The information in this preliminary prospectus supplement and the accompanying
prospectus, relating to an effective registration statement under the Securities
Act of 1933, as amended, is not complete and may be changed. This preliminary
prospectus supplement and the accompanying prospectus are not an offer to sell
these securities and we are not soliciting an offer to buy these securities in
any jurisdiction where the offer or sale is not permitted.
SUBJECT TO COMPLETION, DATED DECEMBER 18, 2013
PRELIMINARY PROSPECTUS SUPPLEMENT
To Prospectus dated December 17, 2013
CEL-SCI CORPORATION
________ Shares of Common Stock
Warrants to Purchase ________ Shares of Common Stock
We are offering an aggregate of ________shares of common stock, $0.01 par
value per share, and warrants to purchase up to ________ shares of common stock.
Each share of common stock is being sold together with a warrant to purchase ___
share of our common stock for the combined purchase price of $_____. Each
warrant can be exercised at any time on or before October 11, 2018 at a price of
$1.25 per share. The shares of common stock and warrants will be issued
separately.
Our common stock is currently traded on the NYSE MKT (formerly known as the
NYSE Amex) under the symbol "CVM." On December 17, 2013, the closing price of
our common stock on the NYSE MKT was $0.75 per share. There is presently no
public market for our warrants. Our warrants have been approved for quotation on
the OTC Bulletin Board under the symbol "CSCIW." There can be no assurance that
any public market for the warrants may develop in the future. We will not apply
to list the warrants sold hereunder on NYSE MKT. For a more detailed description
of our common stock and warrants, see the section entitled "Description of
Securities" beginning on page 16 of this Prospectus Supplement.
Investing in our common stock involves a high degree of risk. See "Risk
Factors" beginning on page 11 of this prospectus supplement and page 12 of the
accompanying prospectus.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus supplement or the accompanying prospectus is truthful or complete.
Any representation to the contrary is a criminal offense.
Underwriting Discounts Proceeds, Before
Price to Public and Commission Expenses, To us
Per Share $___ $_______ $_______
Per Warrant $___ $_______ $_______
Total $___ $_______ $_______
The underwriters may also purchase up to an additional _______ shares of
common stock and/or warrants to purchase up to _______ shares of common stock
from us at the public offering prices set forth above, less underwriting
discounts and commissions, within 45 days of the date of this prospectus
supplement to cover any over-allotments.
The underwriters expect to deliver the shares of common stock and warrants
against payment on or before December __, 2013.
Laidlaw & Company (UK) Ltd. Dawson James Securities, Inc.
1
TABLE OF CONTENTS
Prospectus Supplement
Page
About this Prospectus Supplement 3
Forward-Looking Statements 5
Prospectus Supplement Summary 6
The Offering 10
Risk Factors 11
Use of Proceeds 13
Dilution 14
Description of Securities 15
Underwriting 17
Legal Matters 21
Experts 21
Where You Can Find More Information 22
Incorporation of Documents by Reference 22
2
ABOUT THIS PROSPECTUS SUPPLEMENT
This document is in two parts. The first part is the prospectus supplement,
including the documents incorporated by reference, which describes the specific
terms of this offering. The second part, the accompanying prospectus, including
the documents incorporated by reference, provides more general information.
Generally, when we refer to this prospectus, we are referring to both parts of
this document combined. We urge you to carefully read this prospectus supplement
and the accompanying prospectus, and the documents incorporated herein and
therein, before buying any of the securities being offered by this prospectus
supplement. This prospectus supplement may add, update or change information
contained in the accompanying prospectus. To the extent that any statement that
we make in this prospectus supplement is inconsistent with statements made in
the accompanying prospectus or any documents incorporated by reference therein,
the statements made in this prospectus supplement will be deemed to modify or
supersede those made in the accompanying prospectus and such documents
incorporated by reference therein.
You should rely only on the information contained or incorporated herein by
reference in this prospectus supplement and contained or incorporated therein by
reference in the accompanying prospectus. We have not, and the underwriters have
not, authorized anyone to provide you with different or additional information.
We have not authorized anyone to give any information other than that contained
in the prospectus, this prospectus supplement, and any free writing prospectus
prepared by us or on our behalf. If anyone provides you with different,
additional or inconsistent information, you should not rely on it. . You should
assume that the information in this prospectus supplement and the accompanying
prospectus is accurate only as of the date on the front of the applicable
document and that any information we have incorporated by reference is accurate
only as of the date of the document incorporated by reference, regardless of the
time of delivery of this prospectus supplement or the accompanying prospectus,
or any sale of a security. Our business, financial condition, results of
operations and prospects may have changed since those dates. You should read
this prospectus supplement, the accompanying prospectus and the documents
incorporated by reference in this prospectus supplement and the accompanying
prospectus when making your investment decision. You should also read and
consider the information in the documents we have referred you to in the section
of this prospectus entitled "Additional Information."
We are offering to sell, and are seeking offers to buy, the securities only
in jurisdictions where such offers and sales are permitted. The distribution of
this prospectus supplement and the accompanying prospectus and the offering of
the securities in certain jurisdictions or to certain persons within such
jurisdictions may be restricted by law. Persons outside the United States who
come into possession of this prospectus supplement and the accompanying
prospectus must inform themselves about and observe any restrictions relating to
the offering of the securities and the distribution of this prospectus
supplement and the accompanying prospectus outside the United States. This
prospectus supplement and the accompanying prospectus do not constitute, and may
not be used in connection with, an offer to sell, or a solicitation of an offer
to buy, any securities offered by this prospectus supplement and the
accompanying prospectus by any person in any jurisdiction in which it is
unlawful for such person to make such an offer or solicitation.
3
This prospectus supplement, the accompanying prospectus, and the
information incorporated herein and therein by reference may include trademarks,
service marks and trade names owned by us or other companies. All trademarks,
service marks and trade names included or incorporated by reference into this
prospectus supplement or the accompanying prospectus are the property of their
respective owners.
In this prospectus, unless otherwise specified or the context requires
otherwise, we use the terms "CEL-SCI," the "Company," "we," "us" and "our" to
refer to CEL-SCI Corporation. Our fiscal year ends on September 30.
