Dow Jones 8,537.13 -49.11  5:55 pm EST, Fri., Nov 8, 2002  NASDAQ 1,359.28 -17.43  For info, visit access.smallcapnetwork.com .  S & P 500   894.74 -7.91  To be removed, please click here .  Russell 2000   379.00 -4.15  VOLUME 02: ISSUE 77 November Profile: CEL-SCI Corporation (AMEX:CVM) On March 3, 1995 a little known biotech company named Imclone Systems (IMCL) closed at $0.19 per share (a split adjusted price of $0.38 per share). Over the course of the next seven years this biotechnology company began an incredible run that may never be equaled.  Imclone's stock reached its pinnacle on December 5th, 2001 when the stock closed at $146.66 per share (split adjusted $73.83 per share). Investors that owned just $1000.00 of Imclone at $0.19 per share saw their stake increase to over $771,000 dollars in less than seven years.  Even today, after all the scandals and turmoil at Imclone that same one thousand dollars is still worth approximately $94,000 dollars. Investing in biotechnology has always been an exciting venture.  Along with this excitement comes volatility which in turn may lead to unbelievable rewards such as those experienced by early Imclone shareholders.  The biotechnology industry has been and will always be attractive for investors because the industry strives to save lives and in essence change the world. However, due to the complexity of this sector, companies will often experience a disconnect between the stock price and the corporate developments.  What fundamental difference was there between Imclone at $0.19 per share versus $146.66 per share? In an industry that has often been accused of hype, there are companies that have real potential with valuations that are very attractive. Today we introduce you to a biotechnology company that has been in business for almost 20 years.  Fundamentally, the company is on the brink of entering Phase III trials for its lead drug but the stock price is at its lowest levels in the company's history. The SmallCap Digest may have found what could be the best "value play" in the biotech industry.   Stock Listing: AMEX: CVM Estimated Shares Issued and Outstanding: 34.7 million Estimated Public Float: 31.9 Million Last Closing Price: $0.21 Market Capitalization: $6.93 Million 52 Week High and Low : $1.29/$0.16 Corporate Web Site: http://www.cel-sci.com CEL-SCI Corporation (CVM) is a biotechnology company involved in the development of new noninvasive immune system based treatments for cancer and infectious diseases. Formed in 1983, CEL-SCI has been involved in the research and development of certain drugs and vaccines primarily focused in the treatment of cancer for almost 20 years. Unlike many of the companies in the industry CEL-SCI is geared toward early stage treatment therapy, while most other potential therapies are mostly focused on late stage treatment.  The company believes that early stage treatment will improve the survival rate in cancer patients. This could be significant as early treatment of cancer is very important in prolonging survival. CEL-SCI has nearly completed its Phase II study on the effects of its lead drug Multikine on head and neck cancer patients.  In addition an ongoing study with Multikine for HIV infected women with Human Papilloma Virus (HPV), testing showed the elimination of about 75% of the HPV strains following the administration of Multikine. Multikine is a drug with so much potential that CEL-SCI has spent $35 million dollars over the past eight years on the manufacturing validation work involved with producing the drug.  It was a requirement that heath regulators mandated before Phase III trials could be initiated.  Now that this aspect has been completed, the capital expenditures going forward will be reduced significantly. With the company's stock at $0.21 per share the market capitalization of CEL-SCI stands at $6.93 million dollars or only 20% of what the company has spent on getting their manufacturing validated for Multikine. We believe that the company's potential and intellectual property is undervalued. Our short term target for CEL-SCI is $0.30 per share which is a 42% return from Friday's closing price of $0.21 per share.  Our 12-month target for the company is $1.00 per share. Investors with a five year time horizon have the potential to experience the return of a lifetime- Imclone like appreciation is possible as Phase III clinical trials start providing results with downside of a mere $.20.      Multikine (Head & Neck Cancer) Multikine is CEL-SCI's most advanced drug having been used to treat over 150 head & neck cancer patients.  The drug has induced tumor reduction in Phase I/II trials of head & neck cancer. Multikine is not tumor specific and, if proven effective, may work against most solid tumors and/or virus caused diseases. CEL-SCI believes that most, if not all, cancer treatments could benefit from the addition of Multikine by generating a targeted, immune based anti tumor response. The American Cancer Society statistics show that there are 500,000 annual new cases of head and neck cancer worldwide with over 40,000 in the United States. Head and neck cancer is extremely difficult to treat. Disfiguring surgery, chemotherapy and radiation are often used and 5 year survival rates are low. About 50% of patients experience recurrence within two years, regardless of the therapy employed and most of these patients die within a year. Multikine is an early stage drug that may have the ability to save the lives of many cancer patients by reducing the number of cancer recurrences following treatment.  In head & neck cancer, approximately 50% of the patients will end up being cured by surgery alone or surgery and follow-on radiation therapy. The remaining 50% of the patients will have a recurrence of the tumor one to two years later.  Multikine is administered 2 weeks prior to surgery with the goal of eliciting an anti tumor immune response that will act to reduce cancer recurrence rates. In Europe, reports from one clinical center show that all eight head & neck cancer patients in a Phase II clinical trial who were treated by the same investigator with Multikine in combination with surgery/radiation over 2 years ago, have not had recurrences to date and remain alive. This finding is not conclusive because further tests must be done.  However the results are very encouraging because it is generally expected that approximately 50% of such patients would have experienced a recurrence on or before 18--24 months post treatment. According to CEL-SCI's corporate website, the company's partner in Asia, Orient Europharma, is planning to take Multikine into a Phase III clinical trial for the treatment of advanced primary oral cancer during 2002 or possibly early 2003. The Company believes that worldwide sales for this indication alone could be over $300 million. Additional sales could be expected from other head & neck cancer uses.   