VIENNA, Va., Aug. 14 CEL-SCI CORPORATION(Amex: CVM) announced today that it has entered into an agreement with abiomedical real estate group under which CEL-SCI acquires long term use of adedicated manufacturing facility for its cancer drug Multikine(R). Thefinancial value of this transaction to CEL-SCI is about $15 million. Thisfacility is located near Baltimore, Maryland. Once fully built out to CEL-SCI's specifications, the facility will produce Multikine for both its PhaseIII clinical trials for head and neck cancer, as well as other cancers, andfollowing marketing approval, for sale. This transaction is of greatimportance to CEL-SCI because it allows the Company to preserve its cash and,at the same time, pursue the development of its cancer drug in the mostprudent manner.
BioRealty, Inc., a privately held real estate firm specializing in thebiomedical sector, acquired the facility and is responsible for its build outpursuant to CEL-SCI's specifications. CEL-SCI leases the facility for 20years, with options to extend the lease or purchase the facility at a latertime. BioRealty, Inc. also committed to provide development managementservices and funding for the build-out of this facility, which, once fullybuilt out, will be able to supply over $1 billion worth of drug. The Companyhad entered into a letter of intent with BioRealty on this transaction inJanuary 2007.
The manufacturing facility will allow the Company to produce Multikine, abiologic, in the same manufacturing facility for Phase III clinical trials asfor commercial production. Regulatory authorities prefer to see biologicssuch as Multikine produced in the same manufacturing facility for Phase IIIclinical trials and the sale of the product because this arrangement helps toensure that the drug lots used to conduct the clinical trials will beconsistent with those that will be marketed subsequent to approval.
Although some biotech companies outsource their manufacturing, this can berisky with biologics because they require intense manufacturing and processcontrol. With biologic products a minor change in manufacturing and processcontrol can result in a major change in the final product. Good andconsistent manufacturing and process control is critical and is best assuredif the product is manufactured and controlled in the manufacturer's ownfacility by their own specially trained personnel. In fact, there have beenmany situations in which companies had to repeat their Phase III trials orperform an additional clinical bridging study to address regulatory concernsresulting from outsourced manufacturing. This has led to enormous costs andlengthy delays in getting biotech drugs to market. In addition, using acontract manufacturer ties the company's approval to the manufacturingfacility of the contractor, further reducing the level of control by thecompany.
Geert Kersten, Chief Executive Officer of CEL-SCI said, "Manufacturingbiologics is such an expensive endeavor that most biotech companies partnerwith larger companies, and in the process give up their marketing rights. Thefunding with BioRealty, Inc. will allow us to keep the marketing rights,thereby giving our shareholders the greatest value creation. Now that thesignificant hurdle of manufacturing has been tackled, we are able to focus ongetting Multikine through Phase III, and ultimately to patients."
Stan Wendzel, Managing Director of BioRealty, Inc. said, "After havingcompleted the due diligence on both CEL-SCI and its Multikine product, werecognized that CEL-SCI may fundamentally change the standard method fortreating cancer in the future. At the same time we also recognize thechallenges faced by any Phase III biotech company wishing to self-fund amanufacturing facility. With CEL-SCI's help we were able to devise a client-tailored financing approach for their facility, which allows CEL-SCI topreserv