Dow Jones 11520.26 -12.97 7:02 am PDT, September 22, 2006 NASDAQ 2229.27 -8.48 For info, visit access.smallcapnetwork.com S & P 500 1316.51 -1.52 Change your subscription status here Russell 2000 722.82 -4.31 VOLUME 06: ISSUE 74 A Heart To Heart Chat With a Biotech CEO  We recently sat down with CEL-SCI Corporation (AMEX: CVM) CEO Geert Kersten to discuss his recent letter to shareholders, the company's stock price, and what the future might hold. And, what we learned went well beyond the usual corporate PR stuff. Investors (potential or current) take note...this is a behind-the-scenes look you won't get anywhere else. Q. You regularly send open letters to shareholders about your company and its stock, including one on Wednesday (see below). Most corporations wouldn't bother, so why do you do that?  A. It's a combination of logic and heart. Stock owners want and deserve to know how a company is creating value for them. So, the letters accomplish that in an efficient and logical fashion. All of those letters are also from the heart. I think it's important for investors to know how CEL-SCI believes in the value and potential of its work, and equally, how we carefully evaluate the data before we move forward.  Q. Has it been worth the effort?  A. Yes, it's been worth it, which is why I've been writing those letters for ten years now. It takes a long time, but, in the end it will be soooo sweet. Investors have to understand that there's a difference between big biotech companies and the small and mid cap ones. Big biotech companies are already perceived as a proven entity to the investment community since they have sales and, mostly, profits. Small-cap and mid cap biotech companies, on the other hand, need to prove themselves over and over again as they work through all the pains of developing novel products. Just imagine how forward looking one has to be to develop a new drug. You can only get a patent, a prerequisite for raising money, if you have an idea that is totally novel and unique. Then you have to go out and explain your idea. The letters let us do that.    Multikine - CEL-SCI's Cancer Treatment Q. And for CEL-SCI, the main drug in development is Multikine. Can you tell us - in simple terms - what it is and how it works?  A. Multikine is an immune system boosting drug that has shown very promising survival results in Phase II studies in head and neck cancer, which has been our focal point in the first part of our research. Think of it as an immune system booster that is a copy of a patient's own immune system. By switching the type of immune cell that attacks the tumor, Multikine helps the body break tumor tolerance - a scenario where the immune system does not actively attack the tumor. With Multikine you have a different and more effective immune response. It's a non-toxic way to help you beat cancer.  Q. You mentioned that Multikine is non-toxic. What does that mean?  A. It means that it does not cause bad things to happen to you as do radiation and chemotherapy, and many other products.  Q. And has human testing shown positive results?  A. It certainly looks that way. So far, 12% of the patients had no tumor remaining after only a 3 week treatment and 3.5 years after the whole cancer treatment was finished, survival with Multikine appeared to be much higher. In our Phase II testing we saw a 65 - 70% chance of survival with Multikine, or only a 50% chance without it. Phase III will look to verify these early results in a large number of patients. If we are right there will be many less deaths from cancer since more patients will be cured with the first treatment.  Q. How does Multikine differ from other similar treatments in development stages out there?  A. We know of no pharmaceutical drug that works like our product and attacks the tumor the same way.    The Opportunity Q. Sounds like CEL-SCI is working on something unique. Why do you think bigger, well-funded companies aren't going down the same treatment avenue?  A. We have the area patented and they are blocked from doing this. They are starting to show an interest since we are about to enter Phase III clinical trials.  Q. Why do you not go for the chronic cancer treatment market as do so many of the pharma companies?  A. With our drug, if proven successful, it's possible to get the cancer with the first treatment and make a lot of money too. While the market for chronic cancer therapy is immense, our market is still huge and we should save the healthcare system money; therefore insurance companies should push for our product to be used. Our first goal is to beat cancer...the money will come when we get this product to market, and, if we are right, there will be plenty to go around.  Q. And what kind of market is out there? Are we talking $1 million, or $1 billion?  A. Each year, globally, there are 500,000 new diagnosed cases of head and neck cancer. Assuming Multikine is used to treat just 10% of them, at about $25,000 per patient, that would mean about $1.25 billion in sales. Obviously these are estimates, but that should give you some idea.  