Let the games begin!" Last Friday they stormed in quick to drop the share price by about 20% and the sharp move lower on volume (price crashed below $6 briefly) likely scared a few longs from at least some of their shares and took out all sorts of stop-losses. 

A few take-aways to keep in mind moving forward.  

No negative news release accompanied the drop, which is indicative that bad news did not leak, as some suspected, it was just purely a game of the shorts having their day.  If the Multikine trial were to fail, and news leaked, then we are likely in store for much more than a twenty percent drop since Multikine is essentially a 'one trick pony' right now.  Yes, LEAPS has been getting more and more of a spotlight along with some credibility by the health community, according to recent company, press releases, but LEAPS is not advanced enough in its pipeline progress to provide much support for a CVM share price, should Multikine fail.  That said, LEAPS does add value to any potential merger or acquisition that may take place between Cel-Sci and another company, so it is still very relevant to the larger story.

It's also key to remember that the shorts are likely not done.  With about four million shares short, according to recent stats on the Finance services, the shorts will need some time to cover, if their intent is to cover.  Given their conviction in Multikine failure, however, it is also likely that they may continue building on their short position in anticipation of trial failure news hitting.  Shares to borrow in order to build a short position have been tough to come by, however, but a few volatile days like they created last Friday - followed by a nice rebound Monday that likely attracted some trading shares to sell - will ease their game a bit.  Point is, it would be naive at this point to assume another significant drop is not coming.

Needless to say, the winning strategy in investing is to sell for a profit.  Each investor has their own appetite for risk, their own trading strategy and conducts their own DD (they should).  Nothing wrong with traders trading into the Cel Sci volatility and nothing wrong with holding through the storm and waiting for the endgame.  Their is also nothing wrong with shorting the market, that is part of the game and it benefits longs, too, by creating trading opportunities and 'buy the dips' scenarios.  

It's also keen to remember that there are beginner investors playing with a few hundreds of shares and the bigger boys playing with tens of thousands of shares.  Everyone is in the game together playing by their own rules, which makes it that much more important to devise your own strategy before entering into any stock.  Have an entry and exit strategy and be aware of your own tolerance for risk.

The Endgame is near for Cel-Sci in regards to the Multikine trial.  If you are one considering the trial to be a success, shares are still very attractive to purchase right now, especially if it drops further due to short pressure.  I'm always of the belief that one should play trades in order to have house money only riding into the final results, but that's just my strategy.  I also like the 'night on the town' strategy.  Skip a night out that would cost a couple of hundred bucks or so and throw it into a speculative play that could pay off.  If it does, bonus - in this case you're likely talking a ten-bagger.  If it doesn't work out then yeah, you're out a couple of hunney, but you've saved yourself a hangover.

It is possible that SoC has improved and is extending the overall trial.  Some easy research on Google will bring you to sites that will offer up statistic that may make you skeptical that it is strictly Multikine effectiveness that is extending the trial.  There is nothing, however, that I have found that indicates a drastic extension in Stage III and IV cancer that would indicate that is the sole reason why the trial is still going.  Although there is still no coverage by major analysts (it's my opinion big money is waiting on the sidelines for results before jumping in), CVM is popping up on the radar of more and more smaller blogging and (if you can call them) news sites.  The story is beginning to make its rounds, which will only add to the volatility leading into results.

Being on house money and having followed this company for more than a decade, I'm enjoying the Cel-Sci story each and every day.  Our pharmaceutical industry could use some good wins.  We know the industry (biggest drug cartel in the world) gears towards treatment and not cures in order to milk insurance companies and individuals for the rest of their lives - not to mention that drugs and treatments in America cost so much more than they do overseas or even Canada - but Multikine looks to change that paradigm.  Being advertised as a potential cure, it will likely at least significantly reduce the cost of treatment while extending lives, if proven successful.  That's a big deal.

As an investor or as a spectator, the Cel-Sci story is one to watch, more and more every day as this trial continues past the expected end date.

I'm not affiliated with the 'KillCVMShorts' website, but it is a great place to conduct DD for the long side of the story.

Disclosure:  LONG CVM.

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