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See Jim's
1:30pm valuable
Comments from
today's
"At The Half"
1:30pm show
here...
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Tuesday, 08/12/08
Posted 08/13/08, 10:37
am ET |
(Scroll down to see Jim's
comments below) |
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Today's date:
Tuesday, 08/12/08 |
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Dow Jones: |
11,642 |
- 139 |
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NASDAQ: |
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2,430 |
- 9 |
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S&P 500: |
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1,289 |
- 15 |
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Opening Segment 1
Title: |
'Don't Fall
Behind' |
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. . . .
. |
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Featured Stock(s): |
Genzyme Corp. (GENZ)
See GENZ's official
investor relations' site
here.
See the Yahoo!
Finance profile for
GENZ
here.
See Opening Segment 2,
below...
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After this segment, you
can see Jim's Lightning
Round picks
here... |
JJC:
Ugliness came back with
abundance today... banks,
brokers, rails... they all
got crushed as the oils,
at last, seemed to find
their footing... and the
natural gas stocks - the
worst hit group, other
than banks - actually
rallied...
What's happening?...
I believe that oil and
natural gas have finally
come down to a level where
there might be some
demand... Gasoline,
I told you $3.50...
that's where people pump.
$110 oil... our original
price target, give or take
a buck or two... and the
cleaner carbon natural
gas... it's trading at $8.
Coal's worth $7.50.
They're at parody...
Meanwhile, the banks...
they're back on the
red-hot griddle... as,
suddenly, the analysts
community has turned on
them big, citing weaker
earnings, bad equities
markets... the usual
negatives...
And most importantly
though, we are back where
the SEC is allowing the
kind of free-fire zone
short sell that we can
condemn on this show.
The rules that ban bear
raids are once again
gone... What?
Do you think these stocks
went down for no reason?
The rules are gone.
They are the rules that
stop endless, motivated
declines by short
sellers... who take your
stocks and slam them in
your face, using rules
that should be enforced...
and other rules that they
just threw away that could
really stop this.
The SEC and its academic
bedfellows are out and
doing it again...
Here's a memo, SEC...
Have me come down... I'll
explain to you the way the
world really works... how
the hedge funds drive
these stocks down, now
with your complicity...
and you can explain to me
your position, which
allows banks to get raided
and, ultimately, run into
the ground, perhaps with
bank runs... by
hedge funds needing to
make oodles of money by
rich clients...
Shame on you, SEC...
. . . .
.
My take is that you can
take an oil or bank... if
you don't own either...
and begin the process of
buying, into tomorrow's
raiding. They're
going to raid them all
week and, believe me, they
will raid them...
Oh, by the way, the
rails... totally raided
today... I think they're
going to crush them.
You've got to leave that
group... you've got to
leave them. It's one
of my favorite groups, but
let the hedge funds do
their damage. They
decided to operate on the
rails. They're going
to take them down...
. . . .
.
Now let's play some
offense...
For us on Mad Money, well,
we're playing offense by
playing biotech...
You've heard of "Shark
Week"... this is "Biotech
Week"...
Biotech was the
best-performing group in
1990... It was led
by
Amgen Inc. (AMGN)...
It's also generally
beloved by the democratic
party, even as they hate
big pharma, and they seem
to be poised to win big
this December...
There have been takeovers
galore in the group, the
biggest being Roche's bid
for 45% of
Genentech Inc. (DNA)...
And, finally, for
everything there is a
season... and, for
biotech, that season's
usually the fall...
because it tends to be
loaded with medical
conferences and drug
approvals... a lot of news
coming...
Hey, why does this
matter?... Because,
in this wild market, where
people are shooting at you
from left to right, and
it's anything but (easy),
you need to be grounded in
something in the future...
grounded from lightning
strikes... and you'll know
you'll hold on when the
stocks go down, and you
won't panic...
So we're looking for biotech stocks that
fit somewhere in this template, and the
one I've got today is...
Genzyme Corp. (GENZ).
While the democrats generally love
biotech, they absolutely adore biotechs
like GENZ, that focus on developing
drugs that treat rare diseases with
small constituencies.
GENZ makes drugs that fall into what's
called "orphan" status... meaning that
they treat diseases that affect less
(fewer) than 200,000 people in America,
or in the EU (European Union of
countries)... diseases that occur in
less (fewer) than 5 in every 10,000
people.
If you make orphan drugs in America, you
get seven years of exclusivity, which is
really just another word for no
competition... We still love
a government for, by and of the
corporation... in addition to tax
credits for R&D (research and
development)... great, great,
great... and just imagine how
those tax credits could balloon if Obama
wins... It still looks like he's
going to, although the defense stocks
(which would respond better to a McCain
win) are saying it's getting even.
