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 OCTOBER 20, 2014
PRELIMINARY PROSPECTUS SUPPLEMENT
To Prospectus dated July 8, 2014
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 at a price of $______. For every four
shares sold, we will issue to investors in this offering one warrant. 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 October 17, 2014, the closing price of our
common stock on the NYSE MKT was $0.8495 per share. Our warrants are traded on
the NYSE MKT under the symbol "CVM WS." For a more detailed description of our
common stock and warrants, see the section entitled "Description of Securities"
beginning on page 15 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.
Price Underwriting Discounts Proceeds, Before
to Public and Commissions (1) Expenses, To Us
Per Share $___ $_______ $_______
Per Warrant (2) $___ $_______ $_______
Total $___ $_______ $_______
(1) The underwriters will receive compensation in addition to the underwriting
discount. See "Underwriting" beginning on page 18 of this prospectus for a
description of the compensation payable to the underwriters.
(2) Per quarter of a warrant.
Concurrently with this offering, pursuant to a separate prospectus
supplement and accompanying prospectus, we are offering shares of our common
stock and warrants to purchase shares of common stock in a registered direct
offering. The securities being offered in the registered direct offering are
being offered on the same terms as the securities we are selling in this
offering, i.e. each share of common stock is being sold at a price of $_____.
For every four shares sold, we will issue to investors in this offering one
warrant. 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.
The closing of this offering is not conditioned upon the closing of the
concurrent registered direct offering, and the closing of the concurrent
registered direct offering is not conditioned upon the closing of this offering.
We cannot assure you that either or both of these offerings will be completed on
the terms described herein, or at all. We reserve the right to change the terms
of the concurrent registered direct offering. Nothing in this prospectus
supplement should be construed as an offer to sell, or a solicitation of an
offer to buy, any securities in the concurrent registered direct offering, and
no part of the concurrent registered direct offering is incorporated by
reference in this prospectus supplement.
The underwriter expects to deliver the shares of common stock and warrants
against payment on or before October __, 2014, subject to customary closing
conditions
Laidlaw & Company (UK) Ltd.
Prospectus supplement dated October __, 2014.
1
TABLE OF CONTENTS
Prospectus Supplement
Page
About this Prospectus Supplement 3
Forward-Looking Statements 4
Prospectus Supplement Summary 5
The Offering 10
Risk Factors 11
Use of Proceeds 14
Dilution 14
Description of Securities 15
Concurrent Registered Direct Offering 17
Underwriting 18
Legal Matters 27
Experts 27
Where You Can Find More Information 27
Incorporation of Documents by Reference 28
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 underwriter has
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.
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.
4
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. The information
contained in, and that which can be accessed through, our website is not
incorporated into and does not form a part of this prospectus supplement.
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 U.S. Food and
Drug Administration or 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 seventeen countries around
the world, including the FDA, for a global Phase III clinical trial in advanced
primary (not yet treated) head and neck cancer patients. This 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. At the end of September 2014, approximately 270
patients have been enrolled in the study.
5
This Phase III 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.
In this Phase III clinical trial Multikine is giving immunotherapy to
cancer patients first, 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 HPV, 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.
6
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.
In October 2013, CEL-SCI entered into a co-development and profit sharing
agreement with Ergomed for Multikine in HIV/HPV co-infected men and women with
peri-anal warts. This agreement will initially be in support of the development
with the US Navy. Ergomed will assume up to $3 million in clinical and
regulatory costs.
Also in October 2013, CEL-SCI entered into a co-development and profit
sharing agreement with Ergomed for Multikine in HIV/HPV co-infected women with
cervical dysplasia. HPV is a significant health problem in the HIV infected
population as individuals are living longer as a result of greatly improved HIV
medications. People living with HIV and others with compromised immunity are
more at risk for HPV-related complications. Persistent HPV infection can also be
a precursor to cervical cancer. Ergomed will assume up to $3 million in clinical
and regulatory costs.
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 U.S. 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.
7
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.
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
8
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.
