Cel-Sci Chairman Sells Stock, Despite Sweetheart Loan Deal: BioBuzz

VIENNA, Va. (TheStreet) -- Cel-Sci(CVM Quote) founder and chairman Maximilian de Clara sold nearly one quarter of his common stock holdings in the company, according to a late Friday filing with the Securities and Exchange Commission.

De Clara sold 100,000 shares of Cel-Sci common stock on Nov. 18 at $1.34 a share, leaving him with a bit more than 351,000 shares remaining, according to the SEC filing. De Clara sold his stock on the day that Cel-Sci announced the start of a preclinical study of its LEAPS-H1N1 flu drug.

Cel-Sci shares closed Friday at $1.30.

De Clara's stock sale is noteworthy but perhaps not as much as the generous repayment terms he negotiated for himself when he lent Cel-Sci $1.1 million earlier this year.

This loan, details of which are disclosed in Cel-Sci's SEC filings, truly enriches de Clara at the expense of Cel-Sci shareholders.

The $1.1 million loan from de Clara to Cel-Sci bears an unusually high 15% interest rate. The loan was supposed to be repaid last March, but was extended until June. As a reward for lending the cash, Cel-Sci granted de Clara 1.65 million warrants exercise-able at 40 cents a share.

In June, Cel-Sci decided not to repay the de Clara loan, even though the company had the necessary money. In addition to extending the loan repayment, Cel-Sci granted de Clara another 1.85 million warrants exercise-able at 50 cents a share.

Cel-Sci also allowed de Clara to ask for repayment of the loan in discounted company stock instead of cash. If the loan is repaid in this way, de Clara will receive more than 2.7 million shares, priced at 40 cents a share.

Oh, and the loan is also secured by nearly all of Cel-Sci's assets, and the company is not allowed to repay the loan without de Clara's permission.

Talk about executive feather-bedding!

FDA Issues New Obesity Drug Heart Warning

(At 8:15 a.m. ET)

Abbott Labs'(ABT Quote) weight-loss drug Meridia may cause a higher incident of heart-related adverse events, including heart attacks, strokes and death, than patients using a placebo, according to preliminary data flagged in an alert by the U.S. Food and Drug Administration late Friday.

The new, unexpected warning about a possibly serious side effect related to an approved weight-loss drug comes at an inopportune time for the three small drugmakers -- Arena Pharmaceuticals(ARNA Quote), Vivus(VVUS Quote) and Orexigen Therapeutics(OREX Quote) -- which will soon seek regulatory approval for new obesity drugs.

Meridia is a weight-loss drug approved in 1997. As part of its post-approval commitments, Abbott has been conducting a large study of 10,000 patients to determine whether treatment with Meridia could reduce the number of heart-related adverse events compared to a placebo.

In mid-November, however, Abbott reported to regulatory agencies that treatment with Meridia was associated with an 11.4% rate of cardiovascular events compared to 10% for patients treated with placebo.

"This difference is higher than expected, suggesting that sibutramine is associated with an increased cardiovascular risk in the study population," said the FDA in its statement released Friday evening. Sibutramine is the scientific name for Meridia.

Meridia's label already comes with a warning that the drug should not be used in patients with a history of heart disease. An Abbott spokesman told Dow Jones Newswire that most of the patients in the study would not normally be prescribed Meridia because they had some form of heart disease, therefore the company doesn't believe that the safety profile of Meridia has changed.