4
FORWARD-LOOKING STATEMENTS
This prospectus supplement, the accompanying prospectus and the documents
incorporated by reference herein and therein contain forward-looking statements.
These statements relate to future events and involve known and unknown risks,
uncertainties and other factors which may cause our actual results, performance
or achievements to be materially different from any future results, performances
or achievements expressed or implied by the forward-looking statements.
Factors that might affect our forward-looking statements include those
disclosed in this prospectus and the accompanying prospectus.
In some cases, you can identify forward-looking statements by terms such as
"may," "will," "should," "could," "would," "expects," "plans," "anticipates,"
"believes," "estimates," "projects," "predicts," "potential" and similar
expressions intended to identify forward-looking statements. These statements
reflect our current views with respect to future events and are based on
assumptions and subject to risks and uncertainties. Given these uncertainties,
you should not place undue reliance on these forward-looking statements. We
discuss many of these risks in greater detail under the heading "Risk Factors"
herein and in the documents incorporated by reference herein. Also, these
forward-looking statements represent our estimates and assumptions only as of
the date of the document containing the applicable statement.
Unless required by law, we undertake no obligation to update or revise any
forward-looking statements to reflect new information or future events or
developments. Thus, you should not assume that our silence over time means that
actual events are bearing out as expressed or implied in such forward-looking
statements. Before deciding to purchase our securities, you should carefully
consider the risk factors incorporated by reference and set forth herein, in
addition to the other information set forth in this prospectus supplement, the
accompanying prospectus and in the documents incorporated by reference herein
and therein.
5
PROSPECTUS SUPPLEMENT SUMMARY
This summary highlights certain information about us, this offering and
information appearing elsewhere in this prospectus supplement, in the
accompanying prospectus and in the documents we incorporate by reference. This
summary is not complete and does not contain all of the information that you
should consider before investing in our securities. To fully understand this
offering and its consequences to you, you should read this entire prospectus
supplement and the accompanying prospectus carefully, including the information
referred to under the heading "Risk Factors" in the accompanying prospectus and
set forth herein, the financial statements and other information incorporated by
reference in this prospectus supplement and the accompanying prospectus when
making an investment decision.
About CEL-SCI Corporation
We were formed as a Colorado corporation in 1983. Our principal office is
located at 8229 Boone Boulevard, Suite 802, Vienna, VA 22182. Our telephone
number is 703-506-9460 and our web site is www.cel-sci.com.
Our business consists of the following:
1) Multikine(R) (Leukocyte Interleukin, Injection) investigational
immunotherapy against cancer and Human Papilloma Virus (HPV);
2) LEAPS technology, with two investigational therapies, LEAPS-H1N1-DC
pandemic flu treatment for hospitalized patients and CEL-2000, a
rheumatoid arthritis treatment vaccine.
MULTIKINE
Our lead investigational therapy, Multikine, is currently being developed
as a potential therapeutic agent directed at using the immune system to produce
an anti-tumor immune response. Data from Phase I and Phase II clinical trials
suggest that Multikine simulates the activities of a healthy person's immune
system, enabling it to use the body's own anti-tumor immune response. Multikine
(Leukocyte Interleukin, Injection) is the full name of this investigational
therapy, which, for simplicity, is referred to in the remainder of this document
as Multikine. Multikine is the trademark that we have registered for this
investigational therapy, and this proprietary name is subject to FDA review in
connection with our 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. Neither has its safety or efficacy been
established for any use.
Multikine has been cleared by the regulators in ten countries around the
world, including the U.S. FDA, for a global Phase III clinical trial in advanced
primary (not yet treated) head and neck cancer patients. The trial is currently
under the management of two new clinical research organizations (CROs) who are
adding 60-80 clinical centers in existing and new countries to increase the
speed of patient enrollment.
6
The trial will test the hypothesis that Multikine treatment administered
prior to the current standard therapy for head and neck cancer patients
(surgical resection of the tumor and involved lymph nodes followed by
radiotherapy or radiotherapy and concurrent chemotherapy) will extend the
overall survival, enhance the local/regional control of the disease and reduce
the rate of disease progression in patients with advanced oral squamous cell
carcinoma.
The primary clinical endpoint in CEL-SCI's ongoing Phase III clinical trial
is that a 10% improvement in overall survival in the Multikine treatment arm,
plus the current standard of care (SOC - consisting of surgery + radiotherapy or
surgery + radiochemotherapy), over that which can be achieved in the SOC arm
alone (in the well-controlled Phase III clinical trial currently ongoing) must
be achieved. Based on what is presently known about the current survival
statistics for this population, CEL-SCI believes that achievement of this
endpoint should enable CEL-SCI, subject to further consultations with FDA, to
move forward, prepare and submit a Biologic License Application to FDA for
Multikine.
The clinical trial is giving immunotherapy to cancer patients, i.e., prior
to their receiving any conventional treatment for cancer, including surgery,
radiation and/or chemotherapy. This could be shown to be important because
conventional therapy may weaken the immune system, and may compromise the
potential effect of immunotherapy. Because Multikine is given before
conventional cancer therapy, when the immune system may be more intact, we
believe the possibility exists for it to have a greater likelihood of activating
an anti-tumor immune response under these conditions. This likelihood is one of
the clinical aspects being evaluated in the ongoing global Phase III clinical
trial.
Multikine is a different kind of investigational therapy in the fight
against cancer. Multikine is a defined mixture of cytokines. It is a combination
immunotherapy, possessing both active and passive properties.
In October 2012 and again in November 2013, in an interim review of the
safety data from the Phase III study, an Independent Data Monitoring Committee
(IDMC) raised no safety concerns. The IDMC also indicated that no safety signals
were found that would call into question the benefit/risk of continuing the
study. CEL-SCI considers the results of the IDMC review to be important since
studies have shown that up to 30% of Phase III trials fail due to safety
considerations and the IDMC's safety findings from this interim review were
similar to those reported by investigators during CEL-SCI's Phase I-II trials.
Ultimately, the decision as to whether a drug is safe is made by the FDA based
on an assessment of all of the data from a trial.