In July 2014, CEL-SCI was awarded a Phase I Small Business Innovation
Research (SBIR) grant in the amount of $225,000 from the National Institute of
Arthritis Muscoskeletal and Skin Diseases (NIAMS), which is part of the National
Institutes of Health (NIH). The grant will fund the further development of
CEL-2000 and the work will be conducted in collaboration with scientists at Rush
University Medical Center in Chicago, Illinois.
Concurrent Registered Direct Offering
Concurrently with this offering, pursuant to a separate prospectus
supplement and accompanying prospectus, we are offering shares of our common
stock and warrants in a registered direct offering, which we refer to as the
"registered direct offering." The securities being offered in the registered
direct offering are being offered on the same terms as the securities we are
selling in this offering, i.e. each share of common stock is being sold at a
price of $_____. For every four shares sold, we will issue to investors in the
registered direct offering one warrant. 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.
The closing of this offering is not conditioned upon the closing of the
concurrent registered direct offering, and the closing of the concurrent
registered direct offering is not conditioned upon the closing of this offering.
We cannot assure you that either or both of the offerings will be completed. The
foregoing description and other information regarding the registered direct
offering is included herein solely for informational purposes. Nothing in this
prospectus supplement should be construed as an offer to sell, or a solicitation
of an offer to buy, any common stock in the registered direct offering, and no
part of the registered direct offering is incorporated by reference in this
prospectus supplement.
9
CEL-SCI CORPORATION
THE OFFERING
Common stock we are offering _________ shares
Common stock to be outstanding _________ shares
immediately after this offering
(assuming all shares offered are sold)
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. Our warrants
trade on the NYSE MKT under the symbol
"CVM WS."
Concurrent registered direct
offering Concurrently with this offering, pursuant
to a separate prospectus supplement and
accompanying prospectus, we are offering
shares of our common stock and warrants
to purchase shares of common stock from
us, on the same terms and conditions, in a
registered direct offering. See
"Concurrent Registered Direct Offering" in
this prospectus supplement.
This offering is not contingent upon the
concurrent registered direct offering, and
the concurrent registered direct offering
is not contingent upon this offering. We
cannot assure you that either or both of
these offerings will be completed on the
terms described herein, or at all. We
reserve the right to change the terms of
the concurrent registered direct offering.
Nothing in this prospectus supplement
should be construed as an offer to sell,
or a solicitation of an offer to buy, any
securities in the concurrent registered
direct offering, and no part of the
concurrent registered direct offering is
incorporated by reference in this
prospectus supplement.
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
10
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 11 of
this prospectus supplement and page 12 of
the accompanying prospectus set forth
under the headings "Risk Factors" and all
other information set forth in this
prospectus supplement, 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 - NYSE MKT CVM WS
Unless we indicate otherwise, the number of shares to be outstanding after
this offering is based on 81,902,471 shares of our common stock outstanding as
of the date of this prospectus (without giving effect to the concurrent
registered direct offering), but excludes approximately 40,677,000 shares which
may be issued upon the exercise of outstanding options and warrants or the
conversion of a note. All common stock price per share, stock option and warrant
exercise price data reflects a 1-for-10 reverse stock split of our authorized
and issued and outstanding shares of common stock, options and warrants which
was effective as of September 25, 2013. Unless otherwise indicated, the
information in this prospectus supplement assumes that the underwriter 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, 2013, filed with the SEC on December 27, 2013, 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 and the concurrent registered direct offering.
We currently intend to use the net proceeds from this offering and the
concurrent registered direct offering for our Phase III clinical trial, other
research and development, and general and administrative expenses. See "Use of
Proceeds" on page 14. We have not designated the amount of net proceeds we will
receive from this offering and the concurrent registered direct offering for any
particular purpose. Accordingly, our management will have broad discretion as to
11
the application of these net proceeds and could use them for purposes other than
those contemplated at the time of this offering and the concurrent registered
direct 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, 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.
In addition to the shares of common stock we are issuing in this offering
and the concurrent registered direct offering, we are also issuing warrants to
purchase shares of our common stock. We will issue one warrant for each four
shares we sell in this offering. If the holders of our warrants exercise the
warrants, you will experience dilution at the time they exercise their warrants.
In addition, 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.
12
Our outstanding options and warrants may adversely affect the trading price of
our common stock.
