Cell-Sci Corporation

According to the prospectus, CEL-SCI Corporation (CVM) is a clinical-stage biotechnology company that researches and develops immunotherapy treatments for cancer and other diseases.

The prospectus states that its primary investigational therapy is Multikine, a locally administered injection designed to stimulate the immune system to destroy tumors. It is reportedly designed to treat advanced primary squamous cell carcinoma, a rare type of cancer, specifically in the head and neck. According to the prospectus, Multikine has received orphan drug designation from the FDA.

CEL-SCI is also investigating peptide-based immunotherapies using the company’s LEAPS (Ligand Epitope Antigen Presentation System) technology. These investigational therapies are candidates for the potential treatment of rheumatoid arthritis and pandemic influenza.

CEL-SCI Corporation and Aegis Capital Corporation

Kurta Law is investigating recommendations of risky investments underwritten by Aegis Capital Corp. Brokers are obligated to recommend investments that fit their clients’ risk profiles and must disclose any conflicts of interest in the transaction.

For example, brokerage firms have a conflict of interest in recommendations of stocks that they underwrite because they profit from bringing those stocks to market.

If you lost money on your investment in CEL-SCI Corporation, consider reaching out to a securities attorney. Contact (877) 600-0098 or email info@kurtalawfirm.com to speak to a securities attorney at no cost today.

What are the Risks Associated with CEL-SCI Corporation?

Stock offered by biotechnology companies like CEL-SCI can be high-risk investments due to the time-intensive and expensive process of developing new treatments and seeking federal approval for their use. The company’s prospectus discloses several significant risks that investors should know about.

Immediate Share Dilution

CEL-SCI states that investors will experience “immediate and substantial dilution in the net tangible book value” of their shares. As of September 30, 2019, this dilution amounted to $8.80 per share, resulting in an adjusted net tangible book value of just $0.27 per share. Any additional securities offerings could increase this dilution as well as provide exclusive rights to newer investors.

Dilution by Outstanding Warrants and Options

The prospectus notes that, as of December 23, 2019, investors held outstanding warrants allowing them to purchase over 5.6 million shares of common stock, and outstanding options to purchase more than 6.2 million shares.

These outstanding warrants and options could negatively affect CEL-SCI’s ability to raise capital, as investors will benefit from exercising them when the market price of the stock rises above its exercise price. In any case, existing stockholders will experience additional dilution of their ownership interests upon the issuance of these shares.

Managerial Discretion in Use of Proceeds

According to the prospectus, CEL-SCI intends to use the proceeds from its stock offering primarily to continue developing its immunotherapy projects.

However, the company also states that it will not be limited to these projects and that management may make financial decisions that have negative effects on CEL-SCI’s “financial condition, operating results and cash flow.” Investors will not have the chance to evaluate these decisions at the time of their investment.

Further, the prospectus states that “the net proceeds from this offering will not be sufficient to complete clinical trials and other studies required for the approval of any product candidate” and the company will still need to raise additional capital.

Aegis Capital Corp. Underwriting  

Investors should know that Aegis Capital Corp. served as the underwriter for this offering. Underwriters take on risk in exchange for a fee, which could motivate certain investment banks to underwrite investments that pose too much risk for the average retail investor. Additionally, brokers may have conflicts of interest when they recommend shares that are underwritten by an affiliate of their brokerage firm. 

Do You Have Concerns About Your Shares of CEL-SCI Corporation?

If you have concerns about your investment in CEL-SCI Corporation, consider reaching out to a Kurta Law securities attorney. Our attorneys have 5-star reviews on Google and regularly win fair settlements for clients in cases of broker misconduct and unsuitable investment recommendations. Call (877) 600-0098 or email info@kurtalawfirm.com.