Small Cap Network Blog

It had been a while since we heard anything from biotech company CEL-SCI (CVM), but that changed yesterday with a fat dose of encouraging news. Teva Pharmaceuticals (TEVA) has been signed as an exclusive licensee of CEL-SCI’s cancer treatment - Multikine - for Turkey and Israel. What’s interesting here is that Teva got on board even before Phase III testing for Multikine has started.

Of course, Phase III is mostly an FDA-mandated stage, so the same testing requirements may not apply in other countries before a drug is approved for public use. Even so, Multikine is not quite ready to be put on the shelf anywhere…at least not until some more efficacy and benefit data is gathered. So, for Teva to sign a contract at this juncture indicates a fair amount of faith that Multikine will indeed be approved in the two afore-mentioned countries. And, that ‘faith’ is also coming in the form of dollars - Teva is putting up some money for Phase III testing.

I don’t know how big the head-and-neck cancer market is in Turkey and Isreal. I’m sure it’s not the biggest market either company is eyeing. However, even a small market can get the revenue ball rolling.

The press release also mentioned something I think we should never forget about Multikine…all the work and regulatory hoop-jumping so far has focused on using the cancer treatment only for head-and-neck cancer. But, Multikine is also known to be effective for all types of tumors, regardless of location. It’s just particularly more effective than most alternative head-and-neck cancer drugs.

I think what the company is doing is taking the path of least resistance - a wise move. The drug has already been ‘fast tracked’ by the FDA, so the odds of getting it approved as a head-and-neck cancer treatment in most countries are very good. Once that happens, it’ll be much easier to win approval for its use against other tumors.

Good news? You bet. So what happens with the stock? It surges….for a few moments. Then it sank into the red and closed out with about a 10% loss.

If you’re asking how that can happen following the best news in months from CEL-SCI, you’re not alone. My answer is simple…when has the market ever been logical?

Specifically, I think what we saw as just a case where CVM had hit new 52-week highs, and impatient owners just started taking profits. That profit-taking, however, started an avalanche that tripped a lot more owners up along the way; I’m guessing there were a lot of stops around - and slightly above - 60 cents.

Here’s my take on the matter….eventually, all stock prices are justified. In the short run, they may or may not be. Personally I think CEL-SCI is a long-term holding anyway, since Phase III won’t be over for at least a couple of years. That’s why I don’t really care what happens in the meantime, good or bad.

On the other hand, other traders clearly don’t have the same point of view. They ended up being net sellers yesterday. Maybe it was a case of ‘buy the rumor, sell the news’ (though it was the fastest case of it I’ve seen in a while).

Either way, whether you’re an investor or a trader, I don’t think Tuesday is the day to worry about. I think today (Wednesday) and the next few days will really tell the tale. Hyper-volatility can skew the true picture.

Are you a subscriber to the Small Cap Network newsletter? If not, you’re missing out on some great trading ideas and exclusive market commentary. To sign up, just go to the top right corner of any page of our website. You’ll be joining thousands of other subscribers who have already benefited from our news and views.

I really thought this week’s news would get biotech stock CEL-SCI (CVM) moving again. And it did…..for a while. We saw little follow-through on the chart though. Even so, CEL-SCI is still one of our favorite longer-term ideas.

If you didn’t hear, CEL-SCI announced they’ve discovered an effective treatment for rheumatoid arthritis. They’re calling it CEL-2000 for now; it’s a vaccine/peptide that so far seems to be as effective - if not more effective - than the leading RA treatment. That’s not to say CEL-2000 is ready for the market. It’s got a lot more R&D to go, not to mention it has to pass the FDA’s requirements as well. But still, it’s something they feel confident enough about to keep working on. The rheumatoid arthritis market is no minor market either - it’s worth $13 billion per year.

Now, if the CEL-SCI news is only a little bit familiar to you, it may be because we’ve primarily focused on their cancer treatment Multikine. It’s also a vaccine, but obviously one with a much bigger impact on a market with much stronger demand. We haven’t been able to tell you much about Multikine’s progress lately because, well, there’s not much to report. The wrapped up Phase II testing last year, and will start Phase III testing later this year. Once this last round of trials gets underway, we’ll certainly have more to talk about.

The CEL-2000 announcement is equally good news…just different. Keep in mind, however, that Multikine is closer to the end of its developmental cycle, while CEL-2000 is practically at the beginning of its creation.

As for the stock, the last time I looked I was looking mostly at its range-boundedness (which I know is not a word, but you know what I’m saying). Here it is more than two months later, and the story is still the same despite a brief glimpse of bullishness on Tuesday…stuck between 65 and 70 cents. That’s still the key to getting this one going again - a break past 70 cents. Give it time.

Are you a subscriber to the Small Cap Network newsletter? If not, you’re missing out on some great trading ideas and exclusive market commentary. To sign up, just go to the top right corner of any page of our website. You’ll be joining thousands of other subscribers who have already benefited from our news and views.

