[Beginning of Cramer's verbatim comments for this segment...]

Jim:          Time to get serious… Cancer research week on Mad Money… so the rest of the week we are going to be celebrating the companies that are seeking breakthroughs against the disease that kills over a half a million Americans every year… companies that have made gigantic strides in improving extending life for those with cancer… make no mistake about it… this is an illness that has touched almost everyone… whether it be thru a friend or a family member… including mine… or someone in your community that has been diagnosed… we appreciate the humanitarian value of what these drug companies are doing… but at the same time we recognize that many of you are looking to make money with the pharmaceutical companies and this is a major growth area for them… and that is the reason that we are devoting this week to the battle against cancer… and the companies that are doing the research, that can be very attractive investment opportunities. .. many of them aren’t...

Jim:           Now, the ones we are going to reveal tonight are our steady four legged chair stocks… to go with last week’s metaphor… defensive stocks that can work even if we go down… a drug company with a strong cancer business is a good fit in a diversified portfolio… call me on Wednesday, maybe this is a good way to answer it thru the stocks that we are talking about tonight… that is why we are focusing on who is doing the best work and who has the best franchises… today we are going to start with the bigger more established players… as the week goes on we are going to get more speculative for those who really want to roll the dice… in keeping with what I talk about in Getting Back To Even… the generation on investing way to play cancer research for all but the youngest people is with the two companies that I am going to recommend tonight… Pfizer (PFE), boy I never thought I would ever recommend that stock since 1998.… and Bristol-Myers Squibb Co. (BMY*), which my charitable trust, ActionAlertsPlus.com owns.

These are two steady big pharma names and they happen to have strong cancer franchises that are not talked about enough… when we are looking at a big drug company… one disease is not the only thing that is going to move the needle… as they have lots of exposure to lots of different illnesses… that is true with these two stocks, Bristol and Pfizer… cancer is not the whole story by any means… but both companies have powerful oncology arms that are getting bigger and bigger… especially Bristol Myers.

So let’s look at BMY first, remember why do I say that it is a conservative way to invest as they try to battle cancer?… they have a 5.7% yield… the company just reported a strong third quarter October 22nd, it beat the streets consensus earnings per share estimate by a penny… and delivered 16% earnings growth… that makes it one of the fastest growing big pharma names out there… now, why is it so cheap?… because Bristol-Myers is going to fall off of a patent cliff in 2012... when Plavix, its number one drug for cardiovascular problems, that was $5.6b in sales in 2008, it goes off of patent… but the companies acquisition strategy and its oncology business should help make up for lost Plavix sales.

Bristol-Myers main oncology drug is Erbitux, that is for colorectal, head and neck cancer… it did $749m in sales in 2008... now there the exclusivity lasts until 2017... now the colorectal cancer market has been shrinking…but Erbitux sales in that market has begun to stabilize, up 2% vs. the second quarter… even as they were down 4% year over year… the company could have a gigantic opportunity in Sprycel… that is the leukemia drug that did $310m in sales in 2008... in the second quarter sales of this drug were up nearly 40%… that is really incredible growth… that is year over year… Bristol-Myers is currently testing it in other forms of cancer like prostate cancer… it is in phase III development, that means that it is about to go up or down… breast cancer, that is phase II, that means that it is going to be a long time.

Bristol also has Ixempra for breast cancer, it is doing $101m in sales just last year… but that loses its exclusivity too, but not until 2018... it has got Texal, that did $385m in sales last year… even though it went off patent in 2000... Bristol-Myers has had a lot of success with what is known as its string of pearls take over strategy to expand its oncology and immunology phrases… thank you Stephanie Lynn, who helps run ActionAlertsPlus.com with me, who pointed this out… the company has made 7 acquisitions since October 2007, in order to improve the visibility of its pipeline and diversify its product exposure.. most recently Bristol-Myers just bought Medarex, this was a smart acquisition… they paid a 90% premium back in July.. but it is a deal that doubled the size of its cancer pipeline… the product that is closest to approval is a metastatic melanoma drug… it is in phase III development, again that means very close… it is also being studied for lung and prostate cancer.