As of September 30, 2014, there were outstanding options which allows the
holders to purchase approximately 6,840,000 shares of our common stock, at
prices ranging between $0.85 and $20.00 per share, outstanding warrants which
allow the holders to purchase approximately 36,542,000 shares of our common
stock, at prices ranging between $0.53 and $5.50 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
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.
We may have exposure for certain securities we sold in October 2013.
In September 2012, we filed a shelf registration statement covering the
sale of $50,000,000 of securities (the "2012 Registration Statement"), and in
January 2013 we filed another shelf registration statement covering the sale of
an additional $50,000,000 of securities (the "2013 Registration Statement"). In
October 2013, we filed a prospectus supplement to the 2012 Registration
Statement for the sale in an underwritten public offering of 17,826,087 shares
of our common stock, 20,475,000 Series S Warrants, as well as up to 20,475,000
shares of common stock issuable upon the exercise of the Series S warrants (the
"October Prospectus"). Collectively, we offered approximately $43.4 million of
securities pursuant to the October Prospectus. This amount includes
approximately $17.8 million for the sale of the common stock and Series S
warrants and $25.6 million upon the exercise of the Series S Warrants. We
subsequently realized that at the time of the October 2013 offering we had
approximately $28.9 million available for issuance under the 2012 Registration
Statement. As a result, we issued securities that were not registered with the
SEC, and that may not have been eligible for an exemption from registration
under the federal or state securities laws. We had securities available under
the 2013 Registration Statement to register all of the securities not covered by
the 2012 Registration Statement. In December 2013, we filed a prospectus
supplement to the 2013 Registration Statement registering the offer and sale of
all of the shares of common stock issuable upon exercise of the Series S
Warrants included in the October 2013 offering to assure that the offering and
sale of all of the shares issuable upon exercise of the Series S Warrants were
registered (the "December Prospectus"). Prior to the filing of the December
Prospectus, no Series S Warrants issued in the October offering had been
exercised. Notwithstanding the above, the actions we have taken to mitigate our
possible non-compliance with securities laws will not prevent regulators from
asserting that we violated the law, from imposing penalties and fines against us
with respect to any potential violations of securities laws, and may subject us
to possible claims for damages from certain investors.
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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 $________ after
deducting the underwriter's commissions and the offering expenses payable by us.
We intend to use the net proceeds from this offering, together with the net
proceeds from the concurrent registered direct 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 the concurrent registered direct 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.
This offering is not contingent upon the concurrent registered direct
offering, and the concurrent registered direct offering is not contingent upon
this offering. We cannot assure you that either or both of these offerings will
be completed on the terms described herein, or at all. We reserve the right to
change the terms of the concurrent registered direct offering. Nothing in this
prospectus supplement should be construed as an offer to sell, or a solicitation
of an offer to buy, any securities in the concurrent registered direct offering,
and no part of the concurrent registered direct offering is incorporated by
reference in this prospectus supplement.
14
DILUTION
If you purchase our securities in this offering, your interest will be
diluted as discussed below.
Net tangible book value per share is determined by dividing our total
tangible assets, less our total liabilities, by the number of our outstanding
shares of common stock. Our historical net tangible book value per share as of
June 30, 2014 was $0.22 per share computed using our outstanding shares as of
June 30, 2014 (66,041,612). Our pro forma net tangible book value per share as
of June 30, 2014 was $0.18 per share computed giving effect to the issuance of
approximately 15,900,000 additional shares of our common issued subsequent to
June 30, 2014. We did not receive any cash or property in connection with the
issuance of the 15,900,000 shares.
Dilution in pro forma 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 pro forma 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, and after deducting the underwriter's commission and estimated
offering expenses payable by us, our as-adjusted pro forma net tangible book
value as of June 30, 2014 would have been approximately $_________, (unaudited)
or $___ per share. This represents an immediate increase in the pro forma net
tangible book value of $____ per share to existing stockholders and the
immediate dilution in the pro forma 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 $___
Historical net tangible book value per share as of June 30, 2014 $0.22
Pro forma net tangible book value per share as of June 30, 2014 $0.18
Pro forma net tangible book value per share as of June 30, 2014,
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 $___
The above discussion and table assumes that all of the shares of common
stock offered by means of this prospectus are sold but none of the warrants sold
in this offering are exercised. The number of outstanding shares at June 30,
15
2014 excludes approximately 43,034,000 shares of common stock (40,677,000 shares
as of the date of this prospectus) 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
the date of this prospectus, we had 81,902,471 shares of common stock
outstanding (without giving effect to the concurrent registered direct
offering). 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: The warrants trade on the NYSE MKT under the symbol
"CVM WS". The warrants will be issued in registered form under a warrant agent
agreement with Computershare, Inc., as warrant agent.