On October 7, 2013, CEL-SCI announced a Cooperative Research and
Development Agreement with the U.S. Naval Medical Center, San Diego. Pursuant to
this agreement, the Naval Medical Center will conduct Human Subjects
Institutional Review Board approved Phase I study of CEL-SCI's investigational
immunotherapy, Multikine, in HIV/HPV co-infected men and women with peri-anal
warts. Anal and genital warts are commonly associated with the Human Papilloma
Virus, the most common sexually transmitted disease. Men and women with a
history of anogenital warts have a 30 fold increased risk of anal cancer.
Persistent HPV infection in the anal region is thought to be responsible for up
to 80% of anal cancers. HPV is a significant health problem in the HIV infected
population as individuals are living longer as a result of greatly improved HIV
medications.
7
The purpose of this study is to evaluate the safety and clinical impact of
Multikine as a treatment of peri-anal warts and assess its effect on anal
intraepithelial dysplasia (AIN) in HIV/HPV co-infected men and women.
CEL-SCI will contribute the investigational study drug Multikine, will
retain all rights to any currently owned technology, and will have the right to
exclusively license any new technology developed from the collaboration.
Multikine is being given to the HIV/HPV co-infected patients with peri-anal
warts since promising early results were seen in another Institutional Review
Board approved Multikine Phase I study conducted at the University of Maryland.
In this study, investigational therapy Multikine was given to HIV/HPV
co-infected women with cervical dysplasia resulting in visual and histological
evidence of clearance of lesions. Furthermore, elimination of a number of HPV
strains was determined by in situ polymerase chain reaction (PCR) performed on
tissue biopsy collected before and after Multikine treatment. As reported by the
investigators in the earlier study, the study volunteers all appeared to
tolerate the treatment with no reported serious adverse events.
The treatment regimen for the study of up to 15 HIV/HPV co-infected patient
volunteers with peri-anal warts to be conducted by the Naval Medical Center will
be identical to the regimen that was used in the earlier Multikine cervical
study in HIV/HPV co-infected patients.
CEL-SCI's focus in HPV is not the development of an antiviral against HPV
in the general population. Instead it is the development of an immunotherapy to
be used in patients who are immune suppressed by diseases such as HIV and are
therefore less able or unable to control HPV and its resultant diseases. This
group of patients has no good treatments available to them and there are, to the
Company's knowledge, no competitors at the current time. HPV is also relevant to
the head and neck cancer Phase III study since it is now known that HPV is a
cause of head and neck cancer. Multikine was shown to kill HPV in an earlier
study of HIV infected women with cervical dysplasia.
LEAPS
CEL-SCI's patented T-cell Modulation Process, referred to as LEAPS (Ligand
Epitope Antigen Presentation System), uses "heteroconjugates" to direct the body
to choose a specific immune response. LEAPS is designed to stimulate the human
immune system to more effectively fight bacterial, viral and parasitic
infections as well as autoimmune, allergies, transplantation rejection and
cancer, when it cannot do so on its own. Administered like a vaccine, LEAPS
combines T-cell binding ligands with small, disease associated, peptide antigens
and may provide a new method to treat and prevent certain diseases.
The ability to generate a specific immune response is important because
many diseases are often not combated effectively due to the body's selection of
the "inappropriate" immune response. The capability to specifically reprogram an
immune response may offer a more effective approach than existing vaccines and
drugs in attacking an underlying disease.
8
Using the LEAPS technology, we have created a potential peptide treatment
for H1N1 (swine flu) hospitalized patients. This LEAPS flu treatment is designed
to focus on the conserved, non-changing epitopes of the different strains of
Type A Influenza viruses (H1N1, H5N1, H3N1, etc.), including "swine", "avian or
bird", and "Spanish Influenza", in order to minimize the chance of viral "escape
by mutations" from immune recognition. Therefore one should think of this
treatment not really as an H1N1 treatment, but as a pandemic flu treatment.
CEL-SCI's LEAPS flu treatment contains epitopes known to be associated with
immune protection against influenza in animal models.
Additional work on this treatment for the pandemic flu work is being
pursued in collaboration with the National Institute of Allergy and Infectious
Diseases (NIAID), part of the National Institutes of Health, USA. In May 2011
NIAID scientists presented data at the Keystone Conference on "Pathogenesis of
Influenza: Virus-Host Interactions" in Hong Kong, China, showing the positive
results of efficacy studies in mice of L.E.A.P.S. H1N1 activated dendritic cells
(DCs) to treat the H1N1 virus. Scientists at the NIAID found that H1N1-infected
mice treated with LEAPS-H1N1 DCs showed a survival advantage over mice treated
with control DCs. The work was performed in collaboration with scientists led by
Kanta Subbarao, M.D., Chief of the Emerging Respiratory Diseases Section in
NIAID's Division of Intramural Research, part of the National Institutes of
Health, USA.
In July 2013, CEL-SCI announced the publication of the results of
additional influenza studies by researchers from the NIAID in the Journal of
Clinical Investigation (www.jci.org/articles/view/67550). The studies described
in the publication show that when CEL-SCI's investigational J-LEAPS Influenza
Virus treatments were used "in vitro" to activate immune cells called dendritic
cells (DCs), these activated dendritic cells, when injected into influenza
infected mice, arrested the progression of lethal influenza virus infection in
these mice. The work was performed in the laboratory of Dr. Subbarao.
With our LEAPS technology, we have also developed a second peptide named
CEL-2000, a potential rheumatoid arthritis vaccine. The data from animal studies
of rheumatoid arthritis using the CEL-2000 treatment vaccine demonstrated that
CEL-2000 is an effective treatment against arthritis with fewer administrations
than those required by other anti-rheumatoid arthritis treatments, including
Enbrel(R). CEL-2000 is also potentially a more disease type-specific therapy, is
calculated to be significantly less expensive and may be useful in patients
unable to tolerate or who may not be responsive to existing anti-arthritis
therapies.
9
CEL-SCI CORPORATION
THE OFFERING
Common stock offered by us _________ shares
Common stock to be outstanding _________ shares
immediately after this offering
Warrants we are offering We are offering warrants to purchase
up to _______ shares of common stock
that will be exercisable during the
period commencing on the date of
original issuance and ending on
October 11, 2018 at an exercise price
of $1.25 per share, subject to
adjustment. This prospectus
supplement also relates to the
offering of the shares of common stock
issuable upon exercise of the
warrants. There is presently no
public market for our warrants. Our
warrants have been approved for
quotation on the OTC Bulletin Board
under the symbol "CSCIW." There can
be no assurance that any public
market for the warrants may develop
in the future. We will not apply to
list the warrants sold hereunder on
NYSE MKT.
