Big Pharma's Paradigm Shift = Biotech Investment Opportunity With both the market and the economy apparently poised to begin improving, I know we're all interested in trading ideas that will start the portfolio-recovery process. What's interesting about today's idea, though, is how the bear market may have actually obscured the opportunity's development. Today I'm going to remedy that by specifically pointing out the paradigm shift the big pharmaceutical companies underwent in 2008, and then highlighting a company that's well-positioned to benefit from the industry's overhaul.  And, I think you're going to like it - there's some significant upside potential for investors from this familiar stock.  First things first though. Just to set the tone, consider the following quotes, statements, or plans from some of the biggest names in the pharmaceutical world. All of them came in 2008, and all of them were quite different than the tunes being sung during and before 2007.    Proof of the Pudding Martin Mackay, Pfizer's (NYSE: PFE) head of R&D, said during the latter part of 2008 the company is taking a direction away from heart drug development and obesity treatment (e.g. Lipitor), and will be redirecting their attention on more "valuable" drugs... like treatments for Alzheimer's and cancer. His exact words? "We still see the programs that we're stopping as having value. They're just not as valuable as other programs, like Alzheimer's or oncology." Pfizer now has seven cancer programs in Phase III trials. Eli Lilly (NYSE: LLY) finalized their acquisition of ImClone in the third quarter of 2008. Now, this was an interesting mix of two different types of pharma companies. Lilly wasn't exactly known for tackling major, life-threatening illnesses. Zyprexa and Cymbalta are worthy treatments for psychological disorders, and Cialis has found a market as well. (And to Lilly's credit, they do have a cancer treatment in Gemzar.) Overall though, Eli isn't - or wasn't - saving lives on a daily basis.  So what? Think about this... what's ImClone got in a big way that Eli didn't? That's right - a cancer drug. The first generation of Erbitux is just so-so, but I think Lilly is eyeing the next generation of ImClone's cancer technology. Here's the compelling part though.... Lilly doesn't even technically 'own' the Erbitux technology, but rather paid $6.5 billion just for marketing rights. I'd call that a strong indication of just how committed they are to getting a piece of the cancer drug market. (If you're convinced of my point, you can skip the next two paragraphs and proceed to the next section. If you want the full effect, the next two paragraphs are relatively short.)  GlaxoSmithKline's (NYSE: GSK) - which makes drugs for what seems like every pharmaceutical category - has been slowly but methodically turning their attention to cancer vaccines and immunotherapy. Breast cancer treatment Tyverb, melanoma treatment Elesclomol, cervical cancer vaccine Cervarix, and multi-cancer treatment pazopanib all hold strong promise. However, in the middle of the year Glaxo's CEO Andrew Witty overhauled their entire research strategy to refocus on areas of most "value". The segment pushed to the top was, you guessed it, oncology. Care to know why Roche is so interested in acquiring the remainder of Genentech (NYSE: DNA) (which they own half of so far)? Roche isn't a bad company. In fact, they already have a handful of cancer drugs under their umbrella. It's just that none of them are real blockbusters. Genentech's cancer treatment Avastin is a real contender though. That may well be why Roche is trying to muster another $40 billion to acquire the part of Genentech they don't own.    And The Point Is? The cancer treatment market is big, and getting bigger every day. 'Big Pharma' finally figured it out, but 'Big Pharma' isn't exactly equipped to do anything about it right away.... except buy the technology they need to compete in this lucrative market, or ramp up R&D efforts. The examples above verify that idea. The investment opportunity, of course, is in owning one of those smaller biotech outfits that a bigger company wants to get involved with. Whether it's licensing (a la ImClone) or an outright acquisition (like Genentech's Avastin) doesn't really matter - this trend is good news for the smaller biotech names doing real R&D in the fight against cancer. So, here's my suggested pick from the cancer treatment universe... Remember CEL-SCI Corporation (AMEX: CVM)? We haven't talked about them in a while, but maybe we should have - they're working on a very effective cancer treatment of their own called Multikine.  Well folks, I think it's time to start accumulating CEL-SCI again if you haven't been already. The combination of a marketwide pullback and the retooling of the pharmaceutical industry - as described above - means now's likely to be the right time to venture into the waters of select biotech stocks. But don't take my word for it - take Teva Pharmaceuticals' (NASDAQ: TEVA) word for it. It wasn't that long ago they became the exclusive future licensee for Multikine in Turkey and Israel. How about Orient Europharma, who even more recently became the exclusive licensee for a big chink of Southern Pacific Asia. Oh, did I mention that both Teva and Orient Europharma are investing their own money into the final development of CEL-SCI's Phase III drug? Think about that for a second. Investment money is being devoted to Multikine - in a horrible economy no less - and despite the fact that the drug isn't bearing revenue yet. I have to think Teva and Orient Europharma know what they're doing too. Interesting.   Bottom Line With the market finally coming out of its doldrums, and with financing becoming possible again, I can see the new cancer-intensive industry continuing to turn up the heat on viable cancer treatments like the one CEL-SCI is working on. Roche and Lilly are just a couple examples of this idea.     Company Name: CEL-SCI Corp.  Stock Symbol : CVM Coverage Initiated: Jan. 7th, 2009 Current Price: $0.275 Avg. Volume (3 mo.): 247,166 52 Week Range: $0.18 - $0.78 Market Cap: $32.4 M  Target: $0.40  Stop: $0.20  Do I foresee an acquisition? Anything's possible. A few months ago CEL-SCI employed measures that would make an outright buyout difficult to do, but I wouldn't rule anything out now. After all, the company's current market cap is $34 million, but Lilly just paid $6.5 billion for the rights to Erbitux, and Roche is willing to pay more than $40 billion for the rest of Genentech. Considering Multikine is a Phase III drug, even paying a hefty premium for CVM shares wouldn't be a financial or psychological problem for a big suitor. Most likely, however, I think CEL-SCI is going to continue garnering partners, raise funds via the licensing process, and complete the third and final phase of Multikine's development. The economic and industry environment is just taking the right shape for that kind of story to unfold. At the very least I think it's a well-calculated speculation for investors. There are actually several more details that I could add regarding CEL-SCI's potential, but I'll have to add them in upcoming editions. My only goal for today was to get the trading idea out to you so you guys could go ahead and take action, before the rest of the market wakes up to the possibility. Time really is of the essence here. And what action do I recommend? Though I mostly see CVM shares as a long-term investment (and a good one at that), I'll also suggest a short-term 'trading' target of 40 cents. The potential gain is much greater for those with the patience to wait for Multikine's complete development though, so I'd probably re-enter another position even if 40 cents is hit (after some early 'trading' profits are locked down). I'll also recommend a stop of 20 cents, which applies to investors as well as traders.  One last thought... As with almost every great investment, this one is likely to get rolling at a point in time when next to nobody is really thinking about it. Perhaps a handful of investors recognize the major pharmaceutical companies have been acquiring biotechnology and biotech companies, but very few investors have realized the macro shift towards the development of cancer treatments. Fewer still have been able to uncover one of the likely beneficiaries of that paradigm shift, like CEL-SCI. So, that's your edge, but it only does you any good of you act on it.