Q. That's enormous potential.  A. Yes, and in the biotech business, margins are very high. So, the potential earnings for shareholders are also enormous. That is why I have been buying the stock during the last 2 years. To get the maximum benefit, the time to invest, in my opinion, is now when the stock price is depressed. I believe that we have a risk/reward proposition in CEL-SCI which is very attractive.  Q. You said the average Multikine treatment per patient would cost around $25,000? That seems very low for a new cancer therapy.  A. It is low compared to many of the existing drugs, many of which show very small survival benefit. That's one of the other exciting parts of our cancer treatment. If we are right, Multikine will save lives and money. Medical expenses for a terminal cancer patient in the last year of his or her life total about $1 million. If we can reduce the number of patients getting to that terminal stage, we will help patients, insurance companies and the government payors.    CEL-SCI Shares Q. It certainly seems like Multikine could eventually be an answered prayer for cancer patients, but let's talk a little bit about what this all means for shareholders. You contend that now is a good time to consider investing in CEL-SCI. Why now?  A. More so than most markets, biotech stocks are cyclical. Biotech followed pharmaceuticals lower for the last few years, but if you look at Pharma now, you can see they're on the rise again. That should help boost biotech stocks as well. But, I've also noticed how the smaller and mid cap biotech companies move in their own three-year (or so) cycle. This has been true for over 15 years. As of right now, we're at the low and long end of the down cycle, and overdue for the expansion (price appreciation) period. I see biotech coming out of its lull soon...especially with oil stocks and other sectors starting to fall out of favor. Investors are going to put their money somewhere, and I think biotech is starting come into favor. But that's not the only reason that now might be a good time... We are entering Phase III clinical trials and that is when institutional investors generally take positions.  Q. Any other reason now may be a good time to look at CEL-SCI?  A. My first and foremost goal - at all times - is to create shareholder value. We can do that by doing things the right way, and doing them when we're properly funded. We recently got $8 million in funding through the sale of shares when they were priced at 86 cents, while the overall market and biotech was suffering. But, just think of the kind of funding we can get when the market and biotech stocks are moving higher. It's best to wait for the right environment before making a major funding effort. Maintaining shareholder value is the motivating factor behind the decision. Doing the smart thing right now creates the most value later on and, in my opinion, it pays to be thoughtful and careful when you work in a high risk/high return field. I have seen too many small companies rush forward to get things done quickly, and, almost all of them are no longer around. You get to be big and successful only if you are thoughtful and careful.  Q. But some investors might say they'll wait until the stock actually starts to move higher before they buy in. What do you say to them?  A. I believe that waiting potentially means a missed opportunity. What if we get a big pharmaceutical partner? What if our bird flu drug is shown to work and bird flu hits the US? Once small biotech company stocks start to move (for whatever reason), you typically cannot catch them unless you are willing to pay up a lot. There have been days when our stock doubled. We have spent $90 million to get to this advanced point of development and our Company is valued at only $50 million. I believe that the ground-floor opportunity is here and now and I have invested in CEL-SCI accordingly.  Q. Is there anything else you think investors would want to know before we wrap-up?  A. To repeat something I mentioned earlier, my primary goals are to help cancer patients and to create shareholder value. There are several steps to achieving this: One of them is funding the operation when the time is right, keeping dilution down. Another one is communicating CEL-SCI's plan and progress on a regular basis. And obviously, one of the best ways to create value is in developing a more effective cancer treatment. Survival is the difference; Multikine has shown great results so far. We're excited to be on the track we're on, and we hope investors are able to see the big picture of Multikine's potential. Today we are valued at $50 million, and if we are right, we should be valued at between $1-3 billion when our drug comes to the market. Somewhere between $50 million and $1-3 billion is a lot of room for share appreciation, but it will not all happen the day we show the results from the Phase III study. So, don't assume Multikine has to be in approved, full-blown production to benefit shareholders. As you guys at the SmallCap Digest say, you buy a stock for where the company is going, not where they've been.  