Over-allotment option We have granted the underwriters a 45
day option to purchase up to _______
additional shares of our common stock
and/or warrants to purchase up to
______ shares of common stock to cover
any over-allotments.
Use of proceeds We estimate that our net proceeds from
this offering will be approximately
$________ after deducting underwriting
discounts and commissions and estimated
offering expenses.
We intend to use the net proceeds from
this offering primarily for our Phase
III clinical trial, other research and
development, and general and
administrative expenses.
Dividend policy We have not declared or paid any cash
or other dividends on our common stock,
and do not expect to declare or pay
any cash or other dividends in the
foreseeable future.
Risk factors You should carefully read and consider
the information beginning on page 10
of this prospectus supplement and page
11 of the accompanying prospectus set
forth under the headings "Risk
Factors" and all other information set
forth in this prospectus supplement,
10
the accompanying prospectus, and the
documents incorporated herein and
therein by reference before deciding
to invest in our common stock.
Trading symbols:
Common Stock - NYSE MKT CVM
Warrants - OTC Bulletin Board (1) CSCIW
(1) Although FINRA has assigned a trading symbol to the warrants, as of the
date of this prospectus supplement, no public market for the warrants has
developed.
Unless we indicate otherwise, the number of shares to be outstanding after
this offering is based on 49,752,200 shares of our common stock outstanding as
of December 1, 2013, excludes approximately 36,959,000 shares which may be
issued upon the exercise of outstanding options and warrants or the conversion
of a note, and reflects a 1-for-10 reverse stock split of our authorized and
issued and outstanding shares of common stock, options and warrants effective as
of September 25, 2013 and the corresponding adjustment of all common stock
price, per share and stock option and warrant exercise price data. Unless
otherwise indicated, the information in this prospectus supplement assumes that
the underwriters will not exercise their over-allotment option.
RISK FACTORS
Investing in our common stock involves significant risks. You should
carefully consider the "Risk Factors" included and incorporated by reference in
the accompanying prospectus, this prospectus supplement and any other applicable
prospectus supplement, including the risk factors incorporated by reference from
our most recent Annual Report on Form 10-K for the fiscal year ended September
30, 2012, filed with the SEC on December 14, 2012, as updated by our Quarterly
Reports on Form 10-Q and our other filings with the SEC, filed after the Annual
Report. The risks and uncertainties we described are not the only ones facing
us. Additional risks not presently known to us, or that we currently deem
immaterial, may also impair our business operations. If any of these risks were
to occur, our business, financial condition, or result of operations would
likely suffer. In that event, the trading price of our common stock would
decline, and you could lose all or part of your investment.
Risks related to this Offering
Management will have broad discretion as to the use of the proceeds of this
offering.
We currently intend to use the net proceeds from this offering for our
Phase III clinical trial, other research and development, and general and
administrative expenses. See "Use of Proceeds" on page 13. We have not
designated the amount of net proceeds we will receive from this offering for any
particular purpose. Accordingly, our management will have broad discretion as to
the application of these net proceeds and could use them for purposes other than
those contemplated at the time of this offering. You will be relying on the
judgment of our management with regard to the use of these net proceeds, and you
will not have the opportunity, as part of your investment decision, to assess
whether the net proceeds are being used appropriately. It is possible that the
net proceeds will be invested in a way that does not yield a favorable, or any,
11
return for us. The failure of our management to use such funds effectively could
have a material adverse effect on our business, financial condition, operating
results and cash flow.
You will experience immediate and substantial dilution.
Since the offering price of the securities offered pursuant to this
prospectus supplement and the accompanying prospectus is higher than the net
tangible book value per share of our common stock, you will suffer substantial
dilution in the net tangible book value of the common stock you purchase in this
offering. After giving effect to the sale of ____ shares of common stock and
_____ warrants to purchase shares of common stock in this offering at a public
offering price of $____ per share, and after deducting estimated underwriting
discounts and commissions and estimated offering expenses payable by us, and
attributing no value to the warrants, if you purchase securities in this
offering, you will suffer immediate and substantial dilution of approximately
$___ per share in the net tangible book value of the common stock you acquire.
In the event that you exercise your warrants, you will experience additional
dilution to the extent that the exercise price of those warrants is higher than
the book value per share of our common stock. See the "Dilution" section of this
prospectus supplement for a more detailed discussion of the dilution you will
incur if you purchase securities in this offering.
You may experience future dilution as a result of future equity offerings or
other equity issuances.
We expect that significant additional capital will be needed in the future
to continue our planned operations. To raise additional capital, we may in the
future offer additional shares of our common stock or other securities
convertible into or exchangeable for our common stock. We cannot assure you that
we will be able to sell shares or other securities in any other offering at a
price per share that is equal to or greater than the price per share paid by
investors in this offering. The price per share at which we sell additional
shares of our common stock or other securities convertible into or exchangeable
for our common stock in future transactions may be higher or lower than the
price per share in this offering. To the extent we raise additional capital by
issuing equity securities, our stockholders may experience substantial dilution.
If we sell common stock, convertible securities or other equity securities, your
investment in our common stock will be diluted. These sales may also result in
material dilution to our existing shareholders, and new investors could gain
rights superior to our existing shareholders.
Our outstanding options and warrants may adversely affect the trading price of
our common stock.
As of December 1, 2013, there were outstanding options which allows the
holders to purchase approximately 5,200,000 shares of our common stock, at
prices ranging between $1.60 and $20.00 per share, outstanding warrants which
allow the holders to purchase approximately 31,483,000 shares of our common
stock, at prices ranging between $0.91 and $17.50 per share, and a convertible
note which allows the holder to acquire approximately 276,000 shares of our
common stock at a conversion price of $4.00. The outstanding options and
warrants could adversely affect our ability to obtain future financing or engage
in certain mergers or other transactions, since the holders of options and
warrants can be expected to exercise them at a time when we may be able to
obtain additional capital through a new offering of securities on terms more
12
favorable to us than the terms of the outstanding options and warrants. For the
life of the options, warrants and the convertible note, the holders have the
opportunity to profit from a rise in the market price of our common stock
without assuming the risk of ownership. The issuance of shares upon the exercise
of outstanding options and warrants, or the conversion of the note, will also
dilute the ownership interests of our existing stockholders.