Not surprisingly, March’s retail numbers were soft…for most. Discounters like Wal-Mart (WMT) and Costco (COST) did fine, while discretionary goods saw dampened demand. The futures dropped (pre-market) on the news, though that means little to me any more. Why? I’m still mostly in a ‘bet against the open’ mode. That’s why I’m actually glad stocks ‘opened’ a little higher at 9:30 am EST today.

That said, I’m still sitting on my QQQQ April 47 puts, which I bought at $1.85. They’re now worth about $2.00 - a meager 8% gain, though I guess that’s better than getting poked with a sharp stick.

I’m still in the trade for reasons that become a little more clear with the nearby chart. I’m looking for at least a retest of the 20 day moving average line near $43.15. That will give me a little cushion (and perhaps inspire the bears) for what I really want to happen, which is a move all the way back down to the lower Bollinger band (20 day) at $41.62. At that point my puts would be worth about $5.00…a nice 150%+ win. It ain’t happened yet though.

Other things you need to know about….

I love for my stock picks to go higher; I hate for them to surge to the point where anybody else is scared to step in. We should all be used to that by now, but somehow it’s still frustrating to deal with this fire-and-ice mentality.

I say that to preface you for the chart of Telemig Celular Participacoes (TMB), which we recommended back on February 24th when it was trading at $60.75. The current price of $66.20 represents a 9% gain. The problem is, the stock pick gained 13.5% in the last week and a half. That’s just a pace I don’t see being sustained. (If a candle somehow had three ends, it would be the equivalent to all three burning.) Such a move is just likely to invite a wave of profit-taking.

Plus, the quick move puts the stock just a tad under a long-term resistance line. A slower move would have let that line extend further up and out before it was intercepted.

That’s not to say I’m getting out; it’s still a good pick. I’d just rather get to our target price of $79.20 in a straight line (which is usually faster) than by bobbing up and down. Unfortunately, nobody who’s buying or selling the stock asked me what I want. Be patient and tolerant with TMB.

We recently had a reader ask about our coverage of BioCurex (BOCX). Yes, we’re still following the company, though they’re not at the top of our watchlist.

We mentioned a while back that we knew their project was going to take time, so we were going to give them plenty of it. Since then, Abbott (ABT) has indefinitely backed out of their deal with BioCurex…something of a game-changer. BioCurex is still going to proceed with the development of RECAF, but considering Abbott was such a big deal when they teamed up, I can only wonder what kind of blow this is to the company. They’ve been fairly quiet on the topic, which I don’t interpret as a good sign.

On the other hand, they signed Inverness (IMA) as a licensee not too long ago, so maybe the Abbott news doesn’t matter.

The European Patent Office has given them a patent on RECAF, which gives the company much more negotiation power than a ‘pending’ patent would.

Bottom line…we’re still following BioCurex, for the long haul. We don’t/can’t worry about the day to day stuff, as our interest primarily lies in the strength of their RECAF technology. Licensees and patents won’t change that.

Speaking of biotech, I want to point out CEL-SCI’s (CVM) chart again. We previously looked at its higher lows and persistent attack on the ceiling at 70 cents. Since then, the lows have continued to move higher, and the stock is still knocking on the door at 70 cents. Accumulation has picked up as well.

I don’t quite know why the renewed interest. Phase III starts later in the year, and nothing has happened in the meantime that would spark a rally. However, I’ve also observed countless times how biotech stocks trade about two years into the future. As such, I think CEL-SCI is actually one of the best trading opportunities out there right now.

Are you a subscriber to the Small Cap Network newsletter? If not, you’re missing out on some great trading ideas and exclusive market commentary. To sign up, just go to the top right corner of any page of our website. You’ll be joining thousands of other subscribers who have already benefited from our news and views.

Back in October 20th edition of the newsletter (‘Big Pharma, Small Biotech - Who Needs Who?’) I spent a little time talking about the potential for a buyout of small cap biotech company CEL-SCI (CVM). Or more specifically, I gave my reason why I thought an acquisition by a big pharma company was very unlikely. Well, now you can add another reason to the list. Today CEL-SCI announced the adoption of a shareholder rights plan that would make it even tougher to facilitate a take-over.

Disclaimers and warnings first….the rights plan will not prevent an acquisition. In fact, it’s not even designed to stave one off. The only goal (and this is from the company) of the plan is to protect current shareholders’ interests in the event of one. If it’s going to happen, the plan will ensure that current owners get at least fair value for their stake.

Why bother? Because with some acquisitions, shareholders receive less that what they should. The term the company used was ‘coercive accumulation practices’, which can and do occur (especially when the company is of the ’small cap’ variety).