16
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.
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.
17
CONCURRENT REGISTERED DIRECT OFFERING
Concurrently with this offering, and pursuant to a separate prospectus
supplement and accompanying prospectus, we are offering up shares of our common
stock and warrants to purchase shares of common stock in a registered direct
offering.
The securities being offered in the registered direct offering are being
offered on the same terms as the securities we are selling in this offering,
i.e. each share of common stock is being sold at a price of $_____. For every
four shares sold, we will issue to investors in this offering one warrant. 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.
This offering is not contingent upon the concurrent registered direct
offering, and the concurrent registered direct offering is not contingent upon
this offering. We cannot assure you that either or both of these offerings will
be completed on the terms described herein, or at all. We reserve the right to
change the terms of the concurrent registered direct offering. This description
and the other information in this prospectus supplement regarding the concurrent
registered direct offering is included in this prospectus supplement for
informational purposes only. Nothing in this prospectus supplement should be
construed as an offer to sell, or a solicitation of an offer to buy, any
securities in the concurrent registered direct offering, and no part of the
concurrent registered direct offering is incorporated by reference in this
prospectus supplement.
UNDERWRITING
Laidlaw & Company (UK) Ltd. is acting as the representative of the
underwriters. We have entered into an underwriting agreement with the
representative. Subject to the terms and conditions of the underwriting
agreement, we have agreed to offer and sell to investors identified by the
underwriters, up to shares of common stock and up to warrants at the public
offering price shown on the cover page of this prospectus supplement. The
Company will pay the underwriters the commission set forth on the cover page of
this prospectus supplement.
This offering is being completed on a "best efforts" basis and the
underwriters have no obligation to buy any shares of our common stock or
warrants from us or to arrange for the purchase or sale of any specific number
or dollar amount of shares or 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
18
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.
Underwriting Commissions and Offering Expenses
The underwriters propose to offer the common stock and warrants to the
public at the public offering price shown below. The underwriters may offer the
common stock and warrants to securities dealers at the price to the public less
a concession.
The following table shows the public offering price, underwriting
commissions and proceeds, before expenses, to us:
Per Share of
Common Stock
and Warrant Total
----------- -----
Public offering price $_____ $______
Underwriting commissions to be paid by us $_____ $______
Proceeds, before expenses, to us $_____ $______
We have agreed to pay Laidlaw & Company (UK) Ltd., the representative of
the underwriters of this offering, a non-accountable expense allowance equal to
1% of the total public offering price for the securities offered and sold
pursuant to this prospectus.
We have agreed to pay the representatives, to the extent permitted pursuant
to FINRA Rule 5110(f)(K), a cash fee equal to 5% of the cash proceeds received
from a cash exercise of the warrants offered pursuant this prospectus supplement
and accompanying prospectus.
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 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)); (e) 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; (f) the costs of
all mailing and printing of the underwriting documents as the representative may
reasonably deem necessary; (g) the costs of preparing, printing and delivering
certificates representing the securities sold in this Offering; (h) fees and
expenses of our transfer agent; (i) stock transfer and/or stamp taxes, if any,
payable upon the transfer of securities from the Company to the representative;
(j) the fees and expenses of our accountants; and (k) the fees and expenses of
our legal counsel and other agents and representatives.
We estimate our total expenses associated with the offering, excluding
underwriting commissions, will be approximately $50,000.
19
Discretionary Accounts
The underwriters do not intend to confirm sales of the securities offered
hereby to any accounts over which they have discretionary authority.