There is currently no public market for the warrants being offered by this
prospectus supplement.
There is presently no public market for our warrants. Our warrants have
been approved for quotation on the OTC Bulletin Board under the symbol "CSCIW."
There can be no assurance that any public market for the warrants may develop in
the future. Without an active trading market, the liquidity of the warrants will
be limited.
The warrants may not have any value.
The warrants have an exercise price of $1.25 per share and expire on
October 11, 2018. In the event that our common stock does not exceed the
exercise price of the warrants during the period when the warrants are
exercisable, the warrants may not have any value.
Holders of our warrants will have no rights as a common shareholder until they
acquire our common stock.
Until you acquire shares of our common stock upon exercise of your
Warrants, you will have no rights with respect to our common stock. Upon
exercise of your warrants, you will be entitled to exercise the rights of a
common stockholder only as to matters for which the record date occurs after the
exercise date.
USE OF PROCEEDS
We estimate that the net proceeds from the sale of the shares of common
stock and warrants that we are offering will be approximately $________, or
approximately $_________ if the underwriters exercise in full their
over-allotment option to purchase additional shares of common stock and warrants
from us, after deducting the underwriters' commissions and the offering expenses
payable by us.
We intend to use the net proceeds from this offering primarily for our
Phase III clinical trial, other research and development, and general and
administrative expenses. We have not yet determined the amount of net proceeds
to be used specifically for any of the foregoing purposes. The net proceeds from
this offering will not be sufficient to complete clinical trials and other
studies required for the approval of any product by the FDA, and we will need
significant additional funds in the future.
Our management will have broad discretion in the application of the net proceeds
from this offering, and investors will be relying on the judgment of our
management with regard to the use of these net proceeds. Pending the use of the
net proceeds from this offering as described above, we intend to invest the net
proceeds in short-term, investment-grade, interest-bearing instruments.
13
DILUTION
If you purchase our securities in this offering, your interest will be
diluted to the extent of the difference between the public offering price per
share and the net tangible book value per share of our common stock after this
offering.
The net tangible book value of our common stock on December 1, 2013 was
approximately $0.42 per share, based on 49,752,200 shares of our common stock
outstanding as of December 1, 2013. Net tangible book value per share represents
the amount of our total tangible assets, less our total liabilities, divided by
the total number of shares of our common stock outstanding. Dilution in net
tangible book value per share to new investors represents the difference between
the amount per share paid by purchasers for shares and warrants in this offering
and the net tangible book value per share of our common stock immediately
afterwards.
After giving effect to the sale of _________ shares of our common stock and
warrants to purchase up to _________ shares of our common stock in this offering
at a combined public offering price of $___ per share and warrant, and after
deducting the underwriters' commission and estimated offering expenses payable
by us, our as-adjusted net tangible book value as of December 1, 2013 would have
been approximately $_________, (unaudited) or $___ per share. This represents an
immediate increase in the net tangible book value of $____ per share to existing
stockholders and the immediate dilution in the net tangible book value of $___
per share to new investors purchasing our shares in this offering.
The following table illustrates this per share dilution. All amounts in the
table are unaudited.
For purposes of the calculations below, the public office price of the
warrants has been allocated to the public offering price of the shares of common
stock sold in this offering. The calculations below do not give any effect to
the shares of common stock issuable upon the exercise of the warrants.
Offering price per share $____
Net tangible book value per share as of December 1, 2013 $0.42
Pro forma net tangible book value per share as of December 1,
2013, after giving effect to this offering $____
Increase in net tangible book value per share attributable to
this offering $____
Dilution per share to new investors in this offering $____
If the underwriters exercise in full their over-allotment option to
purchase ________ additional shares of common stock and warrants at the public
offering price shown on the cover page of this prospectus, the as adjusted net
tangible book value after this offering would be $____ per share, representing
an increase in net tangible book value of $___ per share to existing
stockholders and immediate dilution in net tangible book value of $___ per share
to investors purchasing our shares in this offering at the public offering
price.
14
The above discussion and table are based on 49,752,200 shares of our common
stock outstanding as of December 1, 2013 and excludes approximately 36,959,000
shares of common stock issuable upon the full exercise of outstanding options
and warrants or the conversion of a note.
DESCRIPTION OF SECURITIES
In this offering, we are offering _________ shares of common stock and
warrants to purchase up to _________ shares of common stock. Each warrant will
have an exercise price of $1.25 per share and will expire on October 11, 2018.
The shares of common stock and warrants will be issued separately. This
prospectus also relates to the offering of shares of our common stock upon the
exercise, if any, of the warrants.
Common stock
The material terms and provisions of our common stock are described under
the caption "Description of Securities" in the accompanying prospectus. As of
December 1, 2013, we had 49,752,200 shares of common stock outstanding. Our
common stock is listed on the NYSE MKT under the symbol "CVM".
Warrants
The following summary of certain terms and provisions of the warrants that
are being offered hereby is not complete and is subject to, and is qualified in
its entirety by the provisions of the warrants, the form of which will be filed
as an exhibit to a Current Report on Form 8-K that we will file in connection
with this offering. Prospective investors should carefully review the terms and
provisions of the form of warrant for a complete description of the terms and
conditions of the warrants.
Duration and Exercise Price: The warrants offered hereby will entitle the
holders thereof to purchase up to _______ shares of our common stock at an
initial exercise price of $1.25 per share, commencing immediately on the date of
issuance and will expire on October 11, 2018.
Cashless Exercise: If, at any time during the term of the warrants, the issuance
of shares of our common stock upon exercise of the warrants is not covered by an
effective registration statement, the holder is permitted to effect a cashless
exercise of the warrants (in whole or in part) by having the holder deliver to
us a duly executed exercise notice, canceling a portion of the warrant in
payment of the purchase price payable in respect of the number of shares of our
common stock purchased upon such exercise.
Transferability: The warrants may be transferred at the option of the warrant
holder upon surrender of the warrant with the appropriate instruments of
transfer.
