When he dug into the fundamentals, it became obvious to Cramer that this company has more going for it than many other public biotechs. The company isn't another development stage biotech with no products coming to market.
It has also invented a proprietary cancer therapy called Tumor Treading Fields, to use alternating electric fields in order to disrupt key molecules inside cancer cells. It aims to make it more difficult for those cells to replicate.
However, Cramer spotted the real business opportunity for Novocure as treating patients with glioblastoma multiforme, or GBM, with its first Tumor Treating Fields device, called Optune. On Tuesday, Optune received FDA approval for treating that stage of the disease.
"This is exactly the kind of recent biotech IPO that I think is worth betting on, and the fact that Novocure is down nearly 19 percent from where it came public last Friday only makes that opportunity more attractive," Cramer said.
Still, he was skeptical of the two other biotech IPOs he researched. Edge Therapeutics came public last Thursday, and spiked 17 percent on its first day of trading. However, when Cramer took a closer look, he found that most of its pipeline is still in a very early stage.
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In fact, the company's lead drug still has yet to move into Phase 3 trials. Edge's stock is dependent on the success of those trials, so Cramer expects that the stock will be very volatile given that there aren't many catalysts for it until the middle of next year.
"In a different market, I might be willing to give this stock my blessing, but in this environment, I think Edge Therapeutics is just too chancy," Cramer added.
Next up was Aclaris Therapeutics, which Cramer also found to be too risky for his taste. This is a tiny company developing novel treatments for skin diseases. And while the company has plenty of projects in the works, they are only just entering Phase 1 trials.
So while its drug could ultimately be worth something, Cramer had to deem it as another risky one-drug wonder. He was also concerned with how fast Aclaris is burning through cash, as they may need to raise more money.
"The monster sell-off in biotech might be creating some opportunities in the space, especially among the newly public companies that have IPO'd right into the teeth of the carnage. However, you have to be careful, because not all of these fresh-faced biotechs are worth owning," Cramer said. (Tweet this)