Anyway, the deal basically gives current owners the right to buy more shares at a ridiculously low price. Through two tranches of rights (the option to buy a stock), current owners will be able to buy more shares at 20% of their value at the time, and/or 50% less than the value at the time if further conditions are met.

Like I said, technically this won’t bar an acquisition. However, you do the math here. If current owners can get such a deep discount and dilute the takeover attempt, the prospect of a buyout is incredibly unattractive to any suitors. They’ll have to end up possibly paying more than the market value at the time, and they’ll need a lot more shares to actually gain control of the company.

The plan is in effect through 2015. That should be more than enough time for the company to get through Phase III testing of Multikine and start generating revenue with it. If and when that happens, we suspect CEL-SCI shares will be far too expensive to even consider a buyout.

Anyway, for the official release, click here.

Are you a subscriber to the Small Cap Network newsletter? If not, you’re missing out on some great trading ideas and exclusive market commentary. To sign up, just go to the top right corner of any page of our website. You’ll be joining thousands of other subscribers who have already benefited from our news and views.

The timing on last weekend’s edition “Big Pharma, Small Biotech - Who Needs Who?” couldn’t have been any better. Why? Because it was only a kickoff to what I hope will become a fruitful discussion of biotechnology investing. The second act came on Monday when small cap company CEL-SCI (CVM) unveiled a brand new website, aimed entirely at explaining the usually-under-explained science of immunotherapy.

I’ve been scouring the site for a while, and already I’ve found some things I would have liked to known a long time ago. I’m NOT going to even try and teach you the ins and outs of immunotherapy - I’ll let the site do that. I will, however, highlight enough things to hopefully whet your appetite.

For instance, I never really had a grasp on why most immunotherapy efforts had failed. The reason is, they’re too targeted. There are a variety of cancer antigens to which a vaccine or antibody is targeted, and cancerous tumor calls can mutate as they grow. But, immunotherapy treatments thus far have only been aimed at specific antigens or tumor types. Target the wrong antigen, and the treatment is pointless. (I also think this is why immunotherapy has a bit of a bad rap within the investment community.)

The solution is simple enough - make the treatment less targeted. All well and good, but a multi-faceted immunotherapy may also be ineffective. See the two-edged sword?

CEL-SCI’s response to the problem was Multikine(r). Multikine is a combination of two types of treatments - one type to solve each of the previous problems with immunotherapies. It directly attacks cancer the way an ingested antibody would (like when you can’t shake a cold or the sniffles). And, it also induces and enhances the body’s own immune response, making it able to fight cancer on its own, like a vaccine does.

The company’s website obviously goes into a lot more detail, so I encourage you to take a look for yourself. I think it may clarify for investors exactly what CEL-SCI’s strategic advantage is. Even if you’re not an investor though, I think the medical science is fascinating enough to merit a look.

Side note: CEL-SCI’s site is the first and only site I’ve found to really detail the good, bad, and obscure within the world of cancer vaccines. It is centered around Multikine, but I believe their in-depth immunotherapy explanation will become an industry-wide resource. In turn, I also believe it will attract more investors to the stock. In that light, I see today’s announcement as another long-term plus for shareholders.

Are you a subscriber to the Small Cap Network newsletter? If not, you’re missing out on some great trading ideas and exclusive market commentary. To sign up, just go to the top right corner of any page of our website. You’ll be joining thousands of other subscribers who have already benefited from our news and views.

Thanks for all the great feedback on Saturday’s commentary about small-cap biotech’s critical role in large-cap pharma’s success. We really enjoyed putting the unspoken reality together for you, though we also want to let you know we only scratched the surface of the topic.

We also want to share some of the key questions and comments we’ve gotten since then. Most are about CEL-SCI (CVM), but there are a couple of general biotech comments as well. Let’s just list each them one at a time, and respond accordingly.

1) agree with everything your saying , and truely realize the companies potential,but it has a long history of taking forever to do things. just look at the time its taking from when the fda allowed them to enter into phase 3 to the time its gonna take to build the manufactureing facility and actually start enrolling patients. cvm will be lucky to start enrolling patients by the summer of 08, but i doubt it. till then and for the last year owning cvm has been dead money, in one of the mkts greatest bull runs.

Response: Yes, we’d never say CVM has been on fire lately…a frustration in comparison to most other stocks. I think that’s just the nature of biotech though - they have to be hyper-careful, and painfully precise (and not just for the FDA). However, just so you know, Phase III is planned to start in the first half of 2008. The facility will be done in early 2008. I don’t doubt that timeframe at all. One thing to note though…the FDA is going to be looking at three-year efficacy data. So, if you’re looking for 2009 to be the payoff year, you might be early. I think the stock will start to rise before the final decision is made, but I’m looking for the last hurrah to coincide with an FDA announcement.