Lock-Up Agreements
Pursuant to certain "lock-up" agreements, we, our executive officers and
directors have agreed, subject to certain exceptions, not to offer, sell,
assign, transfer, pledge, contract to sell, or otherwise dispose of or announce
the intention to otherwise dispose of, or enter into any swap, hedge or similar
agreement or arrangement that transfers, in whole or in part, the economic risk
of ownership of, directly or indirectly, engage in any short selling of any
common stock or securities convertible into or exchangeable or exercisable for
any common stock, whether currently owned or subsequently acquired, without the
prior written consent of the underwriter, for a period of sixty (60) days from
the effective date of the offering.
The lock-up period described in the preceding paragraphs will be
automatically extended if: (1) during the last 17 days of the restricted period,
we issue an earnings release or announce material news or a material event; or
(2) prior to the expiration of the lock-up period, we announce that we will
release earnings results during the 16-day period beginning on the last day of
the lock-up period, in which case the restrictions described in the preceding
paragraph will continue to apply until the expiration of the 18-day period
beginning on the date of the earnings release, unless the representative waives
this extension in writing.
Laidlaw & Company (UK) Ltd. may, in its sole discretion and at any time or
from time to time before the termination of the 60-day period release all or any
portion of the securities subject to lock-up agreements. There are no existing
agreements between the underwriters and any of our stockholders who will execute
a lock-up agreement, providing consent to the sale of shares prior to the
expiration of the lock-up period.
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.
Stabilization
In connection with this offering, the underwriters may engage in
stabilizing transactions, syndicate covering transactions and penalty bids.
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 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
20
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 commission 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
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 and warrants for sale to
their online brokerage account holders. The common stock and warrants will be
allocated to underwriters that may make Internet distributions on the same basis
as other allocations. In addition, common stock and warrants may be sold by the
underwriters to securities dealers who resell the common stock and warrants 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 the registration statement of which this prospectus
supplement forms a part, has not been endorsed by us and should not be relied on
by investors in deciding whether to purchase our common stock or warrants. The
underwriters are not responsible for information contained in websites that they
do not maintain.
21
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.
Laidlaw & Co. (UK) is also acting as a financial advisor to the Company in
connection with the concurrent registered direct offering and will receive a
cash fee equal to 1% of the aggregate purchase price paid by each purchaser of
securities in the concurrent registered direct offering.
Offer Restrictions Outside the United States
Other than in the United States, no action has been taken by us or the
underwriters that would permit a public offering of the securities offered by
this prospectus in any jurisdiction where action for that purpose is required.
The securities offered by this prospectus may not be offered or sold, directly
or indirectly, nor may this prospectus or any other offering material or
advertisements in connection with the offer and sale of any such securities be
distributed or published in any jurisdiction, except under circumstances that
will result in compliance with the applicable rules and regulations of that
jurisdiction. Persons into whose possession this prospectus comes are advised to
inform themselves about and to observe any restrictions relating to the offering
and the distribution of this prospectus. This prospectus does not constitute an
offer to sell or a solicitation of an offer to buy any securities offered by
this prospectus in any jurisdiction in which such an offer or a solicitation is
unlawful.
European Economic Area
In relation to each Member State of the European Economic Area which has
implemented the Prospectus Directive (each, a "Relevant Member State"), with
effect from and including the date on which the Prospectus Directive is
implemented in that Relevant Member State (the "Relevant Implementation Date"),
our securities will not be offered to the public in that Relevant Member State
prior to the publication of a prospectus in relation to the securities that has
been approved by the competent authority in that Relevant Member State or, where
appropriate, approved in another Relevant Member State and notified to the
competent authority in that Relevant Member State, all in accordance with the
Prospectus Directive, except that, with effect from and including the Relevant
Implementation Date, an offer of securities may be made to the public in that
Relevant Member State at any time:
o to any legal entity that is a qualified investor as defined in the
Prospectus Directive;
o to fewer than 100 or, if the Relevant Member State has implemented the
relevant provision of the 2010 PD Amending Directive, 150, natural or
legal persons (other than qualified investors as defined in the
Prospectus Directive), as permitted under the Prospectus Directive,
subject to obtaining the prior consent of the manager for any such
offer; or
o in any other circumstances which do not require the publication by the
issuer of a prospectus pursuant to Article 3(2) of the Prospectus
Directive.
