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

Jim:          This is cancer research week on Mad Money… and we are looking at companies that are fighting the battle against this terrible disease… and we are trying to see if some of them are worth investing in…

Yesterday, I highlighted Bristol-Myers Squibb Co. (BMY*) and Pfizer (PFE)… those are the two most conservative ways to play the fight against cancer… as the week goes on we are going to get progressively more speculative… meaning for younger viewers… with the focus on companies that are focused entirely on treating the many forms of cancer… that is why tonight we are going to go Off The Charts… because I do not like the price of one of these… but I certainly want to talk about it… we are going to take a look at one of the most promising cancer research stocks out there… you have heard me mention it many times…

And the name is Celgene Corporation (CELG)… a local company, I live in Summit where it is headquartered...

Sometimes when you have a big long term theme like this one…looking at the chart first can help us to figure out when and where to buy… even as we know that we might like the company… what does this chart tell us?… I have gone to Dan Fitzpatrick, he is our go to technician and he is my colleague at RealMoney.com, part of TheStreet.com where I am Chairman… I think Dan had some pretty interesting things to say about this one… see he likes Celgene… and I think that we should put quotes around likes… he likes it but he thinks that you should wait until you get a pullback closer to $48... why?… let’s learn what the charts tell us.

Charting is really important… and I know many of you care about it… this is Fitz’s reason… you can see this chart had a major break our here… now it had been in a nasty downturn… it is interesting… you can see that it had a head and shoulders pattern… but that is not what intrigues Fitz… this thing just had a horrible downturn since August of 2008... it bottomed with the rest of the market in March, not much there… in July the company reported a good quarter… and it jumped… look at this jump… boom, that is an amazing jump in a day… this is called a gap… that is a gap… I want to be very basic because it is important… technicians like Fitz say that the gap tends to be filled… now what does a gap being filled mean?… it means that it has to retreat to where it was when it had that breakout… which means this stock in Fitz’s parlance is going lower.

Now, here is where I think that it gets really sticky… he says that if the stock holds this line… the 200 day moving average when it comes down… he thinks that it can bounce… alright, now keep that in mind… because he thinks that if it does not hold, he thinks the stock should be sold because it is going to go down.. so in other words, if it does not hold this blue line, it goes down… and if it does it goes higher.. with me? because that is really important to what I am about to say… I have a problem with Fitz’s approach here… it is why I am a fundamentalist and not a technician… but I do like to show every way to try to make money… and if you are comfortable with technical work?… I am giving it to you.

What is my beef about the way that Fitz is analyzing?… well first I think that Celgene is not cheap here…I agree with him that it can come down… but where do I want to buy it?… now remember I buy in stages… in fact, my first buy would be exactly at the $48 level which he is hoping it holds, right?… if it fails to use Fitz’s parlance, again just staying with the ergo of technical work… if it fails, I do not want to run from it… I want to run to it… I want to double down on a failure… so if I wanted 100 shares of Celgene… I would first buy 50 at the blue line $48... and then I would buy another 50 wherever the technicians take it down to if the line fails… if it does not fail, you have your 50 and you are done.

See I believe and I know that this is going to sound so common sense school… but understand, we are different from technicians… I believe that stocks get cheaper as they go down… and the notion of blowing out something I like just because it trades at a lower price… is totally antithetical to my style of investing… if Celgene breaks down from $48, I would have a great basis… and I would pick up some right here up after the breakdown…I can sit with the stock and do my homework and stay long… remember we do buy and homework here… that is exactly what I do for my charitable trust, ActionAlertsPlus.com… I just sit there and wait for the breakdowns and then I start buying… I do not sell… if you do not know what the homework is, that is one of the reasons why I wrote Getting Back To Even.

If I like Celgene enough to feature it on this week long series about battling cancer… why don’t I just want to pull the trigger and buy the stock right here where it is?… because there is nothing so compelling at this moment that makes me want to jump in… this has a great long term story based on its drugs that treat various forms of blood cancer… and more drugs in the pipeline that treat cancer and inflammatory diseases… so why not take your time?… why not Fitz’s work about your entry point?… and either way you make your first buy at $48... and then use his work again against him, to buy more if it breaks its support.

Why do we like Celgene so much? And why do we have time to buy it?…

Main reason that I like the bio-tech is its huge blood cancer drug, Revlimid… it did $1.3b in sales in 2008... Revlimid is approved by the FDA to treat multiple Myeloma, that is a cancer of the plasma cells in bone marrow… these cancers are horrible… that is in patients who have received at least one prior therapy… Revlimid has also been approved for the treatment of MDS… another terrible blood cancer that was formerly known as pre-leukemia… the drug is still being evaluated in numerous clinical trials for the treatment of a broad range of blood cancers… so this blockbuster drug could be approved to treat more diseases… help more people and yes, make Celgene’s shareholders more money.

There is a lot of momentum behind Revlimid… the sales are accelerating with several launches in Europe hitting the top line… gaining market share in the US… up 3% in the last quarter over the previous one… penetration still only at 34%... it is about to launch in Canada and Latin America… expected to launch in Australia late in the fourth quarter… Japan next year… given that the drug is life saving, we do not think that it is going to be threatened by any government crack downs on costly drugs… however, those fears have kept the lid on this stock and shrunk what is known as price to earnings multiple… it is not going to blow off the fears any time soon… that is a reason why I do not want you to defy Fitz’s chart work.

Good news… it is not a one drug wonder… it has also got Thalomid, which was approved by the FDA in 2006 for patients with newly diagnosed multiple Myeloma… $110m in sales just last quarter… $8m more than what the street expected… it made an acquisition of Pharmion in 2008 so it has Vidaza, that is a chemotherapy agent for the treatment of MDS… $103m in sales last quarter… I mean it has got a lot of stuff… it has got a blockbuster drug with multiple indications including more to come… it has other drugs that give it an incredible portfolio of products that fight many different kinds of blood cancer.. it delivered that better than expected quarter on October 22nd… but it is down 5 points since then… it trades at slightly less than 29 times 2010 earnings.. and that is expensive vs. other pharmaceutical companies… but it has got a 24% long term growth rate… I think that it could go a good deal higher before it stops being cheap relative to earnings and growth… if you like the anti-cancer thesis, you are going to get a chance to make what I think is going to be a terrific trade… not an investment… a trade… ahead of the annual American Society of Hematology meeting… that is December 5th, write that down… Celgene is going to be presenting some terrific relevant data on December 5th… again no hurry though… I would not pull the trigger on this trade until the week before the conference.

Here is the bottom line…

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Bottom Line:     Celgene Corporation (CELG) is a fabulous bio-tech company… with a terrific slate of drugs for fighting cancer… especially Revlimid… great pipeline… I think that it could be a takeover target for a bigger pharma player looking to expand its oncology business… but as Dan Fitzpatrick’s chart shows us… you do not have to buy it right here… let it fill in the gap…you could buy it here if you really wanted… but I would much prefer for you to wait for a pullback to his buy point of $48... remember, you might get a chance to buy this one at a true discount price courtesy of technicians dislike of stocks that drop below the 200-day moving average… now that should not mean much at all to those who want to have a long term call on Revlimid’s potential against multiple cancers… including indications that might surprise everyone down the road… let the stock break down, and then do some big buying.

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