Non-dilutive funding will only be paid back from proceeds of arbitration
Vienna, VA, October 14, 2015 -- CEL-SCI Corporation (NYSE MKT: CVM) ("CEL SCI" or the "Company") today announced that it has signed a funding agreement (the "Agreement") with a company established by Lake Whillans, a firm specialized in the funding of litigation. Pursuant to the agreement, Lake Whillans Vehicle I, LLC will provide the Company with up to $5,000,000 in funding for litigation expenses to support its $50,000,000 arbitration claims against its former clinical research organization ("CRO"). The funding will be available to CEL-SCI if and when needed to fund the expenses of the ongoing arbitration and will only be repaid upon CEL-SCI receiving proceeds from the arbitration, subject to the terms and conditions of the Agreement.
"This agreement is important for several reasons. First, it allows us to focus all of our financial resources on our Phase 3 cancer immunotherapy drug Multikine. Second, we believe that the financing confirms that CEL-SCI has a strong case, and third, it makes clear to anyone involved in the arbitration that CEL-SCI has the funds to finish the arbitration and go the whole way, if needed," stated CEL-SCI CEO Geert Kersten.
The return of funds to Lake Whillans will be structured as follows (capitalized terms are as defined in the Investment Agreement):
(i) the repayment of capital actually disbursed by Lake Whillans under this Agreement, plus
(ii) $5,000,000; plus
(iii) fifteen percent (15%) of the Net Proceeds;
provided, however, that in the event that CEL-SCI has fully resolved the Claims via settlement with its former CRO on or prior to November 26, 2015, the "Assigned Return"shall mean:
(i) the repayment of capital actually disbursed by Lake Whillans under the Agreement, plus
(ii) the greater of (x) ten percent (10%) of the Proceeds or (y) $2,500,000.
For the 45 days after the signing of this agreement the share of the proceeds to be paid to Lake Whillans will be less than the share after 45 days. This is done to give a settlement of the arbitration the best chance of success as it nears its hearing date.
CEL-SCI initiated an arbitration claim against its former CRO in October 2013. CEL-SCI initially retained its former CRO to conduct the Phase 3 clinical trial of CEL-SCI's investigational cancer immunotherapy drug Multikine* (Leukocyte Interleukin, Injection). CEL-SCI terminated its former CRO in or about April 2013 and replaced it with new CROs. CEL-SCI's arbitration claim is initiated under the Commercial Rules of the American Arbitration Association alleging (i) breach of contract, (ii) fraud in the inducement, and (iii) common law fraud, and seeks at least $50 million in damages.
About the Multikine Phase 3 Study
The Multikine Phase 3 study is enrolling patients with advanced primary squamous cell carcinoma of the head and neck. The objective of the study is to demonstrate a statistically significant improvement in the overall survival of enrolled patients who are treated with the Multikine treatment regimen plus standard of care ("SOC") vs. subjects who are treated with SOC only.
About Multikine
Multikine (Leukocyte Interleukin, Injection) is an investigational immunotherapeutic agent that is being tested in an open-label, randomized, controlled, global pivotal Phase 3 clinical trial as a potential first-line treatment for advanced primary squamous cell carcinoma of the head and neck. Multikine is designed to be a different type of therapy in the fight against cancer: one that appears to have the potential to work with the body's natural immune system in the fight against tumors.
Multikine is also being tested in a Phase 1 study under a Cooperative Research and Development Agreement ("CRADA") with the U.S. Naval Medical Center, San Diego, and at the University of California, San Francisco (UCSF), as a potential treatment for peri-anal warts in HIV/HPV co-infected men and women. Dr. Joel Palefsky, a world renowned scientist and Key Opinion Leader (KOL) in human papilloma virus (HPV) research and the prevention of anal cancer, is the Principal Investigator at UCSF, which was added to the study in July 2015.
About CEL-SCI Corporation
CEL-SCI's work is focused on finding the best way to activate the immune system to fight cancer and infectious diseases. Its lead investigational therapy, Multikine (Leukocyte Interleukin, Injection), is currently being studied in a pivotal Phase 3 clinical trial as a potential neoadjuvant treatment for patients with squamous cell carcinoma of the head and neck. If the study endpoint, which is a 10% improvement in overall survival of the subjects treated with the Multikine treatment regimen plus the current SOC as compared to subjects treated with the current SOC only, is satisfied, the study results will be used to support applications that the Company plans to submit to regulatory agencies in order to seek commercial marketing approvals for Multikine in major markets around the world. Additional clinical indications for Multikine that are being investigated include the treatment of cervical dysplasia in HIV/HPV co-infected women, and the treatment of peri-anal warts in HIV/HPV co-infected men and women. A Phase 1 trial of the former indication has been completed at the University of Maryland. The latter indication is now in a Phase 1 trial in conjunction with the U.S. Naval Medical Center, San Diego, under a CRADA, and at UCSF.
CEL-SCI is also developing its pre-clinical L.E.A.P.S. (Ligand Epitope Antigen Presentation System) technology for the potential treatment of pandemic influenza in hospitalized patients and as a potential vaccine for the treatment of rheumatoid arthritis.
The Company has operations in Vienna, Virginia, and in/near Baltimore, Maryland.
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 (the "SEC"), 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.
The description of the Agreement contained in this press release is qualified by reference to the full text of the Agreement, a copy of which is being filed with the SEC.
*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.