VIENNA, Va.--(BUSINESS WIRE)--The following letter is being released by CEL-SCI Corporation (NYSE MKT: CVM) to its shareholders:
Dear Fellow Shareholder:
We are pleased to report significant steps forward for our most important clinical program, the ongoing Phase 3 clinical trial with our investigational cancer immunotherapy drug Multikine* (Leukocyte Interleukin, Injection) against advanced primary head and neck cancer. We also recently received a very important endorsement for our $50 million arbitration against the former Clinical Research Organization (CRO) that used to run this trial.
In our Phase 3 cancer immunotherapy trial, Multikine is given for 3 weeks right after cancer has been diagnosed and before any standard of care treatments, like surgery, radiation and/or chemotherapy. This trial is about proving that it should be more beneficial to cancer patients if we stimulate their immune systems before their immune systems are severely weakened by standard of care cancer treatments. It seems logical to us that this immune therapy approach should give better results than today’s standard approach of treating cancer patients after radiation and chemo have left their immune systems severely weakened. Our goal is to make the very first cancer treatment more successful.
While at this time we cannot report clinical results in the ongoing Phase 3 trial, we can point to rapidly increasing enrollment and to many more of the world’s leading doctors participating and enrolling patients in this study. When we dismissed the former CRO we were enrolling about one patient per month. Last month, with the new CRO, we basically enrolled one patient per day.
In early October 2015 we had another development that we think is quite telling. The new CRO running our Phase 3 trial, Ergomed, has increased its co-development agreement, the amount it contributes to the Phase 3 study, from $10 to $12 million. If Multikine is not successful, Ergomed will get nothing back from its $12 million Multikine co-development investment. If it is successful, Ergomed will be repaid in the form of a royalty on sales with a cap. Ergomed runs the Phase 3 study and its employees are in contact with all the study sites and treating physicians on a regular basis. We believe Ergomed’s choice to increase its investment in the trial is important.
Another very important event is the $50 million arbitration against the CRO that used to run our Phase 3 study, until we dismissed them in or about April 2013. The arbitration against this company was filed in October 2013 and is drawing closer to trial. Remember, this is an arbitration which is generally much faster than litigation. This arbitration is very important to CEL-SCI because it offers us the opportunity to prove that the CRO significantly harmed CEL-SCI’s efforts to conduct the Phase 3 clinical trial. The trial, under the new CRO, has been going well since we dismissed the former CRO. If the arbitrator agrees with us, and based on the evidence we have assembled we strongly believe that he will, CEL-SCI will collect damages that could be significant.
Further strengthening our position in the case, we just announced that Lake Whillans, a firm specialized in financing litigation, has committed $5 million to fully fund the arbitration expenses against the former CRO. This amount is larger than we think is needed, but we wanted to make sure that the other side clearly understands that we are more than prepared to represent and protect our rights in this case. The $5 million will be used to pay for the arbitration costs; CEL-SCI will no longer pay any arbitration costs. This money is non-recourse, meaning that Lake Whillans’ return can only come from the proceeds of the arbitration award or the proceeds from the settlement of the arbitration. If we do not win or if we only win a small amount, then Lake Whillans will receive nothing or just a small amount. Prior to committing to fund our arbitration against the former CRO, Lake Whillans, under strict confidentiality, conducted extensive and detailed due diligence of all of the records in this case.
The bottom line is:
- The Phase 3 trial is progressing well and we feel that the new Ergomed co-development investment confirms this.
- We feel that our case in the arbitration is strong and that the Lake Whillans arbitration funding agreement confirms this too.
- The arbitration, which had been a substantial financial burden in the past, is no longer costing CEL-SCI money.
We will keep you updated as matters progress in both the global Phase 3 study and the arbitration.
Sincerely,
Geert Kersten
Chief Executive Officer
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. When used in this press release, the words "intends," "believes," "anticipated," "plans" and "expects," and similar expressions, are intended to identify forward-looking statements. Such statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected. Factors that could cause or contribute to such differences include, an inability to duplicate the clinical results demonstrated in clinical studies, timely development of any potential products that can be shown to be safe and effective, receiving necessary regulatory approvals, difficulties in manufacturing any of the Company's potential products, inability to raise the necessary capital and the risk factors set forth from time to time in CEL-SCI Corporation's filings with the Securities and Exchange Commission, including but not limited to its report on Form 10-K and 10-K/A for the year ended September 30, 2014. The Company undertakes no obligation to publicly release the result of any revision to these forward-looking statements which may be made to reflect the events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.
*Multikine is the trademark that CEL-SCI has registered for this investigational therapy, and this proprietary name is subject to FDA review in connection with the Company's future anticipated regulatory submission for approval. Multikine has not been licensed or approved for sale, barter or exchange by the FDA or any other regulatory agency. Similarly, its safety or efficacy have not been established for any use. Moreover, no definitive conclusions can be drawn from the early-phase, clinical-trials data involving the investigational therapy Multikine (Leukocyte Interleukin, Injection). Further research is required, and early-phase clinical trial results must be confirmed in the Phase 3 clinical trial of this investigational therapy that is currently in progress.