Listing and Warrant Agent: Although the warrants have been approved for an
unpriced quotation on the OTC Bulletin Board under the symbol "CSCIW", as of the
date of this prospectus supplement there was no public market for the warrants.
There can be no assurance that the warrants will be approved for a priced
quotation on the OTC Bulletin Board or that any public market for the warrants
will develop in the future. The warrants will be issued in registered form under
15
a warrant agent agreement with Computershare, Inc., as warrant agent. We will
not apply to list the warrants on NYSE MKT.
Rights as a stockholder: Except as set forth in the warrants, the holders of the
warrants do not have the rights or privileges of holders of our common stock,
including any voting rights, until they exercise the warrants
Fundamental Transactions: In the event of a fundamental transaction, as
described in the warrants and generally including any merger with another
entity, the sale, transfer or other disposition of all or substantially all of
our assets to another entity, or the acquisition by a person of more than 50% of
our common stock, the holders of the warrants will thereafter have the right to
receive upon exercise of the warrants such shares of stock, securities or assets
as would have been issuable or payable with respect to or in exchange for a
number of shares of our common stock equal to the number of shares of our common
stock issuable upon exercise of the warrants immediately prior to the
fundamental transaction, and appropriate provision will be made so that the
provisions of the warrants (including, for example, provisions relating to the
adjustment of the exercise price) will thereafter be applicable, as nearly
equivalent as may be practicable in relation to any share of stock, securities
or assets deliverable upon the exercise of the warrants after the fundamental
transaction. In lieu of the right to receive upon exercise the shares of stock,
securities, or assets as would have been issuable or payable with respect to or
in exchange for a number of shares of our common stock, the holders of the
warrants, in certain limited circumstances, may require us under certain
circumstances to redeem the warrants for a purchase price payable in cash of the
Black-Scholes value of the warrants, as calculated pursuant to the terms of the
warrants.
14
Limits on Exercise of Warrants: Except upon at least 61 days' prior notice from
the holder to us, the holder will not have the right to exercise any portion of
the warrant if the holder, together with its affiliates, would beneficially own
in excess of 4.99% of the number of shares of common stock (including securities
convertible into common stock) outstanding immediately after the exercise.
Rights Agreement
In November 2007 we declared a dividend of one Series A Right and one
Series B Right for each share of our common stock which was outstanding on
November 9, 2007. When the Rights become exercisable, each Series A Right will
entitle the registered holder, subject to the terms of a Rights Agreement, to
purchase from us one share of our common stock at a price equal to 20% of the
market price of our common stock on the exercise date, although the price may be
adjusted pursuant to the terms of the Rights Agreement. If after a person or
group of affiliated persons has acquired 15% or more of our common stock or
following the commencement of, a tender offer for 15% or more of our outstanding
common stock (i) we are acquired in a merger or other business combination and
we are not the surviving corporation, (ii) any person consolidates or merges
with us and all or part of our common shares are converted or exchanged for
securities, cash or property of any other person, or (iii) 50% or more of our
consolidated assets or earning power are sold, proper provision will be made so
that each holder of a Series B Right will thereafter have the right to receive,
upon payment of the exercise price of $100 (subject to adjustment), that number
of shares of common stock of the acquiring company which at the time of such
transaction has a market value that is twice the exercise price of the Series B
Right.
16
UNDERWRITING
Laidlaw & Co. (UK) Ltd. is acting as the representative of the underwriters
named below, or the representative. We have entered into an underwriting
agreement with the representative. Subject to the terms and conditions of the
underwriting agreement, we have agreed to sell to each underwriter named below,
and each underwriter named below has severally agreed to purchase, at the public
offering price less the underwriting discounts and commissions set forth on the
cover page of this prospectus supplement, the number of shares of common stock
and warrants set forth opposite its name below:
Number Number
Name of Underwriter of Shares of Warrants
------------------- --------- -----------
Laidlaw & Company (UK) Ltd. _______ _______
Dawson James Securities, Inc. _______ _______
The underwriters are committed to purchase all the shares of common stock
and warrants offered by us other than those covered by the option to purchase
additional securities described below, if they purchase any shares of common
stock and warrants. The obligations of the underwriters may be terminated upon
the occurrence of certain events specified in the underwriting agreement.
Furthermore, pursuant to the underwriting agreement, the underwriters'
obligations are subject to customary conditions, representations and warranties
contained in the underwriting agreement, such as receipt by the underwriters of
officers' certificates and legal opinions.
We have agreed to indemnify the underwriters against specified liabilities,
including liabilities under the Securities Act of 1933, and to contribute to
payments the underwriters may be required to make in respect thereof.
The underwriters are offering the common stock and warrants, subject to
prior sale, when, as and if issued to and accepted by them, subject to approval
of legal matters by their counsel and other conditions specified in the
underwriting agreement. The underwriters reserve the right to withdraw, cancel
or modify offers to the public and to reject orders in whole or in part.
Option to Purchase Additional Common Shares
We have granted to the underwriters an option, exercisable for 45 days from
the date of this prospectus supplement, to purchase up to _______ additional
shares of common stock and/or additional warrants to purchase up to _________
shares of common stock at the public offering prices, less the underwriting
discount and commissions. shown on the cover page of this prospectus supplement.
The underwriters may exercise this option, in whole or in part, solely to cover
over-allotments, if any, made in connection with this offering. The underwriters
are not required to exercise the over-allotment option. If the underwriters
exercise all or part of this option, they will purchase shares of common stock
and warrants covered by the option at the public offering price that appears on
the cover page of this prospectus supplement, less the underwriting discount. If
this option is exercised in full, the total price to the public will be $___
million and the total net proceeds to us will be $___ million.
17
Underwriting Discount and Commissions and Offering Expenses
The underwriters propose to offer the common stock and warrants to the
public at the public offering price set forth on the cover of this prospectus
supplement. The underwriters may offer the common stock and warrants to
securities dealers at the price to the public less a concession. After the
common stock and warrants are delivered for sale to the public, the underwriters
may vary the offering price and other selling terms from time to time.
The following table shows the public offering price, underwriting discount
and proceeds, before expenses, to us.