2) Another question about anyone trying to “buy-out” Cel-Sci: Who actually owns the patents on Multikine & Cel-1000? Not Cel-Sci directly. Can you write about thet?

Response: Great question. There are a few patents out there for something called Multikine. I think they’re all somewhat similar, but CEL-SCI has actually been assigned the one designated as a cancer treatment with a specific cytokine mixture. Here’s the patent office link. I know that CEL-SCI had filed a suit against another maker of a ‘Multikine’, though I don’t know where that stands now. Anyway, CEL-SCI controls the patent they need to control. The CEL-1000 question I can’t answer. I don’t think it’s CEL-SCI, but I’ll see what I can find out.

3) Another example of this is Generex biotechnology. They are entering phase 3 clinical trials for their oral spray insulin and have avoided big pharma collaboration. It appears likely (particularly in view of Pfizers recent withdrawal of Exubera from the market) that it will pay off large for the shareholders. Thought you might find this of interest.

Response: Thanks for the mention. I’ve heard of it, but that’s about it. Maybe there’s something there - especially after the Pfizer (PFE) news.

Are you a subscriber to the Small Cap Network newsletter? If not, you’re missing out on some great trading ideas and exclusive market commentary. To sign up, just go to the top right corner of any page of our website. You’ll be joining thousands of other subscribers who have already benefited from our news and views.

We haven’t heard much from small cap biotech company CEL-SCI (AMEX: CVM) lately, but that hasn’t prevented the stock from trading all the same. Since it’s my job to be nosy for the benefit of our newsletter readers (and certainly for our readers who trade our stock picks), I took your questions straight to the top - to Geert Kersten, CEO of CEL-SCI. He answered them all to my satisfaction.

Though I can’t give you his complete answers (due to lack of space and my inability to write that fast), these are pretty good paraphrases of his responses. Our explanatory comments are in brackets.

Q. When will Multikine’s Phase III start?

A. Sometime early in the coming year. The production facility will be completed around then, and it takes a few weeks to manufacture enough backlog of Multikine to have a constant supply for testing. In terms of actually using Multikine on patients, though, the prep wok has already started. The study is being conducted on four different continents, and will treat 800 patients. A study of that size and scope has a lot of planning involved while the facility is being completed. [Even if the facility and drug were ready, the extensive planning would still take weeks to finalize.]

Q. Will you need another round of financing to start Phase III?

A. Yes, but we foresee no problem getting it. Phase III has a much stronger element of risk abatement than phase II studies, as far as investors are concerned. Statistically speaking, about 2/3 of Phase III drug trials get ultimate approval, so the quality of interested parties is different than it was before [based on conference call participants and investment inquiries]. Even if it takes years to complete the study, institutional investors don’t entirely care - since there’s nowhere near as much risk involved as there is with a phase II drug.

Q. Could someone else step in in the meantime and bring a competing cancer drug to the market?

A. Based on the complexity of Multikine, it’s unlikely any competitor could even come close to copying the biotechnology behind it (which could take years in itself to do). As for a comparable cancer drug already in the works, there is nothing out there. Also, remember that the FDA has specifically given Multikine an ‘orphan’ status, meaning this is a treatment that is much needed, but the demand is not currently adequately met. [If there was something else even close, it would be getting similar attention.]

————————-

There were some other things that came up, but those are best left for a follow-up newsletter. Overall, I got the impression that things are proceeding as they should be for CEL-SCI and Multikine. We just haven’t heard anything from the company because there’s nothing earth-shattering or game-changing to say during this mundane stage of the process. The thing is - and as I’ve now said about 90 million times - the time to step into a stock position is when nobody else is even thinking about it. CVM shares are at the low end of a multi-year range, yet real future revenue has never been closer. I guess the market isn’t all that efficient after all. 

Are you a subscriber to the Small Cap Network newsletter? If not, you’re missing out on some great trading ideas and exclusive market commentary. To sign up, just go to the top right corner of any page of our website. You’ll be joining thousands of other subscribers who have already benefited from our news and views.

With all the talk about CEL-SCI’s (CVM) Multikine cancer treatment, it’s easy to forget they’re also working on a vaccine adjuvant platform that could ultimately be effective against several types of infections….including hepatitis B, malaria, herpes, and encephalitis, just to name a few. The name of the adjuvant is CEL-1000. If it rings a bell, it may be because this small cap biotech company’s CEL-1000 technology really came to light in early 2006 when it was realized it could be an effective tool in the war against the bird flu.

On Monday, CEL-SCI updated the market on CEL-1000’s status by releasing details about research done using the vaccine adjuvant against the hepatitis B virus. In a lab setting, it was found to increase the antibody signal in a mouse by 40% by the 28th day of observation. The study also determined what may be the ideal time of dosage, and degree of dosage.

The ‘bigger picture’ implication is simple enough…CEL-1000 continues to gain validity as a broad vaccine adjuvant. As more research refines how CEL-1000 can and should be used, the potential appeal to the market expands.