Editor: We couldn't agree more. Kersten's recent letter to shareholders is below.    Dear Fellow Shareholders:  Many of us invest in biotechnology because of its life changing possibilities and its enormous potential for financial return. We all know that the development of a biotech drug takes a long time, is difficult and costs many millions of dollars. Yet most of us are willing to wait for the potential "home run" on our investment as long as the data looks good. However, the cyclical and at times completely illogical treatment of biotechnology stocks by the investment community challenges the commitment of even the most dedicated of investors.  For this reason we are very pleased to point out that CEL-SCI's share price has outperformed the vast majority of its small and mid cap brethrens, albeit with enormous cyclical volatility, over the last few years. Since high volatility will never be eliminated from biotech stocks like CEL-SCI, we must learn to use it to our advantage. I recently purchased more stock in the open market because I believe that the present price represents a great opportunity.  In the spring of 2003 CEL-SCI's financial health looked rather bleak, our stock price hit an all time low and few people believed in our ability to survive, much less rebound. Nevertheless, despite a stock market environment that has been quite unfriendly to small and medium sized biotechnology companies like ours, we have managed to put ourselves on good financial footing and increased our share price by several hundred percent; and that is after CEL-SCI's stock price pulled back from its substantially higher level in the spring of 2006. We survived, and indeed improved our position by persistently and carefully following our plan for building shareholder value and obeying the following rule. "FOLLOW THE DATA, THE DATA NEVER LIE."  The data for CEL-SCI's products point to a very positive future for our company. Furthermore, based upon our most recent survival data and our cautious and deliberate way of proceeding, we believe that we will continue to build value for our shareholders. Management's sizable investment in CEL-SCI gives us added incentive to do so.  We aim to make the first line cancer treatment more successful through the addition of our cancer drug Multikine(r). Multikine will be a major breakthrough in therapy for cancer patients if we can confirm the increased patient survival data from our Phase II clinical studies in the planned global Phase III clinical study that has already received the go-ahead by the Canadian authorities. Simplistically, would you rather have a 65 - 70% chance of survival with our Multikine or a 50% chance of survival without our Multikine? When we can prove this kind of clinical benefit to patients, shareholder value creation will need no further explanation.  We believe that the market for Multikine may quickly expand beyond the original head and neck cancer indication. The product has already been shown to be very safe, and it is very probable that clinical trials will be conducted with Multikine to examine its usefulness in treating other diseases in which the affected patients might benefit by the addition of Multikine to their overall treatment. Furthermore, the use of Multikine, especially in cancer, would save the health care system money, most likely a lot of money, as fewer patients will have recurrence of their cancer, and thus fewer patients will need to be treated. In short, Multikine could become a very important addition to current cancer treatments.  In the last 18 months we have achieved a number of very important milestones for Multikine. We have published the mechanism of action in the Journal of Clinical Oncology, a highly recognized, leading peer-reviewed cancer publication. We have been granted an important new patent on Multikine, and we received a no objection letter (NOL) from the highly regarded Canadian regulators for our Multikine Global Phase III head and neck cancer clinical trial. Last, but not least, we presented data at the "Vaccine Discovery and Commercialization" conference in Philadelphia which indicate that the addition of Multikine prior to the standard of care treatment resulted in a 33-40% improvement in the median survival at 3 1/2 years after surgery. Survival is the "gold standard" for testing in cancer.  Our CEL-1000 drug has also received a fair amount of attention. It has shown protection in animals against a number of diseases such as herpes virus, viral encephalitis, malaria and leishmania. Based on these data, the U.S. government became interested in its potential for use against avian flu. We believe that CEL-1000 may have the best avian flu potential in two areas, one, as an adjuvant to make vaccines more effective and two, as an adjunct to other antiviral therapies. Either of these uses holds great promise for CEL-1000 as a product.  