Bristol-Myers is not done doing deals.. the company is getting a big $1.75b payout from Mead Johnson the neutreceutical company… it has an 83% stake in it… which on top of the $7.9b in cash that Bristol-Myers already has will give the company more than enough money to keep making pipeline extending acquisitions… remember that it is trying to protect itself from the Plavix patent expiration.

How about Pfizer?… now anyone who has watched this show… since the beginning knows that I have disliked Pfizer… I am changing that tonight… it just closed its massive $68b acquisition of Wyeth… I can no longer be negative on Pfizer… I am going positive right here… it is like it is a whole new drug company… much better than the old one ever was… the Wyeth deal is transformational… it is making it possible for me to like this stock and appreciate the companies 3.8% yield… remember they did cut it… ever without Wyeth Pfizer has been improving… it reported a better than expected third quarter on October 20th… and Pfizer’s most recent pre-Wyeth cost cutting initiative should create $2b in cost savings by the end of 2010.

Just like Bristol, Pfizer has got a patent problem… that is why it is so cheap… Lipitor, its best known cholesterol drug loses patent protection November 2011... two years from now… but I think the Wyeth merger will prevent Pfizer from falling off that patent cliff… the new Pfizer is one of the most diversified healthcare player out there…no drug accounted for more than 10% of the companies 2012 sales… the Wyeth deal should create $4b in synergies… that could be conservative… expected to be additive as soon as 2012... so where does Pfizer stand with cancer?… on its most recent conference call, Pfizer’s CEO said… “We have never been in a better position than oncology.”… so what does Pfizer’s oncology portfolio look like?

22 oncology products and the biggest are Aromazin, that is a $465b breast cancer treatment… and Campdazar, that is a colorectal cancer drug that lost US patent protection in February of 2008... but still did $563m in sales this last year… Pfizer’s biggest cancer opportunity comes from Sutent, which did $847m in sales last year… it is a small molecule drug that inhibit’s the flow of blood to tumors… very important… Sutent got FDA approval in January 2006 to treat renal cell carcinoma… a kind of kidney cancer… as well as approval for a type of gastronal intestinal tumor… in the last quarter Pfizer’s Suten sales came in above expectations… and growth in the future could come from additional ongoing work treating kidney, lung, liver and prostate cancer… the drug has had a few set backs… they are still in 6 phase III trials for Suten that have yet to report… potential, major, block buster cancer drug with multiple indications… those are the two words that you want to look for… anything that treats cancer… because the drugs with multiple indications, ones that treat many different kinds of cancer… are where the big money comes from… remember, this stuff is not light… these are all things that I want to temper any enthusiasm for because this is one tough disease.

Admittedly only 5% of Pfizer’s 2008 sales come from oncology but with the Wyeth acquisition this will make a larger part of the business as it seriously increases the companies R&D focus on oncology… plus Pfizer is devoting a lot of R&D researchers to cancer research.

Bristol and Pfizer are the two most conservative ways to play cancer research on this cancer busting week that we are doing… they are great opportunities for all but the youngest investors… stocks are down since they reported in October… pretty amazing because they both did better than expected… good entry point… they have attractive evaluations… Pfizer 7 times 2011 earnings, growth rate of 8.1, 2010 to 2011... Bristol-Myers only slightly higher… 9 times earnings, 9.1% growth rate in 2011.

Here is the bottom line…

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Bottom Line:     Look no further than Bristol-Myers Squibb Co. (BMY*) and Pfizer (PFE) if you want a good way to invest in the fight against cancer… with a high yielder big pharma name… Bristol has got more exposure to oncology than Pfizer… and it is the one that I like more… but I think Pfizer, amazingly, first time ever, is now worth buying too… now that it has closed it transformational acquisition of Wyeth… you know have the most conservative ways to play the war on cancer… for the rest of the week we will grow more single issue with companies that are focused almost entirely on fighting against this dreadful disease.. including speculative stocks that so many of the younger generation, like the people that I met out at the University of Oklahoma want so much to invest in.

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