The EU gives orphan drugs 10 years of
exclusivity. They may be orphan
drugs but, to me, they could make you
Daddy Warbucks...
About 51% of GENZ's sales come from
drugs that treat Lysosomal storage
disorders... They're a group of
rare genetic disorders where a patient
lacks an enzyme that allows their cells
to function normally. There are
over 40 different kinds of these
disorders, and they go by really
difficult names... things like Gaucher
disease, Fabry disease and Pompe
disease, the big three Genzyme treats...
Even though not many people have these
diseases, GENZ still makes a lot of
money selling the drugs, because they
can charge the exorbitant prices...
For example, GENZ's biggest drug is
called Cerezyme... It's for
Type 1 Gaucher disease, which is an
enzyme deficiency that causes fatty
material to collect in the spleen, the
liver, the kidneys, the lungs... brain
and bone marrow. This was a $1.1
billion drug in 2007, even though less
than 5,000 people take it, because the
annual cost of Cerezyme is $250,000...
The New York Times may not think this is
worth it, but the patients do, and
that's what matters...
Cerezyme's manufacturing patents expire
in 2010 here and 2013 in the EU, but
GENZ's got plenty more drugs that still
have exclusivity... it is a beautiful
pipeline...
It's got Fabrazyme for Fabry
disease... that causes lesions and
burning pain in the extremities...
The stuff that they cure is so awful.
This is an amazing company. It
causes kidney failure if not attended
to...
GENZ has U.S. exclusivity here until
2010. Last year, it was a $424
million drug, but the number of people
who take it is expected to grow 18% this
year, 12% next year...
GENZ has so many of these orphan
drugs... It's got Myozyme
for Pompe disease. That's a
metabolic disorder where the patient
doesn't have the enzyme needed to break
down sugar for energy...
patent-protected through 2013...
Aldurazyme for another metabolic
disorder... it has exclusivity until
2010... although GENZ pays
BioMarin Pharmaceutical Inc.
(BMRN)
royalties for this one...
BMRN
has come right back down. I've got
to do some work on that...
It's expected to grow to a $1.1 billion
franchise and all of these drugs cost
between $220,00 and $300,000 a year on
average for just a single patient, and
yet, they've got to pay.
Those are just the orphan drugs.
GENZ's got a great kidney franchise,
which management expects to generate $1
billion in sales by 2010.
. . . .
.
Then there's the pipeline...
I mean, I could see a traditional pharma
company buying GENZ just for what it's
got in the late-stage pipeline, although
they should have bought it years ago,
it's been such a winner...
There's Mozobil, a stem cell
transplant drug that could be worth
$150-250 million. The FDA will
decide in the third quarter whether to
fast track that one.
How about Mipomersen (yes, we had
to look up these names on
the Genzyme website pipeline chart)
for familial high cholesterol.
This one's in Phase III studies.
$450 million... maybe $900 million... a
catalyst coming in the form of four
trials GENZ's doing in collaboration
with Isis, sometime during the second
half of the year...
How about the biggest kicker of all?...
A drug called Alemtuzumab... this
is for Multiple Sclerosis, and it's
already in Phase III. It could be
years away... the last phase of studies
before the FDA approves or rejects the
drug. Look, I don't even know how
big this one is, but the global market
for MS treatment is over $6 billion...
. . . .
.
I think GENZ has what you want from a
biotech...
...extraordinarily expensive drugs, with
exclusive orphan protection... democrats
endorse that... along with what appears
to be a fabulous pipeline.
I don't know... how about $92
instead of $78?...
Remember, biotech works. A $78
stock I think goes to $92... that's if
nobody decides to buy it for a
takeover...
. . . .
.
The Bottom Line!:
I believe the time is still right
for biotech, particularly when the banks
go down... biotech tends to go up the
next day. I think
Genzyme Corp. (GENZ),
with its orphan drugs, is going to be a
big winner, come November. The
democrats love this kind of company, as
much as they hate big pharma. I
think GENZ... yesterday, we did
another biotech stock. You
know we're going to stay on biotech all
week. These are the winners.
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■ |
Stock Snapshots - Includes
all stocks mentioned above |
■ |
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Jim
Cramer's
rating on
this stock |
STOCK
SYMBOL |
Closing
price
that
day |
Opening
price
next
day |
Full Company
Name/Comments
(see comments above for
each) |
|
|
GENZ |
79.53 |
na |
Genzyme Corp. (GENZ)
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See all of tonight's stocks'
latest quotes on
Yahoo! Finance |
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Most popular
investing books ordered:
(click any book to see at
Amazon.com) |
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