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CEL-SCI Corporation Releases Letter to Shareholders

VIENNA, Va., July 7 /PRNewswire-FirstCall/ -- The following letter is being released by CEL-SCI Corporation (NYSE Amex: CVM) to its shareholders:

Dear Fellow Shareholders:

Recently we have been hearing a great deal about the pandemic caused by the H1N1 swine flu. You may think to yourself, this is no big deal since it does not seem that serious and, look what happened to bird flu - it disappeared. Wrong - on both counts! In this letter I will show you where in the world, outside of the Far East, we already have a potent reservoir of bird flu just waiting to "meet" the swine flu. Once one person infected with a combined bird/swine flu virus gets on a plane, there will be no way to contain that next stage of the continuing pandemic. CEL-SCI scientists and their collaborators are in the process of trying to develop a vaccine/treatment for this eventuality.

Before I get into more details, I want to thank my fellow shareholders for supporting us during the past 9 months of the financial crisis. The crisis severely tested us and we have become better at what we do. In the process we have also defined CEL-SCI to work in three separate business units, all designed to support each other to make an enormous difference for the world and create financial success for our shareholders.

The three business units are:

1) Vaccines/treatment: H1N1 (swine) and other influenza viruses, as

well as a vaccine for rheumatoid arthritis.

2) Unique contract manufacturing services using our new manufacturing

facility near Baltimore, MD to generate additional revenue streams.

3) Our late-stage non-toxic cancer immunotherapy, Multikine, designed

to make the first cancer treatment more successful.

We believe that this combination of assets is fairly unique in the biotechnology industry and explains why we were one of the few companies able to raise a substantial amount of money in recent times.

H1N1 (swine) and other influenza viruses:

As reflected by global events over the Fourth of July holiday, our assets and expertise could prove to be particularly important in battling the H1N1 (swine) flu pandemic. Only last week, Buenos Aires declared a swine flu health emergency amidst escalating morbidity and mortality in the Southern Hemisphere. Argentina's experience in dealing with the winter flu season shows us how challenging our own flu season will likely be this fall and winter, even without the virus getting worse. In the United Kingdom, the country's health secretary said in early July that the U.K. could have more than 100,000 flu cases a day by the end of August. During the weekend, the World Health Organization (WHO) convened a high-level meeting in Cancun, Mexico. At this meeting the WHO's Director General was underscoring the unstoppable nature of swine flu and its potential to mutate - "Constant, random mutation is the survival mechanism of the microbial world. Like all influenza viruses, H1N1 has the advantage of surprise on its side." At the same time, the second and third global cases of Tamiflu-resistant swine flu were reported. Significantly, the third case was reported in a 16-year-old girl (Hong Kong) who was Tamiflu resistant even though she had never been treated with Tamiflu: she was infected with swine flu viruses that already were resistant to Tamiflu.

While it is not yet clear whether the Hong Kong case is a result of resortment (gene-swapping), the advent of Tamiflu-resistant strains of swine flu that have shown the ability to spread is particularly troubling given the rapidly-evolving bird flu situation in one country where public health experts are increasingly concerned about resortment - Egypt. On July 1st, WHO reported that there have been 81 confirmed human cases of H5N1 bird flu in Egypt, of which one-third (27 cases) have been fatal. As the swine flu pandemic rages on, there is a growing risk that H1N1 could find abundant opportunities to swap genes with the bird flu given the prevalence of pigs in Egypt - a common "breeding ground" for viruses that promotes resortment. A further-mutated swine flu virus that combines with the bird flu in Egypt or elsewhere in the world has the potential to be particularly lethal especially if it is Tamiflu-resistant. Knowing this the Egyptian government has been trying to cull the pigs in Egypt, but there has been significant resistance from many groups. History shows that these kinds of government interventions are never completely successful.

That is precisely why we are aggressively pursuing development of the therapeutic and preventative vaccine approaches that our scientists have pioneered. With the world health community perhaps on the verge of losing its third of four flu drug weapons against swine flu - Tamiflu - potentially leaving only Relenza (zanamivir) as the sole option for treatment and prophylaxis, we believe it is critically important to look beyond the swine flu strain originally found to be circulating. We must anticipate its evolution and prepare for mutant strains to appear from remote regions of the globe. Those mutant strains of the virus could possess virulence and other properties that far exceed those of the current strains. We believe the therapeutic and longer-term preventative vaccine approaches we are investigating could address these critical needs. In developing these vaccines, we recognize, as WHO's Director General said in Cancun, "We have the advantages of science, and of rational and rigorous investigation, on our side." We are going to continue leveraging these assets as we try to tackle this persisting and deeply-troubling public health crisis.

