Biotech is the best sector in which to speculate right now, Cramer said Friday. The $193 billion in takeovers just in the past month indicates there’s a good chance to find another winning stock here.
Cramer likes Cougar Biotechnology for its upcoming prostate cancer treatment. Abiraterone is in Phase III trials, and the Food & Drug Administration has given the drug “special protocol assessment” because it treats an unmet need. If the FDA gives Abiraterone the thumbs-up, then Cougar might enjoy patent protection until as late as 2017.
Abiraterone works by preventing prostate cancer cells from getting the hormones that stimulate their growth, and the study data so far looks promising. One Phase II trial showed that 71% of patients who took the drug saw a more than 50% reduction in prostate-specific antigens, or PSAs. Doctors look for these PSAs when they test for the disease. So the fewer they find, the better the drug is doing its job. Another Phase II trial showed that 48% of patients saw that 50% PSA reduction. This is all good news, Cramer said, given how hard prostate cancer can be to treat.
The Phase III trials have been split in two: one for post-chemotherapy patients, which started in April 2008, and one for pre-chemo that started early this year. Interim data for the post-chemo trial should come in the second half of 2009, with the pre-chemo info coming in the first half of 2010. As we said, the FDA has a watchful eye on these trials, and the successes in Phase II should carryover this time around. Good news would send Cougar shares higher.
Admittedly, previous prostate treatments have failed for other biotech firms, but Cramer seemed positive. The company is sitting on enough cash to last another two years without an additional infusion, and two other drugs in the pipeline – one for multiple myeloma, a kind of blood cancer, and another prostate cancer treatment – are in Phase I development. If Abiraterone passes with FDA approval, companies like Celgene , Biogen Idec , Cephalon , Genzyme and Bristol-Myers Squibb could come knocking.
Keep in mind, though, that no matter how bullish the case, this is still a speculation stock. Cougar’s market cap is less than $600 million. So use limit orders and build a position slowly, buying small quantities each time. And be patient – investors shouldn’t pay up for this stock.
Cramer's charitable trust owns Bristol-Myers Squibb and Celgene.
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