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.
Another week gone by. Another week of an increasingly hostile rhetoric between the left and right in the USA; another shooting in America, which is sure to bring another week of inaction and ignorance on the subject from our politicians; US and Europe on the brink of war in the Middle East in a tit for tat over commercial shippin; and the sub .500 Mets, whose season has been over for months, trade prospects for Marcus Stroman - just so the Wilpons can say the Yankees didn't get him. It all makes the stock market seem so relaxing and stress free. A quick update on some of the stories we're following this week:
Shares of Cel Sci Corp (CVM) closed strong last week, spiking at Friday's close to finish at $7.10, over a buck higher than the lows of near six dollars seen earlier in the week. As previously discussed, the volatility of CVM this year is based around the pending conclusion of the Phase III Multikine trial, testing its effectiveness in the treatment of head and neck cancer. Please scroll through my earlier articles on VFC's Stock House for more information on the trial and expected timelines. You can also visit "Kill CVM Shorts" for a nice collection of DD that builds a case for the long argument of CVM. In short, tho, the trial has lasted longer than expected, feeding the theory that the longer the trial takes, the more it indicates that Multikine may be working and extending the lives of patients.
While that certainly may be the case, short interest in CVM, is at 17%, meaning there is a also a strong contingent out there that believes the trial will fail or has already failed.
The longer-than-expected wait has created increased volatility in the CVM trading action, which has attracted the attention of the swing, day and momentum traders - all who have wholly-enjoyed the price action of 2019, let alone the highs and lows of just the past week.
What does Friday's close mean? Some will assume that the late spike meant shorts were covering heading into the weekend while others may believe traders were picking up some 'just in case' shares, as there has been somewhat of a recent pattern of Cel-Sci releasing Monday morning news (although recently in regards to LEAPS).
While the spike into the close looked good - and there was a modest volume spike to go along with it - there wasn't quite enough volume on the day as a whole, in my opinion, to indicate a transition to any major short covering. Could just be some traders closing out short term positions. A couple of months ago, shares of Titan Pharmaceuticals (TTNP) closed strong on a Friday to the two dollar mark after a nice run and are now trading at nearly half that price. Point is that unless significant volume comes in to justify a move in a stock, it could mean absolutely nothing.
Cel-Sci's CRO for the trial, Ergomed from the UK, also continues to see a boost in trading volume and price action. As discussed in a previous blog post, Ergomed has a pretty encouraging outlook for the coming year (see the most recent annual report), but there has been much speculation amongst the CVM investing community as to how much the Ergomed action could be in relation to the Multikine trial. With a shared development agreement, Ergomed stands to monetarily benefit along with Cel-Sci should Multikine work, so the timing of the interest in Ergomed over on the UK side of the Atlantic could be more than coincidence. In fact, another fund not previously mentioned, holds a sizable amount of Ergomed shares, building the case that this interest in Ergomed is and will also translate to Cel-Sci.
Just how much? That's up to each investor to decide after conducting his or her own DD. Ergomed is not a 'one trick pony' with CVM being its one trick, but again - the timing of it all is curious. On the other hand, it would be pretty shady - at least by USA regulatory standards - if enough information has leaked out across the pond that would attract such heavy interest from UK-based funds. So there could be more to the story to look at than just the Cel-Sci connection.
I still believe that there is a chance the shorts will look to drive the share price lower again, prior to results hitting the wires, especially with such a large overall position accumulated. Any indications that shorts are covering in the sixes would be an indication that they are not too confident in their position, in my opinion. That said, the 17% short interest would indicate that they are pretty confident. All makes for volatile days ahead until we hear about results. Back in the day of positive news from Dendreon, there was a pretty good short attack on that stock just before news hit, so it's always something to keep in the back of your mind.
Along with maybe some spare 'night on the town' cash to play the dip, if it happens.
The chart guys say things look great for CVM moving forward, according to chart-investor feeds on the Internet, but charts can be manipulated, especially with small cap lightly-traded biotechs. Additionally, the future of CVM is dependent upon Multikine results, not charts, so take it all with a grain of salt and continue to protect your shares if you are playing the trading game while holding a core long position.
Let's see what this week brings. Ah yeah.
VFC is long CVM. No position in TTNP or Ergomed.