Sarepta Therapeutics
Sarepta is largely a bet on a drug called Eteplirsen, which is used to treat Duchenne muscular dystrophy, a rare genetic condition that leaves patients wheelchair bound by their teens.
"Back in October, Sarepta spiked up to nearly $45 on some downright miraculous clinical trial results, showing that their drug actually improved patients' ability to walk. I say miraculous because the current treatments for this disease only slow the deterioration, this drug may reverse it," Cramer explained.
Currently, Sarepta is trying to file for accelerated approval with the FDA in order to skip phase 3 trials. "That's a bold move that tells me just how revolutionary this drug could be," Cramer added.
"We'll likely get more clarity on this by the end of the month," Cramer explained and therefore the environment is somewhat binary.
That is, if the FDA says yes, the stock could roar. However, if the FDA refuses and Sarepta has to spend time doing additional trials, the stock could decline sharply.
Nonetheless, Cramer thinks the risk is worth the reward.
* If the scenario outlined above presents too much risk, but you remain interested, Cramer suggested waiting for the FDA decision. If it's negative and the stock declines, he suggests buying weakness because he thinks the long-term opportunity remains strong. Of course if it's positive, you'd have no entry point.
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NPS Pharma
In the case of NPS Pharma, Cramer said the play is a drug called Gattex used to treat short-bowel syndrome. "It's a rare condition where patients need to be fed intravenously for 12 hours a day because their intestines can't properly absorb nutrients.
"This company may have a drug with significant potential because two weeks ago management bought back the international rights to Gattex from Takeda Pharma for $50 million," Cramer said.
That's a significant move and one which Cramer interprets as a vote of confidence.
Also Cramer says the company has a second drug that could be very promising. "It's called Natpara, and threats hypo-parathyroidism," said Cramer. "It has yet to be approved in the United States, but NPS expects to file their new drug application with the FDA sometime in the second half. It could potentially do $350 million in peak sales."