Tuesday, June 9, 2009

Another Swine Flu PR from Cel Sci (CVM) - Why?

Cel Sci Corp (CVM) on Tuesday released yet another announcement regarding their L.E.A.P.S. technology and it's possible ability to treat or prevent the Swine Flu.

According to the PR, the company "is expanding the pre-clinical testing of its flu vaccine, utilizing its proprietary L.E.A.P.S. technology (Ligand Epitope Antigen Presentation System) to determine its efficacy against the more dangerous and virulent virus strains that may arise during the up coming winter flu season."

With Multikine being the big player in the Cel Sci pipeline and investors anxiously awaiting the commencement of a Phase III trial which will continue testing the head and neck cancer vaccine, one would wonder why the company is so bent on publicizing the pre-clinical L.E.A.P.S. technology when Multikine seems to be resting on the back burner.

The reason should be obvious: the company is looking for attention. But what kind of attention is the real question. The stock price has been hammered over the past year, but has somewhat recovered with the flow of Swine Flu PRs that are burning up the press (but giving very little new information), so that is one way the company benefits- in stock price. By taking advantage of the popularity of the Swine Flu, Cel Sci can attract new interest to the company and it's stock.

However, in my opinion, that is not the only attention that the company is seeking.

With the Swine Flu news practically being shoved down our throats, and at the same time knowing that Cel Sci is looking for additional funding before initiating the Multikine Phase III trial, I believe that the company is after a quick influx of money- from big pharma, yes, but also from the government.

Nations around the world are spending hundreds of millions of dollars in order to stockpile anti flu treatments such as Tamiflu and are also looking for new treatments that could prevent the epidemic from further spreading in mutated forms.

Here's where Cel Sci comes in. With an experimental technology that could possibly accomplish the desired goals of the US government, they may be able to qualify for government grants. This wouldn't help them fund the Multikine trial, but it sure would draw the attention of a big pharma looking to either partner with, or buy out the relatively tiny company. Any federal money for Cel Sci would be hugely beneficial to the company as a whole. Not only would the advancement of L.E.A.P.S. be accomplished on the government's dime, but many small biotechs have survived for decades on federal grants alone.

As an example, I've followed AVI BioPharma, Inc (AVII) for years. This small biotech has constantly receive government money but has yet to produce anything of value. In fact, it was the Bird Flu scare a few years ago had the AVII stock trading at near nine dollars.

If L.E.A.P.S. can bring in a big buyer or additional funding, then that could be a game changer for the company. However, right now investors should be concerned with the initiation of the Mulitikine Phase III trial.

If there's still ink left in the printing press after all the Swine Flu updates, hopefully investors can get an idea of where the Phase III trial stands.

That being said, CVM is still a great buy trading at it's current levels.

Disclosure: VFC is long CVM and has no position in AVII.

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