Shares of Cel-Sci (CVM) were trimmed by a third on Wednesday, closing the day at just under eleven bucks after hitting as low as $6.35 at one point. The only "news" to hit the wires during the blood bath was a Letter to Shareholders issued by CEO Geert Kersten, which pretty much retells the Multikine story from its infancy to where it stands today. For those that my just be tuning in as a result of the Wednesday massacre, Multikine is Cel-Sci's Phase III immunotherapy treatment for head and neck cancer. Multikine harnesses the body's immune system to combat the cancer cells and is unique because it is applied before the Standard of Care treatment while a patient's immune system is still strong. The Phase III trial was expected to end long end, but it has not yet ended, leaving many to speculate that the treatment must be working. The event that will end the trial is the 298 death mark, a number that many speculate will be reached this month or shortly thereafter.
Given the company's somewhat bumpy history - combined with the general volatility of the sector - CVM has attracted quite the interest of shorts, generally keeping a pretty good lid on any previous price runs. That said, the shorts have failed at keeping a lid on the CVM price run as it jumped from under three dollars to as high as nearly eighteen dollars in the past year, even as them shorts were attempting to tell people to sell every step of the way. To put this stock's price run over the past year into perspective, consider that the closing price after Wednesday's price smash, it is still more than a triple from where it opened last year.
So why the drop?
It could be easily assumed that the drop is due to a leak of bad news. The trial failed. Delay. Trial will have to be re-done. All those theories have been out there, but none have been confirmed by a news release. Again - the only "news" released was the shareholder letter which re-iterates what we already know. The letter is very long-winded, too, if the intent was just to tell us stuff we already knew, so my guess is it was just as much intended to tell the Multikine story to new eyeballs who were researching what the heck just happened to that stock as it was to inform current investors that nothing has changed.
That is key. Without legitimate news, nothing in the story has changed. Since it is being speculated that the 298th event is close, the drop in price could be a bear raid that allows shorts to cover at a lower price before significant news hits that could potentially launch the stock higher. Shorts are already carrying huge losses from the ride up over the past year (and many are likely still under water even after yesterday's action). The same thing occurred with Dendreon (DNDN) back in the day. Dendreon was also awaiting news on its own cancer immunotherapy treatment, Provenge, and shorts were telling everyone to sell because Provenge was a failure. Shares still rode higher, tho, before being 'bear raided' shortly before big news hit that propelled the stock much, much higher. The raid resulted in many longs selling scared and a whole lot of stop-losses being taken out, but more importantly to the short-sellers, it allowed them to cover before the real run-up.
Is it possible that Wednesday's drop is a result of bad news leaking and insiders taking advantage of insider information?
Of course it is. Anything is possible, especially in the biotech sector. It's always been my opinion, tho, that if the Multikine trial failed - even if it were not an outright failure, but a re-do - shares would drop to the sub-one dollar mark, on even larger volume than we saw Wednesday. It still could be that the coming days show us that, but since all we saw from the company was a shareholder letter, i'm chalking this one up to another bear raid. The company CEO would have to have cajones of steel and iron and be located in a non-extradition company to issue a shareholder letter like that during a drop and then issue a trial failure PR a few days later. Additionally, all the usual riff-raff have jumped to the stock-investing message boards with the same misleading statements and presentation slides from over a decade ago - with nothing new to offer. This looks more like a short-covering bear raid than an indication of a bad news.
To the contrary, it could be good news, because it could mean that some insiders became aware of activities that would indicate good news may be pending that would force them to cover now, as happened with Dendreon. Key takeaway there is that the little guy is usually the last one to know what is going on, so the little guy also has to have cajones of steel and not let these monster price swings affect solid and logical judgement. I've always stated that before investing in the speculative biotech sector, ya gotta have a game plan and don't make decisions based on emotion.
It's always, always, always a smart thing to take profits on the way up during huge runs. Gains are not gains until they are sold and realized. The goal is to try and be on 'house money' by the time the big news hits. Being on 'house money' helps in not making emotional trades and keeps one from becoming razzled on days like Wednesday - because if successful trial news comes out in the future, the current prices are going to be looked back upon as a sweet buying opportunity.
It could be that by the time I'm done posting this blog post that news hits the wires and the drop goes lower, but I'm guessing not and that we are just in for some volatility while we still wait for the trial news. That means there could be some fun trading with trading shares while the core position is held for the longer term.
Enjoy. Just another chapter in this Multikine story - and check out some of my previous Cel-Sci write-ups for more in-depth analysis and opinions!
VFC is Long CVM.