We cannot say that the past years have been without difficulties, far from it, but we have been able to overcome any obstacles that we have encountered. We believe that future obstacles will also be dealt with in the same manner. If developing new medicines for cancer were easy, cancer would have been defeated long ago; after all, President Nixon declared the war on cancer 36 years ago. Yet cancer is the second leading cause of death in the U.S. today and, if the trend continues, it is expected to become the leading cause of death in the next few years.  Today we continue to believe that our CEL-SCI shares are not fully valued by the market place, an unhappy occurrence for existing shareholders, but a great opportunity for new shareholders. This is not an uncommon phenomenon in biotechnology investing and was seen often during the early days of Amgen or Genentech, today's leading biotechnology companies. Now almost everybody wishes that they had been long-term investors in Amgen or Genentech since these companies turned out to be great investments. In hindsight the successes of these biotech leaders may appear to have been easy, but an examination of their early history reveals that things did not always go their way. Until 2003 Genentech seemed to be the only one who believed in Avastin, its new blockbuster cancer drug. These companies succeeded because they were persistent and they followed the data. We plan to do the same.  What is the value of a non-toxic cancer drug that enhances survival? To cancer patients it is immeasurable. To investors it is so big that they want to be invested in the company that owns it. That is why I have invested so much of my own money in CEL-SCI, with new stock purchases just a short time ago.  Our Phase II data suggest that we have a cancer compound that may significantly increase survival in patients with advanced primary head and neck cancer. Our Phase III trial is meant to prove this survival benefit in a statistically significant manner to get Multikine approved for sale.  In short, we hope to be able to build significant shareholder value by conducting our important work in a deliberate and methodical manner and always following the data. This has worked for us in the past few years and it should continue to work for us in the future as well. We thank you for your support.  Sincerely yours,  Geert Kersten  Chief Executive Officer  When used in this report, the words "intends," "believes," "anticipated" and "expects" and similar expressions are intended to identify forward-looking statements. Such statements are subject to risks and uncertainties which 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 SEC filings, including but not limited to its report on Form 10- K for the year ended September 30, 2005. 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.  CONTACT: Gavin de Windt of CEL-SCI Corporation, +1-703-506-9460.    We Value Your Feedback   Got comments, questions or suggestions? Send 'em on over: Editor@smallcapnetwork.com If you wish to send a written request or inquiry, please send it to our physical address: TGR Group, LLC 4653 Carmel Mtn Rd Suite 308 #402 San Diego, CA 92130 Execute Sports To Host Mid-Quarter Conference Call Tuesday, Execute Sports (OTCBB: EXCS) announced they would be hosting a conference call in the middle of the quarter, on September 28th...well before they had any official results to discuss. What's the hurry? Good question - we don't know either. However, we are taking Todd Pitcher's statement at face value. He says... "We...understand that, as an early-stage player in the marketplace it is important to provide our investors with visibility and a reasonable level of access to the management so that they can better understand our business, the implications for our business in light of various announcements both financial and otherwise that we have made throughout the quarter and year, and also our business plan." We think it's a good move for Execute. If the company wants to gain favor and legitimacy with investors, they're going to have to be transparent as they work through these early stages of their growth. Plus, it's sends a message they've got nothing to hide.  To listen in on the call (and we encourage you to do so), the toll-free call in number is 1-800-819-9193 and for international, it is 1-913-981-4911. The teleconference call is scheduled for one hour, starting at 1:30 p.m. PT (4:30 p.m. EST).   