22
For the purposes of this provision, the expression an "offer of common
shares to the public" in relation to any shares in any Relevant Member State
means the communication in any form and by any means of sufficient information
on the terms of the offer and the common shares to be offered so as to enable an
investor to decide to purchase or subscribe the common shares, as the same may
be varied in that Relevant Member State by any measure implementing the
Prospectus Directive in that Relevant Member State and the expression
"Prospectus Directive" means Directive 2003/71/EC (and amendments thereto,
including the 2010 PD Amending Directive, to the extent implemented in the
Relevant Member State), and includes any relevant implementing measure in each
Relevant Member State and the expression "2010 PD Amending Directive" means
Directive 2010/73/EU.
The sellers of the securities have not authorized and do not authorize the
making of any offer of shares through any financial intermediary on their
behalf, other than offers made by the underwriters with a view to the final
placement of the shares as contemplated in this prospectus supplement.
Accordingly, no purchaser of the securities, other than the underwriters, is
authorized to make any further offer of the shares on behalf of the sellers or
the underwriters.
United Kingdom
Our securities may not be offered or sold and will not be offered or sold
to any persons in the United Kingdom other than persons whose ordinary
activities involve them in acquiring, holding, managing or disposing of
investments (as principal or as agent) for the purposes of their businesses and
in compliance with all applicable provisions of the Financial Services and
Markets Act 2000 ("FSMA") with respect to anything done in relation to our
securities in, from or otherwise involving the United Kingdom.
In addition, each underwriter:
o has only communicated or caused to be communicated and will only
communicate or cause to be communicated an invitation or inducement to
engage in investment activity (within the meaning of section 21 of
FSMA) to persons who have professional experience in matters relating
to investments falling within Article 19(5) of the Financial Services
and Markets Act of 2000 (Financial Promotion) Order 2005 or in
circumstances in which section 21 of FSMA does not apply to the
company; and
o has complied with, and will comply with all applicable provisions of
FSMA with respect to anything done by it in relation to the securities
in, from or otherwise involving the United Kingdom.
Australia
No prospectus or other disclosure document (as defined in the Corporations
Act 2001 (Cth) of Australia ("Corporations Act")) in relation to the securities
has been or will be lodged with the Australian Securities & Investments
Commission ("ASIC"). This document has not been lodged with ASIC and is only
directed to certain categories of exempt persons. Accordingly, if you receive
this document in Australia:
(a) you confirm and warrant that you are either:
23
(i) a "sophisticated investor" under section 708(8)(a) or (b)
of the Corporations Act;
(ii) a "sophisticated investor" under section 708(8)(c) or (d)
of the Corporations Act and that you have provided an accountant's certificate
to us which complies with the requirements of section 708(8)(c)(i) or (ii) of
the Corporations Act and related regulations before the offer has been made;
(iii) a person associated with the company under section
708(12) of the Corporations Act; or
(iv) a "professional investor" within the meaning of section
708(11)(a) or (b) of the Corporations Act, and to the extent that you are unable
to confirm or warrant that you are an exempt sophisticated investor, associated
person or professional investor under the Corporations Act any offer made to you
under this document is void and incapable of acceptance; and
(b) you warrant and agree that you will not offer any of the
securities for resale in Australia within 12 months of those securities being
issued unless any such resale offer is exempt from the requirement to issue a
disclosure document under section 708 of the Corporations Act.
Hong Kong
The securities may not be offered or sold in Hong Kong by means of any
document other than (i) in circumstances which do not constitute an offer to the
public within the meaning of the Companies Ordinance (Cap. 32, Laws of Hong
Kong), or (ii) to "professional investors" within the meaning of the Securities
and Futures Ordinance (Cap. 571, Laws of Hong Kong) and any rules made
thereunder, or (iii) in other circumstances which do not result in the document
being a "prospectus" within the meaning of the Companies Ordinance (Cap. 32,
Laws of Hong Kong) and no advertisement, invitation or document relating to the
shares may be issued or may be in the possession of any person for the purpose
of issue (in each case whether in Hong Kong or elsewhere), which is directed at,
or the contents of which are likely to be accessed or read by, the public in
Hong Kong (except if permitted to do so under the laws of Hong Kong) other than
with respect to securities which are or are intended to be disposed of only to
persons outside Hong Kong or only to "professional investors" within the meaning
of the Securities and Futures Ordinance (Cap. 571, Laws of Hong Kong) and any
rules made thereunder.