Contract manufacturing services:

We recently completed our $22 million manufacturing facility. During the next 3 months, it will be validated for clinical supplies and readied for contract manufacturing. This facility was built to manufacture Multikine for the Phase III trial and sale thereafter. Due to the unique requirements for Multikine, we have developed over the last 10 years a cold fill at this facility which is not available for contract manufacturing anywhere else. This means that we can fill our Multikine into vials in a completely sterile manner not only at room temperature, as everyone else does, but also at 4 degrees Centigrade. For Multikine, this is a critical step since long exposure to room temperature not only "kills" the biological activity of the investigational product, but may also alter the ratios of the biologically active components and therefore change Multikine. Similar needs exist for every other biologic, including stem cell-derived products and biosimilars. Our 4 degree Centigrade cold aseptic fill will be offered to the industry as a contract service. I leave you with one simple thought: how would your life be affected if you did not have a refrigerator or freezer? We believe that the 4 degree Centigrade cold aseptic fill has the same kind of impact on the pharmaceutical/biotechnology drug industry.

Multikine cancer therapy:

We believe that the most critical step the company can take is to enter the pivotal Phase III clinical trial to support marketing applications for Multikine. In published studies, Multikine has been shown to be non-toxic, to increase survival by 33%, and to eliminate the tumor in 12% of the patients after only a 3-week treatment. The recent success of Dendreon with its prostate cancer vaccine has shown that it is possible to stimulate the immune system of cancer patients to increase survival. Dendreon went from about $3 to $27 on that news. The validation of the manufacturing facility is a critical step to starting this Phase III trial.

Our Phase III trial has been designed to remove many of the common clinical trial problems. We have identified the most common reasons for Phase III study failures or failure to receive approval to sell a drug, other than the drug not working, and they are:

1. Phase III study not reviewed by FDA and not acceptable to FDA:

Our Phase III study was reviewed in detail, and we have made changes

based on FDA's comments prior to commencement of the Phase III


2. Study too small:

Our study will enroll about 800 patients, a very sizeable number.

3. Clinical endpoint not relevant:

We follow overall survival of the patients, the gold standard. The

Clinical endpoint cannot be more relevant.

4. Change in treatment protocol between Phase II and Phase III without

additional studies:

We have made no such changes. Therefore, we expect the Phase II

results to be representative of the results one can expect in the

Phase III trial.

5. Insufficient attention to manufacturing issues:

We have validated our manufacturing process and built a dedicated

manufacturing facility for Multikine.

We believe that the success of this study will open cancer therapy to a whole new way of fighting cancer, one that is not toxic and one that works with the body, not against the body. We have high confidence that this study will be successful for the following reasons:

  • All clinical indicators support the finding of increased survival in Phase II.
  • The 10% increase in overall survival needed to meet the Phase III endpoint is substantially smaller than the 33% increase seen in Phase II.
  • No toxicity issues have been identified.
  • No safety issues have been identified.
  • Clear unmet medical need.
  • FDA granted Multikine Orphan Drug status in the USA.

Our clinical success would be huge since Multikine would be on course to become the recommended first-line treatment for head and neck cancer. From there, we could hopefully prove that Multikine is likely to work against other solid tumors as well.

Our ultimate goal in development is to provide patients and physicians with a new and better way of fighting cancer. We believe that the key to doing so lies in our immune system. Dendreon's prostate cancer vaccine recently established that this is possible. Their success is even more impressive because they focused on late-stage cancer patients. We believe that Multikine should have an even greater chance of success because we focus on patients not yet treated for their cancer. Their immune system is still intact, except in the area of the tumor, and their lymphatics have not yet been cut, meaning that they can still deliver immune cells from the local lymph nodes to the tumor.

From here on there is only one thing to do. We will launch the Phase III study as quickly as possible. Success would be phenomenal, and we anticipate that it should enable rapid approval around the world.

We thank you for your continued support.


Geert Kersten

Chief Executive Officer

When used in this report, the words "intends," "believes," "anticipated" and "expects" and similar expressions are intended to identify forward-looking statements. Such statements are subject to risks and uncertainties which could cause actual results to differ materially from those projected. Factors that could cause or contribute to such differences include, an inability to duplicate the clinical results demonstrated in clinical studies, timely development of any potential products that can be shown to be safe and effective, receiving necessary regulatory approvals, difficulties in manufacturing any of the Company's potential products, inability to raise the necessary capital and the risk factors set forth from time to time in CEL-SCI Corporation's SEC filings, including but not limited to its report on Form 10- K/A for the year ended September 30, 2008. The Company undertakes no obligation to publicly release the result of any revision to these forward-looking statements which may be made to reflect the events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

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SOURCE CEL-SCI Corporation
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