For the details of the news, click here.

As for CVM shares, the patient went into a critical status this summer, but appears to have stabilized over the last month.

It finally looked like CVM might get something going in April. Then between May and August, we saw shares slide from a peak of $1.08 to a low of $0.57. Since hitting $0.57 though, we’ve started to see the waters being tested again. Specifically, we’re not seeing a string of lower lows anymore. In fact, the 50 day line was tested as resistance three times over the last three weeks. So, clearly somebody is interested.

As for whether or not I think the worst is over, let’s just say I’m keeping a close eye on CVM for that possibility. The downtrend has stopped and a wedge has formed. The wedge will have to close up sometime, and force this chart out of its confines. That could be good or bad (bullish or bearish), but if it’s bullish I want to be ready. For me, the 50 day line may be the make-or-break point.

We finally got an update from CEL-SCI Corporation (AMEX: CVM) about its cancer therapy drug Multikine. The update came in the form of a letter to shareholders from CEO Geert Kersten, and serves as a nice recap of how they intend to develop a biotechnology known as immunotherapy and turn it into a one-of-a-kind treatment for head and neck cancer. Though scientific in nature, the letter looks at their work-to-date through the eyes of a biotech stock investor.

If you’ve been along for the CEL-SCI ride since the beginning - and have kept up with our coverage - we don’t think you’ll find anything new in the letter. But, if you’re not familiar with what the company is doing and want a full explanation of why this stock could make for a good longer-term biotech investment, it may do you some good to read it. Just click here. The premise and promise behind the biotechnology are pretty amazing.

Are you a subscriber to the Small Cap Network newsletter? If not, you’re missing out on some great trading ideas and exclusive market commentary. To sign up, just go to the top right corner of any page of our website. You’ll be joining thousands of other subscribers who have already benefited from our news and views. 

I think most everybody was aware of this plan a few months ago, but it’s always nice to get confirmation. CEL-SCI Inc. (AMEX: CVM) has entered into a long-term lease agreement for a Multikine manufacturing facility.

This is generally good news for an obvious reason….for Phase III testing to be completed, the drug has to be made somewhere. However, there’s a less obvious - and more important - reason for CEL-SCI to make longer-term plans.

The FDA prefers a fully-approved version of a biological drug to be made in the same setting as the Phase III version. Why? Even a minor difference in something as trivial as lighting or refrigeration can affect the drug’s effectiveness. 

From a bigger-picture perspective, this leaves little doubt that CEL-SCI is serious about Multikine, and fully expects to get an FDA approval. Based on our understanding, we expect it to as well.

As for the stock, today’s news probably ain’t gonna’ have much of an impact. There are no immediate benefits, and it wasn’t exactly news - this was an idea they talked about a few months ago. All the same, we consider it a minor victory. We just wish we could say the same for the stock price.

CVM shares have been in a slow slide, guided lower by resistance at the 20 day moving average. We’re not necessarily alarmed, as the overall market hasn’t helped either. It happens. The upside in all of this is how CEL-SCI’s stock tends to rebound well. We’ve seen support around 55 cents a couple of times on even longer-term charts. If past history is a guide, this dip to 61 cents may actually be flagging a great entry opportunity. You know we think highly of the company, and feel it’s only a matter of time before Multikine starts to reap rewards.

Here’s the release.

I don’t think it’s any secret the Small Cap Network is an opinionated source of stock-related information. That’s by design - you can get ‘data’ anywhere, but meaningful opinions still seem to be a rarity.

It’s a point I wanted to stress today before I shared my personal take on some recent news from CEL-SCI Corporation (AMEX: CVM). They provided the facts; I’m just providing my opinion on what it ultimately means. In this case, I think the news may be a proverbial grand slam for the company. Whether you’re a full-blown CVM owner, or just mulling it over from a distance, trust me - you’ll want to keep reading.

First things first though, particularly if you’re new to the company.

Though it’s not the only drug CEL-SCI is working on, their primary focus has been on the development of a drug called Multikine as a treatment for head and neck cancer. Though Multikine is still being evaluated through the required FDA procedures, early testing indicates it’s very effective. In fact, the research so far shows a 33% improvement in survival of patients using the experimental treatment (which is quite a bit by medical standards). There’s really nothing else quite like it that’s tumor-specific in addition to being non-toxic.

OK - now with everybody on the same page….

Over the past few months, from my perspective, CEL-SCI has gone from being a question mark to being an exclamation point. You may recall in November we posted a blog entry asking our readers to write to the FDA and urge them to allow Multikine to proceed into Phase III testing (the final stage of the FDA approval process). At the time, the company had been waiting 22 months to hear from the FDA, with no explanation for the delay. Needless to say, everyone - the company, investors, even patients - was getting frustrated. It didn’t bode well for Multikine’s future.