Japan
The securities offered in this prospectus supplement have not been and will
not be registered under the Financial Instruments and Exchange Law of Japan. The
securities have not been offered or sold and will not be offered or sold,
directly or indirectly, in Japan or to or for the account of any resident of
Japan (including any corporation or other entity organized under the laws of
Japan), except (i) pursuant to an exemption from the registration requirements
of the Financial Instruments and Exchange Law and (ii) in compliance with any
other applicable requirements of Japanese law.
24
Singapore
This prospectus supplement has not been registered as a prospectus with the
Monetary Authority of Singapore. Accordingly, this prospectus supplement and any
other document or material in connection with the offer or sale, or invitation
for subscription or purchase, of the securities may not be circulated or
distributed, nor may the securities be offered or sold, or be made the subject
of an invitation for subscription or purchase, whether directly or indirectly,
to persons in Singapore other than (i) to an institutional investor under
Section 274 of the Securities and Futures Act, Chapter 289 of Singapore (the
"SFA"), (ii) to a relevant person pursuant to Section 275(1), or any person
pursuant to Section 275(1A), and in accordance with the conditions specified in
Section 275 of the SFA or (iii) otherwise pursuant to, and in accordance with
the conditions of, any other applicable provision of the SFA, in each case
subject to compliance with conditions set forth in the SFA.
Where the securities are subscribed or purchased under Section 275 of the
SFA by a relevant person which is:
o a corporation (which is not an accredited investor (as defined in
Section 4A of the SFA)) the sole business of which is to hold
investments and the entire share capital of which is owned by one or
more individuals, each of whom is an accredited investor; or
o a trust (where the trustee is not an accredited investor) whose sole
purpose is to hold investments and each beneficiary of the trust is an
individual who is an accredited investor, shares, debentures and units
of shares and debentures of that corporation or the beneficiaries'
rights and interest (howsoever described) in that trust shall not be
transferred within six months after that corporation or that trust has
acquired the shares pursuant to an offer made under Section 275 of the
SFA except:
o to an institutional investor (for corporations, under Section 274 of
the SFA) or to a relevant person defined in Section 275(2) of the SFA,
or to any person pursuant to an offer that is made on terms that such
shares, debentures and units of shares and debentures of that
corporation or such rights and interest in that trust are acquired at
a consideration of not less than $200,000 (or its equivalent in a
foreign currency) for each transaction, whether such amount is to be
paid for in cash or by exchange of securities or other assets, and
further for corporations, in accordance with the conditions specified
in Section 275 of the SFA;
o where no consideration is or will be given for the transfer; or
o where the transfer is by operation of law.
Switzerland
The securities may not be publicly offered in Switzerland and will not be
listed on the SIX Swiss Exchange (SIX) or on any other stock exchange or
regulated trading facility in Switzerland. This document has been prepared
without regard to the disclosure standards for issuance prospectuses under art.
652a or art. 1156 of the Swiss Code of Obligations or the disclosure standards
for listing prospectuses under art. 27 ff. of the SIX Listing Rules or the
listing rules of any other stock exchange or regulated trading facility in
Switzerland. Neither this document nor any other offering or marketing material
25
relating to the securities or the offering may be publicly distributed or
otherwise made publicly available in Switzerland.
