CEL-SCI (CVM) - 2022 Q1 - Quarterly Report

PART I - FINANCIAL INFORMATION Item 1. Financial Statements CEL-SCI reported an $8.8 million net loss for Q4 2021, with total assets decreasing to $69.7 million and stockholders' equity to $51.4 million, raising going concern doubts Financial Position | Financial Metric | Dec 31, 2021 (Unaudited) | Sep 30, 2021 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $37,109,917 | $36,060,148 | | Total current assets | $41,867,261 | $45,271,521 | | Total assets | $69,671,739 | $75,869,965 | | Liabilities & Equity | | | | Total current liabilities | $3,333,495 | $3,937,067 | | Total liabilities | $18,320,284 | $19,335,739 | | Total stockholders' equity | $51,351,455 | $56,534,226 | Statement of Operations | Line Item | Three Months Ended Dec 31, 2021 | Three Months Ended Dec 31, 2020 | | :--- | :--- | :--- | | Research and development | $6,083,167 | $5,414,760 | | General and administrative | $2,760,208 | $3,316,156 | | Operating loss | ($8,843,375) | ($8,730,916) | | Gain on derivative instruments | $364,596 | $932,836 | | Net loss | ($8,782,606) | ($7,936,864) | | Net loss per common share (Basic & Diluted) | ($0.20) | ($0.21) | Cash Flow Activities | Cash Flow Activity | Three Months Ended Dec 31, 2021 | Three Months Ended Dec 31, 2020 | | :--- | :--- | :--- | | Net cash used in operating activities | ($4,805,946) | ($3,827,899) | | Net cash provided by (used in) investing activities | $6,112,223 | ($3,149,820) | | Net cash (used in) provided by financing activities | ($256,508) | $13,329,292 | | Net increase in cash and cash equivalents | $1,049,769 | $6,351,573 | Notes to Condensed Financial Statements Notes disclose a going concern warning, positive Multikine Phase 3 results for FDA submission, and details on equity changes, derivative liabilities, related-party transactions, and lease commitments - The financial statements assume the Company will continue as a going concern, but recurring losses and future liquidity needs raise substantial doubt about this ability[24] - The Phase 3 study for Multikine showed a 14.1% absolute 5-year overall survival benefit in a specific treatment arm, forming the basis for a planned FDA approval filing[44] - The company has significant lease commitments, including a finance lease for its manufacturing facility with a liability of approximately $13.5 million and operating leases with liabilities of approximately $2.1 million as of December 31, 2021[86][93] - In December 2020, the company extended expiration dates of warrants held by the de Clara Trust and other officers, resulting in a deemed dividend and interest expense[80][81] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses positive Multikine Phase 3 results, ongoing reliance on equity financing, a 12% increase in R&D expenses to $6.1 million, a 17% decrease in G&A expenses to $2.8 million, and critical accounting estimates for leases and stock compensation Liquidity and Capital Resources Liquidity depends on external financing, with $62.6 million incurred for Multikine Phase 3, $4.8 million cash used in operations, and an $11.1 million manufacturing facility upgrade completed - The company announced positive results from its 9.5-year pivotal Phase 3 study for Multikine, showing a 14.1% absolute 5-year overall survival benefit in the patient arm treated with Multikine followed by surgery and radiation[101] - The company has been dependent on proceeds from the sale of its securities to meet liquidity and capital requirements and anticipates this will continue, requiring additional capital for research efforts[109][110] - During the three months ended December 31, 2021, the company used approximately $4.8 million in cash to fund regular operations, including its Phase 3 clinical trial[113] Results of Operations R&D expenses increased 12% to $6.1 million due to stock compensation and depreciation, while G&A expenses decreased 17% to $2.8 million from reduced stock compensation - Research and development expenses increased by approximately $0.7 million (12%) YoY, driven by a $0.6 million increase in employee stock compensation and $0.3 million in depreciation, offset by a $0.2 million reduction in other R&D costs[118] - General and administrative expenses decreased by approximately $0.6 million (17%) YoY, largely due to a decrease in employee stock compensation costs[119] R&D Project Expenses | R&D Project | Expenses (Q1 FY2022) | Expenses (Q1 FY2021) | | :--- | :--- | :--- | | MULTIKINE | $5,791,419 | $5,011,950 | | LEAPS | $291,748 | $402,810 | | TOTAL | $6,083,167 | $5,414,760 | Critical Accounting Estimates and Policies Leases and stock-based compensation are critical accounting estimates requiring significant judgment for inputs like incremental borrowing rates, stock volatility, and expected option life - The company's most critical accounting estimates and policies are in the areas of leases and stock-based compensation[128] - Significant judgment is required to determine inputs for lease liabilities (e.g., incremental borrowing rate) and for share-based compensation models (e.g., volatility, expected life, and performance condition probabilities)[129] Item 3. Quantitative and Qualitative Disclosures about Market Risks The company asserts it has no significant exposures to market risk - The Company does not believe that it has any significant exposures to market risk[131] Item 4. Controls and Procedures Management concluded that disclosure controls and internal control over financial reporting were effective as of December 31, 2021, with no material changes identified - The Chief Executive and Chief Financial Officer concluded that the Company's disclosure controls and procedures were effective as of December 31, 2021[132] - Management concluded that the Company's internal control over financial reporting was effective as of December 31, 2021, based on the criteria in the COSO Framework[135] - There were no changes in the Company's internal control over financial reporting during the quarter that materially affected, or are reasonably likely to materially affect, these controls[136] PART II - OTHER INFORMATION Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company issued 18,020 restricted common shares to consultants for investor relations services, exempt from registration under Section 4(a)(2) of the Securities Act of 1933 - During the quarter, the Company issued 18,020 restricted shares of common stock to consultants for investor relations services[139] - The issuance was exempt from registration under Section 4(a)(2) of the Securities Act of 1933, as it was made to sophisticated investors without general solicitation[140] Item 6. Exhibits This section lists exhibits filed with Form 10-Q, including CEO certifications and corporate governance documents incorporated by reference - The report includes a list of exhibits, notably the CEO certifications required under Rule 13a-14(a) and Section 1350[142]