Then on January 16th, things changed for the better - CEL-SCI got the greenlight from the FDA to take Multikine into the next stage of testing.

Though Phase III is obviously still not a final approval, we learned something after the news came out that we didn’t know before….approximately 2/3 of the drugs making it to Phase III testing are ultimately awarded FDA approval. I felt this was an outstanding sign of Multikine’s chances, especially considering Phase III was pretty much a large-scale version of Phase II, and was likely to yield the same results.

Well, I thought the story was pretty good as it was. I believe today’s news made it even better though…..far more encouraging than I ever imagined.

Multikine’s use as a head and neck cancer treatment has been designated as an ‘orphan drug’ by the FDA. What does it mean? The ‘orphan’ status is a good thing. To encourage the development of drug treatments for diseases that are very rare, the FDA sweetens the pot, so to speak.

Why would they do this? Let’s face it - big pharmaceutical companies are more interested in targeting common diseases and illnesses. If there’s not enough of a potential customer base for a treatment, it just doesn’t get developed. Needless to say, that’s far from fair for those affected with uncommon illnesses. 

As you may have guessed by now, head and neck cancer is considered a rare disease by the FDA. It’s estimated there are 500,000 (or more) new cases of head and neck cancer every year. Perhaps by GlaxoSmithKline (NYSE: GSK) standards that’s not a lot, but here’s where the power of being small is huge…….relative to CEL-SCI’s size, 500,000 potential patients each year is a massive number - plenty big enough to encourage them to develop a drug like Multikine. It may be a billion dollar opportunity, which is enormous for CEL-SCI.

Here are the main benefits of having an orphan-drug status:

1) Seven years or exclusive marketing rights after the drug is approved (regardless of the patent’s expiration)
2) Potentially, a faster approval time from the FDA
3) Potential grant money - up to $350,000 per year for three years, in CEL-SCI’s case
4) Tax breaks - up to 50% of the R&D costs

Now, I haven’t told you anything you can’t read (or infer) in the press release for yourself - yet. Here’s my perspective…..

There is one thing that strikes me about Multikine being granted this orphan status. Is it me, or is the FDA rolling out the red carpet for Multikine (to the largest degree that they can anyway)? I recall the company using the term ‘fast-track’ a few months ago to describe something they were hoping for Multikine to benefit from. I don’t know if this is what they were talking about or not, though I suspect it is. I do recall that the FDA fast-tracked drugs when they were desperately needed, and there were no alternatives quite as viable as the one in question.

The way I read between the lines, this makes the odds of Multikine getting final FDA approval even better - and they weren’t bad to begin with. Yeah, there’s always ‘a chance’ of something in the meantime, but the FDA is now doing what it can to support Multikine’s progress. Seems to me that’s a big deal. Yes, I see it as yet one more reason to own CEL-SCI. The dream seems to be making big progress towards becoming a reality.

Click here for the press release.

There’s no question the last several weeks have been a roller-coaster ride for CEL-SCI (AMEX: CVM) investors. Late last year shares were trading at 55 cents, and they peaked at $1.08 in late May. In between, there was plenty of ebb and flow….perhaps enough to make you wonder whether or not this thing was ever going to find a foothold.

After last week though, we believe we’re starting to get some clarity on the chart. The low of 80 cents we saw when May turned into June also tagged what is now a long-term support line (blue, on our chart). This same line was the bottom in December, in addition to being the bottom in March as well as April. In other words, there’s probably something to it. All things considered, this is a line we want to watch going forward. It’s currently at 81 cents. 

To a lesser degree, the 50 day moving average has also been support. It’s currently at 82 cents.

If you ever seen any of the ‘Rocky’ movies, then you know what I’m talking about. It doesn’t even matter which one you’ve seen, since the plot line is pretty much the same in all of them…an underdog becomes a contender. Just when things look like they’re taking a turn for the worst, Rocky gets off the mat and comes out slugging his way to the title.

For some reason I couldn’t get that goofy analogy out of my head while I’ve been watching CEL-SCI’s (AMEX: CVM) chart over the last few days. I was elated when CVM closed at 96 cents on the 8th, let down when shares fell back to 82 cents on the 10th, and then excited again to see the stock back up to 87 cents yesterday…..a rally made on pretty strong volume. You may have even noticed the stock was up as high as 98 cents in after-hours trading.

Exciting? You bet, but also encouraging. CEL-SCI refuses to go yield. Frankly, I don’t know what was going on over the last week. Maybe a big institution was trying to figure out what they thought of CEL-SCI. Or, maybe it’s just the result of tons of retail investors being pulled between extreme levels of fear and greed. Maybe it was neither.

Whatever it was, CEL-SCI is still slugging, and I like that. Let’s see if we can now get and stay above the 90 cent line.