Total
Per Share of --------------------------
Common Stock No Option Full Option
and Per Warrant Exercise Exercise
--------------- ---------- -----------
Public offering price $ $ $
Underwriting discounts and $ $ $
commissions to be paid
by us
-------- -------- -------
Proceeds, before expenses,
to us $ $ $
======== ======== =======
We have paid an expense deposit of $____ to the representative, which will
be applied against the accountable expenses that will be paid by us to the
underwriters in connection with this offering. The underwriting agreement,
however, provides that in the event the offering is terminated, the $____
expense deposit paid to the representative will be returned to the extent
offering expenses are not actually incurred.
We have also agreed to pay the underwriters' expenses relating to the
offering, including (a) all filing fees relating to the registration of the
Securities to be sold in the Offering with the Commission; (b) all actual filing
fees associated with the review of this offering by FINRA; (c) all fees and
expenses relating to the listing of our shares of common stock on the NYSE MKT;
(d) all actual fees, expenses and disbursements relating to background checks of
the Company's officers and directors in an amount not to exceed $2,000 per
individual and $6,000 in the aggregate such expenses to be documented prior to
being reimbursed; (e) all fees, expenses and disbursements relating to the
registration or qualification of our securities under the "blue sky" securities
laws of such states and other jurisdictions as the representative may reasonably
designate (including, without limitation, all filing and registration fees));
(f) all fees, expenses and disbursements relating to the registration,
qualification or exemption of our securities under the securities laws of such
foreign jurisdictions as the representative may reasonably designate; (g) the
costs of all mailing and printing of the underwriting documents as the
representative may reasonably deem necessary; (h) the costs of preparing,
printing and delivering certificates representing the securities sold in this
Offering; (i) fees and expenses of our transfer agent; (j) stock transfer and/or
stamp taxes, if any, payable upon the transfer of securities from the Company to
the representative; (k) the fees and expenses of our accountants; (l) the fees
and expenses of our legal counsel and other agents and representatives; and (m)
the fees and expenses associated with obtaining a regulatory (FDA) compliance
letter from appropriate FDA counsel.
18
We estimate our total expenses associated with the offering, excluding
underwriting discounts and commissions, will be approximately $________.
Discretionary Accounts
The underwriters do not intend to confirm sales of the securities offered
hereby to any accounts over which they have discretionary authority.
Indemnification
We have agreed to indemnify the underwriters against certain liabilities,
including liabilities under the U.S. federal securities laws, or to contribute
to payments that may be required to be made in respect of these liabilities.
Lock-Up Agreements
Pursuant to certain "lock up" agreements, for a period of 60 days from the
date of this prospectus supplement, other than with the prior written consent of
the representative of the underwriters (which consent may be withheld at the
sole discretion of the representative), we and our officers and directors have
agreed that we and they will not, directly or indirectly, sell, offer, contract,
or grant any option to sell, pledge, transfer, or establish an open "put
equivalent position" within the meaning of the Exchange Act or otherwise dispose
of or transfer, or announce the offering of, or file any registration statement
under the Securities Act in respect of, any shares of our common stock, options,
or warrants to acquire shares of our common stock or securities exchangeable or
exercisable for or convertible into shares of our common stock. In addition, our
officers and directors may not enter into a swap or other derivatives
transaction that transfers to another, in whole or in part, the economic
benefits or risk of ownership in our common stock, or otherwise dispose of any
shares of our common stock, options or warrants or securities exchangeable or
exercisable for or convertible into shares of our common stock currently or
later owned either of record or beneficially, or publicly announce an intention
to do any of the foregoing.
The restrictions above do not apply to (i) our issuance of shares of our
common stock or options to purchase shares of our common stock upon exercise of
any warrants or options, or the conversion of a note, which were outstanding on
the date of this prospectus supplement; (ii) our issuance of shares of our
common stock or options to purchase shares of our common stock pursuant to any
stock option, stock bonus, or other stock plan or arrangement in effect on the
date of this prospectus supplement, or any amendment to or replacement of such
plan; (iii) the establishment of a 10b5-1 trading plan under the Exchange Act by
a security holder for the sale of shares of common stock, provided that such
plan does not provide for the transfer of common stock during the restriction
period, (iv) transfers by security holders of shares of common stock or other
securities as a bona fide gift or by will or intestacy, (v) transfers by
distribution by securities of shares of common stock or other securities to
partners, members or stockholders of the security holder, or (vi) tansfers by
19
security holders of shares of common stock or other securities to any trust for
the direct or indirect benefit of the security holder or the immediate family of
the security holder,;
provided that, in the case of each of the preceding three types of
transactions, the transfer does not involve a disposition for value and each
transferee or distributee signs and delivers a lock-up agreement agreeing to be
subject to the restrictions on transfer described above.
If (A) during the last 17 days of the 60-day period, we issue an earnings
release or material news or a material event relating to us occurs; or (B) prior
to the expiration of the 60-day period, we announce that we will release
earnings results during the 16-day period beginning on the last day of the
60-day period, then in each case the 60-day period applicable to our officers
and directors will be extended until the expiration of the 18-day period
beginning on the date of the issuance of the earnings release or the occurrence
of the material news or material event, as applicable, unless the representative
waives such restriction.
Stabilization.
In connection with this offering, the underwriters may engage in
stabilizing transactions, overallotment transactions, syndicate covering
transactions, penalty bids and purchases to cover positions created by short
sales.
o Stabilizing transactions permit bids to purchase shares so long as the
stabilizing bids do not exceed a specified maximum, and are engaged in
for the purpose of preventing or retarding a decline in the market
price of the shares while the offering is in progress.
o Overallotment transactions involve sales by the underwriters of shares
in excess of the number of shares the underwriters are obligated to
purchase. This creates a syndicate short position which may be either
a covered short position or a naked short position. In a covered short
position, the number of shares over-allotted by the underwriters is
not greater than the number of shares that they may purchase in the
overallotment option. In a naked short position, the number of shares
involved is greater than the number of shares in the overallotment
option. The underwriters may close out any short position by
exercising their overallotment option and/or purchasing shares in the
open market.
o Syndicate covering transactions involve purchases of shares in the
open market after the distribution has been completed in order to
cover syndicate short positions. If the underwriters sell more shares
than could be covered by exercise of the overallotment option and,
therefore, have a naked short position, the position can be closed out
only by buying shares in the open market. A naked short position is
more likely to be created if the underwriters are concerned that after
pricing there could be downward pressure on the price of the shares in
the open market that could adversely affect investors who purchase in
the offering.
o Penalty bids permit the representative to reclaim a selling concession
from a syndicate member when the shares originally sold by that
syndicate member are purchased in stabilizing or syndicate covering
transactions to cover syndicate short positions.
