CEL-SCI is a Rare Value Opportunity in Cancer Immunotherapy Stocks

NEW YORK, NY / ACCESSWIRE / April 23, 2015 / Cancer immunotherapy is scorching hot. At no time in medical history has a new cancer treatment been so widely researched and highly paid for. Over the last 50 years, the only medicine for cancer has been radiation and chemotherapy, and a few monoclonal antibodies with side effects not much better, barbaric compared to this new wave of ways to combat the disease.

Leading this charge is CEL-SCI Corporation (CVM:NYSE MKT), far above competitors, in Phase III clinical trials with Multikine, a potent cocktail of immune system activators for head and neck cancer (and other infectious diseases). After a misstep with an incompetent contract research organization (CRO) to run studies, the company regrouped and hired two global oncology experts – Aptiv Solutions and Ergomed, the latter which, also serving multi-billion dollar Sanofi (SNY:NYSE), will contribute up to $10 million to the development of Multikine for its cancer indication in exchange for a very small royalty payment when the drug is approved and on the market. I credit the savvy of Cel-Sci’s CEO, Geert Kersten, long-time advocate of the technology, for inking this terrific deal.

Ergomed, true to a unique model for filling clinical trial beds, helped Cel-Sci report its third consecutive month of record patient enrollment so far this year in the head and neck cancer study, bringing the total to over 400. Cel-Sci’s goal is 880 subjects and looks on track to complete this number by year end. The latest clinical center to join the trial is Aintree University Hospital in the UK, led by a specialist in head and neck cancer from a prestigious facility in Liverpool, bringing on board another country very close to the company’s goal of 100 clinical sites in 25 countries.

Investors should be impressed. The Multikine Phase III study is aimed at patients with advanced head and neck cancer, but not yet treated, a more difficult pool to choose from. Head and neck cancer, a horribly disfiguring disease, inflicts 600,000 new people worldwide every year and accounts for almost 10% of new cancer cases in the US. Globally, the market size is $3.2 billion. There is a clear need for alternatives to scarring surgery, not to mention the devastating effects of standard chemotherapy.

Multikine’s clinical trial endpoint is a 10% improvement in overall survival with subjects treated with the drug versus standard of care, not a hard hurdle to meet. When accomplished, approval applications for Multikine can be made in all the countries where clinical trials are held, giving Cel-Sci a wide global reach for upcoming sales.

With a market cap of just $85 million, CEL-SCI is blatantly undervalued as a Phase III cancer immunotherapy company. Look at recent transactions for cancer immunotherapy: Cellectis SA (CLLS:NASDAQ), an IPO backed by high-powered underwriters, recently raised nearly $230 million and stands with a market cap of $1.1 billion, spurred to new heights with an up-front payment from Pfizer, Inc. (PFE:NYSE) of $80 million.

Juno Therapeutics (JUNO:NASDAQ), another newcomer in cancer immunotherapy barely out of Phase I, took investors for $265 million last year. Bellicum Pharmaceuticals, Inc. (BLCM:NASDAQ), in early trials went public at $140 million with a current value of $681 million. Kite Pharma, Inc. (KITE:NASDAQ), another recent public offering, trades at a $2.8 billion market capitalization, based solely on an early-stage cancer immunotherapy hopeful, in head and neck cancer.

A close peer to Cel-Sci, Inovio Pharmaceuticals (INO:NASDAQ) doing studies in head and neck cancer caused by human papilloma virus (HPV) and only in Phase I/IIa boasts a valuation of $609 million. ImmunoGen, Inc. (IMGN:NASDAQ), early in Phase I for head and neck with a cancer immunotherapy, has investors paying $10 per share with a market cap of $871 million. Transgene SA (TNG.PA:Paris) is enrolling for Phase II in HPV-induced cancer, developing a vaccine for head and neck – market cap is $230 million.

ZIOPHARM Oncology, Inc. (ZIOP:NASDAQ) is in Phase II with immunotherapy for solid cancers with a value of $1.2 billion. Puma Biotechnology (PBYI:NYSE), in various stages of clinical trials with one drug, PB272 for breast cancer, is valued by investors at $7.4 billion. Celldex Therapeutics (CLDX:NASDAQ), in mid-stage trials for brain cancer using immunotherapy would, if successful, sell to a market much smaller than Cel-Sci’s yet is valued at $2.4 billion.

Big Pharma is throwing big dollars around for cancer immunotherapy. Bristol-Myers Squibb (BMY:NYSE) pays $800 million for privately-held Flexus Biosciences with milestones leading up to $1.25 billion, and struck a deal with Rigel Pharmaceuticals (RIGL:NASDAQ) for exclusive rights to develop drugs from Rigel’s technology to inhibit tumor growth, costing Bristol around $340 million. AbbVie Inc. (ABBV:NYSE), spun off from Abbott Laboratories (ABT:NYSE) agreed to buy Pharmacyclics Inc. (PCYC:NASDAQ) for a stake in their new cancer immunotherapy drug Imbruvica, at an astounding $21 billion.

Multinational giant Johnson & Johnson (JNJ:NYSE), the Band-Aid and Tylenol company, and Novartis AG (NVS:NYSE), known best for its diabetes products, both backed cancer immunotherapy purveyor Aduro Biotech (ADRO:NASDAQ) for a recent IPO that sent the stock soaring at its opening, priced at $17 and opening at $32.

Cel-Sci has been unfairly ignored in this race for cancer immunotherapy drugs. This stock has seen momentum and I expect more. In early March, shares jumped when the company announced record patient enrollment in February, with volume 200% above average trading. Cel-Sci’s news keeps getting better. Besides head and neck cancer, Multikine drew attention from the US Naval Medical Center in San Diego resulting in a deal under the government’s coveted CRADA (Cooperative Research and Development Agreement) to study the drug for sexually transmitted disease – apparently a big problem in the armed forces. The University of Maryland also investigates these conditions for Cel-Sci in a Phase I trial. All said, this company has a broad reach for its potential to work with the body’s immune system to attack tumors.

Success in any of Cel-Sci’s clinical trials for Multikine, a pivotal-stage cancer immunotherapy drug, could reward the stock with a huge jump in hundreds of millions of dollars in valuation.

RAY DIRKS Research suggests that Readers/Investors place no more than 1% of the funds they devote to common stocks in any one issue. It’s best to diversify.

About Ray Dirks

Ray Dirks came to Wall Street with Goldman, Sachs & Co. in 1963 where he was established as the leading insurance stock analyst dealing with institutional investors and high -net worth investors both in the U.S. and internationally.

In 1973 Ray uncovered the biggest Ponzi scheme of the 20th century, the Equity Funding fraud. Over the years Ray has expanded his stock market research to include Healthcare Stocks and Special Situations. Ray has written two books,”The Great Wall Street Scandal” and “Heads You Win, Tails You Win”, published by McGraw-Hill and Bantam Books respectively. He continues to provide research to institutions and individuals, and he manages money for some individual investors.

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SOURCE: Ray Dirks Research

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