Multikine (HPV) Multikine is being developed as a potential treatment for Human Papilloma Virus (HPV) induced cervical dysplasia (Cervical dysplasia is a premalignant or precancerous change to the cells of your cervix) in HIV infected women. Multikine is currently in Phase I clinical trial in HIV-infected women with HPV induced cervical dysplasia being conducted at the Institute for Human Virology in Baltimore. CEL-SCI believes that HPV induced cervical dysplasia patients who are also HIV-infected, and therefore represent the most difficult to treat and cure, is the fastest way to bring Multikine to the market. There are a number of compelling reasons for this: This disease currently afflicts 120,000 to 140,000 women (HPV/HIV co-infection) in the United States, and substantially more in other parts of the world. According to the Center For Disease Control & Prevention (CDC), 70% of HIV positive women are infected with HPV and are more susceptible to the disease stemming from their compromised immune system.   The majority of HIV-infected women with HPV induced cervical dysplasia treated with Multikine have had a disappearance of dysplasia, both visually and by biopsy and with minimal or no toxicity. In addition, there are currently no effective, non surgical therapies for these women. And Multikine is the only product currently being developed. U.S. market: potential of sales of $200 million per year. Once approved for sale, CEL-SCI intends to focus on persistent or recurrent cervical dysplasia in HIV infected women. This population also lacks successful treatment. The assumption underlying the potential success of Multikine in the general population is that many scientists believe they have some kind of underlying immune deficiency. L.E.A.P.S. Technology The goal of the L.E.A.P.S. (Ligand Epitope Antigen Presentation System) technology is to activate the immune system in specific and potent ways to fight cancer and infectious diseases. L.E.A.P.S. core technology builds on CEL-SCI's experience in mobilizing the human immune response. L.E.A.P.S. is a patented T-cell modulation technology with three important advantages: 1. Strong, specific activation of the T-cell response, as shown in animals. 2. Fast and efficient integration and evaluation of selected epitopes from a variety of sources. 3. Ability to facilitate disease antigen presentation and to preferentially direct immune response outcome, a major breakthrough. The first one is a new compound called CEL-1000, which was found as an outgrowth of L.E.A.P.S. technology.  CEL-1000 is gaining great momentum.  After showing protection in animal tests against malaria, herpes simplex and cancer in early studies, CEL-SCI recently expanded its program in malaria by signing a Cooperative Research and Development Agreement (CRADA) with the U.S. Naval Research Institute. The company also recently announced an agreement with the Cincinnati Children's Hospital Medical Center of the University of Cincinnati to evaluate CEL-1000 for protection against herpes in the guinea pig vaginal challenge model.  CEL-SCI also hopes to test CEL-1000 against bio-terrorism agents in the future.     Collaborations On average, it costs a company $359 million to get one new medicine from the laboratory to the pharmacist's shelf, according to a February 1993 report by the Congressional Office of Technology Assessment. One of the ways that smaller biotech firms offset the costs is by collaborating with other deep pocketed entities such as large pharmaceuticals, hospitals, or government agencies.  It is very rare for a company the size of CEL-SCI to have multiple collaborations with world class institutions. The more collaborations a company has the higher the likelihood that something positive will develop from the firm's intellectual property.  CEL-SCI has established a high number of powerful collaborations as follows:      Scientists from the laboratory of Dr. Noel Rose in The Johns Hopkins University Department of Pathology and CEL-SCI presented data at the Experimental Biology 2002 meeting that could lead to development of a treatment for autoimmune myocarditis, a life threatening heart disease, characterized by an enlarged heart.  Scientists from the Institute of Human Virology, University of Maryland and CEL-SCI announced the presentation of clinical data with our Multikine as a potentially effective new treatment for HIV-infected women with Human Papilloma Virus (HPV) induced cervical dysplasia at the March 2002 Annual Meeting of the Society of Gynecological Oncologists in Miami, Florida.  After showing protection in animal tests against malaria, herpes simplex and cancer in early studies, CEL-SCI recently expanded their program in malaria by signing a Cooperative Research and Development Agreement with the U.S. Naval Research Institute. CEL-SCI recently announced an agreement with the Cincinnati Children's Hospital Medical Center of the University of Cincinnati to evaluate CEL-1000 for protection against herpes in the guinea pig vaginal challenge model.  CEL-SCI's partner in Asia, Orient Europharma, is planning to take Multikine into a Phase III clinical trial for the treatment of advanced primary oral cancer during 2002 or 2003.  Conclusion Investors will be hard pressed to find a $0.21 cent stock that has almost completed its Phase II trials and should be entering Phase III trials in the near future.  In addition, CEL-SCI also has its lead drug Multikine in Phase I clinical trials in HIV-infected women with HPV induced cervical dysplasia.  This Phase I trial is being conducted at the Institute for Human Virology in Baltimore. Owning shares of CEL-SCI is similar to owning a long term option on a revolutionary new cancer drug. The bonus is that the option never expires.  The company has been public for almost fifteen years.  During this ferocious bear market of the past two and a half years CEL-SCI was able to raise capital in the most unfriendly of environments.  The company has proven itself to be a survivor. CEL-SCI's stock at an all time low thanks to market conditions.  If CEL-SCI's drugs continue to provide favorable clinical results, the company represents an opportunity to enjoy lottery like returns over the longer term. In the short term this stock should rise with the tide of an improving climate for stocks.  There is tremendous potential in what we consider the best "value play" in biotechnology today.  With this potential comes risk.  Take a few dollars of your high risk/high return capital, and own some shares of CEL-SCI before clinical results put this stock on the radar screens of biotech investors. 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