These stabilizing transactions, syndicate covering transactions and penalty
bids may have the effect of raising or maintaining the market price of our
shares or common stock or preventing or retarding a decline in the market price
of our shares or common stock. As a result, the price of our common stock in the
open market may be higher than it would otherwise be in the absence of these
transactions. Neither we nor the underwriters make any representation or
prediction as to the effect that the transactions described above may have on
20
the price of our common stock. These transactions may be effected on NYSE MKT,
in the over-the-counter market or otherwise and, if commenced, may be
discontinued at any time.
Passive Market Making
In connection with this offering, underwriters and selling group members
may engage in passive market making transactions in accordance with Rule 103 of
Regulation M under the Exchange Act, during a period before the commencement of
offers or sales of the shares and extending through the completion of the
distribution. A passive market maker must display its bid at a price not in
excess of the highest independent bid of that security. However, if all
independent bids are lowered below the passive market maker's bid, that bid must
then be lowered when specified purchase limits are exceeded.
Electronic Distribution
This prospectus supplement, the accompanying prospectus and the documents
incorporated herein and therein by reference may be made available in electronic
format on the websites maintained by one or more of the underwriters. The
underwriters may distribute prospectuses electronically. The underwriters may
agree to allocate a number of shares of common stock for sale to their online
brokerage account holders. The common stock will be allocated to underwriters
that may make Internet distributions on the same basis as other allocations. In
addition, common stock may be sold by the underwriters to securities dealers who
resell common stock to online brokerage account holders.
Other than this prospectus supplement, the accompanying prospectus and the
documents incorporated herein and therein by reference, information contained in
any website maintained by an underwriter is not part of this prospectus
supplement, the accompanying prospectus, the documents incorporated herein and
therein by reference or registration statement of which the prospectus
supplement forms a part, has not been endorsed by us and should not be relied on
by investors in deciding whether to purchase common stock. The underwriters are
not responsible for information contained in websites that they do not maintain.
Relationship with the Underwriters
From time to time, certain of the underwriters and their respective
affiliates have provided, and may continue to provide, investment banking
services to us in the ordinary course of their businesses, and have received,
and may continue to receive, compensation for such services.
LEGAL MATTERS
The validity of the issuance of the securities offered hereby will be
passed upon for us by Hart & Hart LLC, Denver, Colorado.
EXPERTS
The consolidated balance sheets as of September 30, 2012 and 2011, and the
related consolidated statements of operations, stockholders' equity, and cash
flows for the years then ended have been incorporated in reliance on the report
of BDO USA, LLP, an independent registered public accounting firm, incorporated
21
herein by reference, given on the authority of said firm as experts in auditing
and accounting.
WHERE YOU CAN FIND MORE INFORMATION
This prospectus supplement and the accompanying prospectus are part of the
registration statement on Form S-3 we filed with the Securities and Exchange
Commission, or SEC, under the Securities Act, and do not contain all the
information set forth in the registration statement. Whenever a reference is
made in this prospectus supplement or the accompanying prospectus to any of our
contracts, agreements or other documents, the reference may not be complete, and
you should refer to the exhibits that are a part of the registration statement
or the exhibits to the reports or other documents incorporated by reference into
this prospectus supplement and the accompanying prospectus for a copy of such
contract, agreement or other document. You may inspect a copy of the
registration statement, including the exhibits and schedules, without charge, at
the SEC's public reference room mentioned below, or obtain a copy from the SEC
upon payment of the fees prescribed by the SEC.
We are subject to the requirements of the Securities Exchange Act of l934
and are required to file reports, proxy statements and other information with
the Securities and Exchange Commission. Copies of any such reports, proxy
statements and other information filed by us can be read and copied at the
Commission's Public Reference Room at 100 F. Street, N.E., Washington, D.C.
20549. The public may obtain information on the operation of the Public
Reference Room by calling the Commission at 1-800-SEC-0330. The Commission
maintains an Internet site that contains reports, proxy and information
statements, and other information regarding us. The address of that site is
http://www.sec.gov.
You can find information about the Company on our website at
http://www.cel-sci.com. Information found on our website is not part of this
prospectus.
INCORPORATION OF DOCUMENTS BY REFERENCE
We incorporate by reference the filed documents listed below, except as
superseded, supplemented or modified by this prospectus, and any future filings
we will make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the
Exchange Act (unless otherwise noted, the SEC file number for each of the
documents listed below is 001-11889):
o Annual Report on Form 10-K for the fiscal year ended September 30,
2012.
o Report on Form10-Q for the three months ended December 31, 2012.
o Report on Form 10-Q for the three and six months ended March 31, 2013.
o Report on Form 10-Q for the three and nine months ended June 30, 2013.
o Current Reports on Form 8-K, which were filed with the SEC on December
26, 2012, June 26, 2013, July 19, 2013, July 26, 2013, August 30,
2013, September 3, 2013, October 10, 2013, October 11, 2013 and
November 1, 2013.
22
All documents filed with the Commission by us pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this prospectus
and prior to the termination of this offering shall be deemed to be incorporated
by reference into this prospectus and to be a part of this prospectus from the
date of the filing of such documents. Any statement contained in a document
incorporated or deemed to be incorporated by reference shall be deemed to be
modified or superseded for the purposes of this prospectus to the extent that a
statement contained in this prospectus or in any subsequently filed document
which also is or is deemed to be incorporated by reference in this prospectus
modifies or supersedes such statement. Such statement so modified or superseded
shall not be deemed, except as so modified or superseded, to constitute a part
of this prospectus.
We will provide, without charge, to each person to whom a copy of this
prospectus is delivered, including any beneficial owner, upon the written or
oral request of such person, a copy of any or all of the documents incorporated
by reference below (other than exhibits to these documents, unless the exhibits
are specifically incorporated by reference into this prospectus). Requests
should be directed to:
CEL-SCI Corporation
8229 Boone Blvd., #802
Vienna, Virginia 22182
(703) 506-9460