With the close of each recent trading day, I’m feeling better and better about CEL-SCI (AMEX: CVM)….not that I was ever particularly concerned following the news from a few weeks ago. Once they went into Phase III trials with Multikine, I just had a hunch the market would start to take notice.

The beneficiary of that reaction - for those who took the advice - was our readers. We renewed our bullish opinion back on January 16th, when shares were trading at 60 cents. Assuming you got a less-than-great fill of the close of 70 cents that day, you’re still up 35%.

Even if you were on the sidelines though, I still like the upside that may be in store. The resistance at 90 cents I’ve been eyeing for weeks finally looks to be broken. And better yet, the volume is getting stronger and stronger. The next milestone I see is 97 cents, though it’s only a minor one in my view. Yes, I think this might be the beginning of the payoff for those folks who stuck it out.

By the way, if we get a good start (and I think we will), we’re likely to yank that $1.48 target…it just doesn’t seem like enough in light of everything. We’ll look at that more closely when the time comes.

I think CEL-SCI (AMEX: CVM) could be a lot of fun real soon. Over the last couple of weeks we’ve been preaching the need to get and stay above 90 cents to really have a shot at a major upward move. But as of today, I really have to say I think it’s in the cards. Momentum is good, and there’s plenty of depth.

Though we haven’t broken past the 90 cent line as decisively as I’d like (we’re currently at 91 cents after reaching a high of 97 cents on Teusday), the higher lows and new highs are clear.

What I really like though, is the volume behind all this buying. This week’s volume was the most we’d seen in nearly a year…and it was almost all from the buying side of the table - CVM is probably going to close higher for the week, after gaining 12% last week, and 6.7% the week before that. The volume has been successively better each week.

I kind of think this thing could have a snowball effect, meaning each milestone passed is likely to incite more buying, and increase the pace. Things are getting real interesting now - in a good way.

I’m NOT surprised to see it happen. I’m a little surprised at the catalyst. For the past few days we’ve been watching CEL-SCI’s (AMEX: CVM) stock, anticipating a break past 90 cents could spark a much bigger rally. Why 90 cents? We topped out there in February. This time though, the market is choosing to get in rather than get out.

Today’s high (so far) has been 97 cents. We have to go all the way back to June of last year to find the last time we visited that level. Better yet, the volume behind the surge is enormous. For that matter, the volume behind the gains over the last two weeks has been very solid. We’d never say anything is ‘for sure’, but this certainly looks like a very good start on a major rally.

The news? I was surprised to read the news wasn’t prompted by CEL-SCI’s head and neck cancer treatment Multikine. Instead, the company put out a press release explaining another one of their drugs, CEL-1000, has been observed to improve some animal’s immune system’s response against Hepatitis B. CEL-1000 may already have practical applications in the vaccination against other diseases, but Hepatitis B is a big one the medical community would like to find a way to beat.

Now, here’s the interesting part - I don’t necessarily think the CEL-1000 news is the reason for the sudden interest in CVM. I think something like today has been brewing up for a while; today’s news is just an excuse (albeit a good one). Why do I feel that way? Because this isn’t exactly ‘news’. CEL-1000’s potential in the fight against Hepatitis B and other viral diseases was understood a long time ago. Some of CEL-SCI’s top researchers presented the Hepatitis B research at a conference in Maryland yesterday and today, but I think this move was likely to happen soon no matter what.

Regardless, the walls are starting to break down (and that’s a good thing). The next hurdle is 97 cents. A move past there, and the next stop may be $1.19. It’s getting real interesting.

For more on the CEL-1000 announcement, click here.

A bit of good news for CEL-SCI (AMEX: CVM) yesterday…..they were finally awarded a patent for their AdapT technology.

Don’t know what that is? It’s short for ‘Antigen Directed Apoptosis’ which is the process of using two proprietary molecular constructs to cause the death of immune T-cells that are the root of autoimmune conditions (and no, I didn’t understand that either).

In layman’s terms, CEL-SCI’s AdapT technology renders the undesired autoimmune T-cells harmless by preventing one of the two activations required to make the T-cell harmful. Without the second activating signal, these cells will automatically die, and therefore not cause autoimmune problems.

The cool part about CEL-SCI’s creation is that it doesn’t harm all T-cells….just the ones you don’t want.

In any case, the AdapT platform isn’t new - CEL-SCI has been working on it for a long time. However, the patent is new, and should afford the company many years of protection from copycat competition.

As far as any impact goes, we don’t expect this to be like a winning lottery ticket. Rather, it’s an asset that is now up to the company to fully monetize. Still, an asset is an asset.

By the way, the company’s flagship cancer treatment, Multikine, is not based on the AdaptT platform (not that it really matters).

For more, click here.

The Small Cap Network web site also offers an e-mail newsletter to bring great trading ideas and insightful market commentary straight to your inbox. To sign up for the newsletter, find the registration box in the top right corner of this page.