The Commerce Planet Empire Continues To Grow  If there's one thing we're convinced of, it's Commerce Planet's (OTCBB: CPNE) ability to nurture new ventures. The fact that the company even exists at all is proof of the pudding. But, even since we started covering the company in March, we've observed new ventures coming into the fold. And more importantly, they all seem to do well under the Planet's guidance. Case in point - Commerce Planet's wholly-owned subsidiary One Source Imaging. The company bought the printing outfit on June 6th. By July, the proverbial bar had already been raised for the printing unit, as it quickly became a viable revenue center. Now, we reviewed One Source Imaging's history to make a point about Commerce Planet and its newest venture...if this one is like the rest, it's going to be a winner (i.e. a viable profit center). In short, the Planet's subsidiary Customer Loyalty is teaming up with Payment Data Systems (OTCBB: PYDS) to create ibillpayonline.com. The joint venture will provide private label bill payment portal services to Commerce Planet. In English, it just means the Planet will provide a bill payment service to current (and future) customers clamoring for a bill payment feature on their account. If it's like most everything else Commerce Planet does, it'll be a winner.    Eagle Broadband Breaks Ground...Literally, and Figuratively When we first profiled Eagle Broadband (AMEX: EAG) in our September 15th edition, we explained how IPTV was going to be the new era of television content delivery. And Eagle, with over 200 channels worth of content to supply to...whoever, was poised to lead the charge. Well, it wasn't just some philosophical, hopeful, generalization to be realized at some point in time in the near or distant future. Eagle recently announced the beginning of construction of its super head-end and satellite farm in Miami, Florida. The Florida-based head-end operation will collect signals from over 30 satellites to deliver a broad range of content from more than 250 cable channels. So, the concept is becoming a reality. Click here for the full story, and complete explanation of the infrastructure being built. Can the stock be far behind the progress of the company? Other investors seem to be getting behind the idea...and behind EAG shares as well. The stock started to perk up a little after we issued the profile on the 15th, and did so on higher volume. We saw a slight dip into the red Wednesday, but the bulls were back at it by Thursday.  Subscribe Information is power and timely information is profitable. Become informed and profit from SmallCapDigest Profiles and Trading Alerts by becoming a Preferred Member today. There is no cost associated with your email subscription. 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Unsubscribe Here D I S C L A I M E R: The Small Cap Digest, the Small Cap Network, its website and email newsletter (hereafter, cumulatively referred to as "SCD") , is an independent electronic publication committed to providing its readers with factual information on select publicly traded companies. SCD is owned and operated by TGR Group, LLC ("TGR"). TGR is not a registered investment advisor or broker-dealer. All companies are chosen on the basis of certain financial analysis and other pertinent criteria with a view toward maximizing the upside potential for investors while minimizing the downside risk, whenever possible.  Moreover, as detailed below, TGR accepts compensation from third party consultants and/or companies, which it features in the publication and circulation of SCD. To the degrees enumerated herein, SCD should not be regarded as an independent publication.  Click Here or go to http://access.smallcapnetwork.com/compensation_disclosure.html to view our compensation on every company we have ever covered, or visit the following web address: http://www.smallnetwork.net/profile_disclosure.html for our full profiles and http://access.smallcapnetwork.com/short_term_alerts.html for Trading Alerts.  TGR Group LLC has been paid a fee of $25,000 and 150,000 shares of newly issued restricted stock by Cel-Sci for coverage of the Company. Additionally, back in November of 2002, TGR Group LLC was paid a fee of $25,000 and 250,000 shares of newly issued restricted stock of Cel-Sci for coverage of the company until November of 2003. The aforementioned 250,000 restricted shares became free trading under SEC rule 144 and were sold in the open market prior to the company entering into a new contract agreement with TGR Group in February of 2006. TGR Group LLC has been paid a fee of $30,000 and 300,000 newly issued restricted shares by Execute Sports for coverage of the company. In addition, one of the prinicipals of TGR Group purchased 100,000 shares of Execute Sports at a cost of $.25 per share prior to the public offering. The shares are now eligible to be free trading.That individual may choose to sell the shares at any time. This should be viewed as a potential conflict of interest. TGR Group LLC has been paid a fee of $60,000 by Commerce Planet for coverage of the company. In addition, one of the principles of TGR Group LLC is also a principle of MarketByte LLC. In a separate contractual relationship in 2004, MarketByte LLC was paid a fee of $25,000 in cash and 750,000 newly issued, restricted shares by Commerce Planet for coverage of the company. The aforementioned shares are all currently eligible to be free trading. The term of MarketByte's obligation to Commerce Planet has expired. 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