Neither this document nor any other offering or marketing material relating
to the offering, us, or the securities have been or will be filed with or
approved by any Swiss regulatory authority. In particular, this document will
not be filed with, and the offer of shares will not be supervised by, the Swiss
Financial Market Supervisory Authority FINMA (FINMA), and the offer of shares
has not been and will not be authorized under the Swiss Federal Act on
Collective Investment Schemes (CISA). The investor protection afforded to
acquirers of interests in collective investment schemes under the CISA does not
extend to acquirers of the shares. Canada
Resale Restrictions
The distribution of our securities in Canada is being made only in the
provinces of Ontario, Quebec, Alberta, British Columbia and Manitoba on a
private placement basis exempt from the requirement that we prepare and file a
prospectus with the securities regulatory authorities in each province where
trades of common stock are made. Any resale of the common stock in Canada must
be made under applicable securities laws which may vary depending on the
relevant jurisdiction, and which may require resales to be made under available
statutory exemptions or under a discretionary exemption granted by the
applicable Canadian securities regulatory authority. Purchasers are advised to
seek legal advice prior to any resale of the common stock.
Representations of Purchasers
By purchasing securities in Canada and accepting delivery of a purchase
confirmation, a purchaser is representing to us and the dealer from whom the
purchase confirmation is received that:
o the purchaser is entitled under applicable provincial securities laws
to purchase the securities without the benefit of a prospectus
qualified under those securities laws as it is an "accredited
investor" as defined under National Instrument 45-106--Prospectus and
Registration Exemptions,
o the purchaser is a "Canadian permitted client" as defined in National
Instrument 31-103--Registration Requirements and Exemptions, or as
otherwise interpreted and applied by the Canadian Securities
Administrators,
o where required by law, the purchaser is purchasing as principal and
not as agent,
o the purchaser has reviewed the text above under Resale Restrictions,
and
o the purchaser acknowledges and consents to the provision of specified
information concerning the purchase of the securities to the
regulatory authority that by law is entitled to collect the
information, including certain personal information. For purchasers in
Ontario, questions about such indirect collection of personal
information should be directed to Administrative Support Clerk,
Ontario Securities Commission, Suite 1903, Box 55, 20 Queen Street
West, Toronto, Ontario M5H 3S8 or on (416) 593-3684.
26
Rights of Action--Ontario Purchasers
Under Ontario securities legislation, certain purchasers who purchase any
securities offered by this prospectus supplement and accompanying prospectus
during the period of distribution will have a statutory right of action for
damages, or while still the owner of the securities, for rescission against us
in the event that this prospectus supplement and accompanying prospectus contain
a misrepresentation without regard to whether the purchaser relied on the
misrepresentation. The right of action for damages is exercisable not later than
the earlier of 180 days from the date the purchaser first had knowledge of the
facts giving rise to the cause of action and three years from the date on which
payment is made for the securities. The right of action for rescission is
exercisable not later than 180 days from the date on which payment is made for
the securities. If a purchaser elects to exercise the right of action for
rescission, the purchaser will have no right of action for damages against us.
In no case will the amount recoverable in any action exceed the price at which
the securities were offered to the purchaser and if the purchaser is shown to
have purchased the securities with knowledge of the misrepresentation, we will
have no liability. In the case of an action for damages, we will not be liable
for all or any portion of the damages that are proven to not represent the
depreciation in value of the common stock as a result of the misrepresentation
relied upon. These rights are in addition to, and without derogation from, any
other rights or remedies available at law to an Ontario purchaser. The foregoing
is a summary of the rights available to an Ontario purchaser. Ontario purchasers
should refer to the complete text of the relevant statutory provisions.
LEGAL MATTERS
The validity of the issuance of the securities offered hereby will be
passed upon for us by Hart & Hart LLC, Denver, Colorado. Certain legal matters
will be passed upon for the underwriters by Sichenzia Ross Friedman Ference, New
York, NY.
EXPERTS
The financial statements as of September 30, 2013 and 2012 and for each of
the three years in the period ended September 30, 2013 and management's
assessment of the effectiveness of internal control over financial reporting as
of September 30, 2013 incorporated by reference in this Prospectus have been so
incorporated in reliance on the reports of BDO USA, LLP, an independent
registered public accounting firm, incorporated 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
27
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 us 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,
2013.
o Report on Form10-Q for the three months ended December 31, 2013, March
31, 2014 and June 30, 2014.
o Current Reports on Form 8-K, which were filed with the SEC on October
10, 2013, October 11, 2013, November 1, 2013, December 19, 2013,
December 24, 2013, April 14, 2014, April 15, 2014, April 18, 2014,
July 23, 2014 and August 7, 2014.
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