I gotta’ say, I really like the way CEL-SCI (AMEX: CVM) is trading now. It was only about a week ago they announced a major funding deal in which all the buyers paid above the current market price for their shares. We got that initial pop in share price like we usually see after news of that ilk, but the real test comes afterwards - would the new uptrend has any staying power?

Our answer to the question is, take a look at today’s chart. We’re seeing new multi-week highs again (86 cents so far), and more importantly, yes, we’re seeing follow-through on the break-out of the wedge pattern. What I really like though is the volume behind today’s move. We might just see more shares transacted today than we did the day after the news came out…it’ll be close. This high-volume second thrust tells me there are a lot of major interested parties waiting in the wings.

From here, I think the next big step is a move past 90 cents. If that level breaks as resistance, I can seriously see all hell breaking loose in a bullish way. That would be a new multi-month high, and this time around, the company would be backed by Phase III testing of Multikine, and about $20 million in brand new funding. That may well be the catalyst needed to spur some serious buying. Perhaps we’ll see a repeat of the April 2006 surge, which by the way would have been practically impossible to jump into once it was started.

In any case, we’ve got our chart alerts set to notify us once 90 cents is passed. It could get real interesting real fast.

We had to back out to a weekly chart to illustrate the magnitude of the potential we see here.

Though we have nothing specific in mind when we recommend keeping an eye on CEL-SCI (AMEX: CVM), we still think it could be prudent. Just call it a hunch. The stock has been resilient the last few days - and the last few weeks for that matter - as the sellers have tried to wage a war. The buyers, however, seem to keep winning the battles.

The end result of those skirmishes appears to be a wedge, framed below by a falling resistance line and a rising support line. Eventually the chart’s going to be squeezed outside of that framework - one way or another. When it does, it could do so with a vengeance.

And, based on the support we seem to be finding at the 20 day and 50 day moving average lines, we tend to believe that ’squeeze’ will most likely result in a move to the upside. Beyond that, a move above the 90 cent level could be an even bigger upside catalyst, as it would be a new multi-month high.

Aside from the chart, the fact that CEL-SCI’s head and neck cancer treatment (called Multikine) recently entered Phase III testing - the last testing stage before the FDA makes a yes/no decision - leaves open a lot of possibilities for encouraging updates. Plus, knowing the company like we do, the recent lack of news or announcement from the company may well mean something big is just around the corner. See, CEL-SCI has a habit of coming out with something when the market isn’t expecting it. When they do have some news though, it tends to be something major - and usually good. Be ready.

Though not necessarily our usual ’small cap’ fare, we still think we have to point out something most of the market seems to be missing….a mini-bull market may be starting - or perhaps we should say restarting - in the biotech arena.

The AMEX Biotech Index (BTK) is up 9.5% from lows hit in early March, which easily tops the S&P 500’s 4.5% gain during the same period. On a six-month basis, biotech’s 9.5% rally tops the SPX’s 6.4% gain. Over the last two years, the biotech index is up by 52.9%, versus the S&P 500’s 22.6% run.

The point is, we see a distinct advantage in biotech stocks right now….an advantage we don’t think is likely to go away anytime soon.

So what’s the deal? Is it cyclical? Well, yes and no. It’s cyclical in the sense that biotech can come and go over time, but biotech rarely moves in tandem with the market’s overall bull/bear cycles. However, knowing biotech how we know biotech, it is indeed cyclical….just on a different schedule than almost all other stocks. From that perspective, it looks like a secular bull market for biotech.

In any case, the chart explains why now may be a great time to start looking at this hot spot.

You don’t have to look at this image too long to figure out the bigger trend is to the upside. If you want a piece of the action, we’d say all you really need to do is look for a dip to buy on. Though the index is up well off recent lows, on a macro level, we’re still on the low end of a bullish trading zone….one that’s guiding the index upward.

The reason we’re excited is, once these rallies get started, they’re capable of moving the index 20% to 30% higher, or more.

And for what it’s worth, we don’t think you have to look past our website for a couple of names we feel are worth considering. CEL-SCI (AMEX: CVM) is starting to show us more upside than downside, while BioCurex (OTCBB: BOCX) is looking attractively-priced as well.

And by the way, our track record with biotech picks is pretty darn solid. Aside from making some big gains a few different times with BOCX and CVM, Novelos Therapeutics (OTCBB: NVLT) - which we featured early last year - is up by 50% over the last six months, and seems poised to stay on that roll.

While NVLS may be history, we feel CEL-SCI and BioCurex have the exact same kind of potential, and you may not necessarily have to wait all that long to tap into it. Of course, as always, we think the best time to claim your stake is when nobody else is even thinking about a stock…..kind of like now. In both cases, the companies have demonstrated a legitimate and viable idea in the war on cancer.