Cramer: Already High, This Stock Trades Higher

Biogen is a leading maker of the most effective treatments for multiple sclerosis, a disease which afflicts some 350 thousand people in the United States and perhaps two million worldwide.

"Because multiple sclerosis is a chronic condition that comes and goes, the goal of every MS treatment is simply to prevent relapses, basically to keep the disease at bay," Cramer explained. "Therefore, there's a population of people who need to take these drugs for life. The total MS market should be worth nearly $18 billion by 2016."

Among Biogen's treatments is a drug called Avonex, said Cramer.

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"It's a mature drug. Nonetheless, it still generated $2.9 billion in sales last year," he explained. "Biogen also makes Tysabri, viewed as having more side effects but also seen as a more effective treatment for MS. And just this week, Biogen received approval for a brand new MS drug called Tecfidera.

But Biogen is about much more than MS treatments. Cramer is also impressed with drugs Biogen has developed to treat other health issues.

"Biogen gets a piece of Rituxan," Cramer explained, "That's Roche's drug for non-hodgkins lymphoma and rheumatoid arthritis. Their cut is equal to about 20% of the drug's sales, and that came to more than a billion dollars last year."

Also the company is working on a hemophilia franchise that could ultimately be worth $3 billion in sales by the second half of the decade.

On top of that Cramer said they have promising new drugs still in earlier stages of development.

"Biogen has an antibody based therapy for MS that's in phase 2 development and they're partnered with ISIS on a spinal muscular atrophy drug that generated positive data just last week, but it's still only in phase one trials."

All told, Cramer likes what he sees.

"Given the strength of the company's MS franchise and their pipeline, I think there's still plenty of upside here. Of course, I hate to chase and the stock is at its 52-week high now, so I say you wait for a pullback and then do some buying—that is, if we get one."

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New IPO for the Dogs, Says Cramer

Background

Zoetis makes anti-infectives, vaccines, anti-parasite medications, as well as medicinal feed additives and other pharmaceutical and non-pharmaceutical products for the animal health industry.

About 65% of the company's sales are livestock related, and the other 35% come from healthcare for dogs, cats and horses.

"Make no mistake, animal health is a huge business," said Cramer.

According to Pfizer, just vaccines and medicines for animals represents a $22 billion market. And after the spin-off, Zoetis will be the largest manufacturer of animal health products on earth, with roughly a 19% market share.

"In many ways, designing medicines for animals is actually a better business than coming up with drugs for humans. You don't need to do as many clinical trials, which means your products get to market much more quickly," Cramer said.

"Also most animal health customers pay out-of-pocket, so the insurance companies have a lot less leverage over Zoetis when it comes to reimbursement," Cramer added.

"And you also have less competition from generic drugs in this space, another big positive," he said.

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Cramer: Don’t Overlook This Biotech

Although the developments were heart-breaking for the medical community – the investment community always looks at price action and the price action was impressive despite the bad news.

Piper Jaffray estimated Biogen spent $75 million to $100 million on the failed trial alone.

"Yet, the stock barely took a hit," said Cramer.

In part that's because Biogen also has a major hemophilia program in the pipeline, one that could potentially generate $3 billion in sales by the second half of the decade.

However, the relative strength in the stock price more likely reflects Biogen's position in n the multiple sclerosis market.

As you may know, MS is it's a life-long, chronic, often disabling disease that attacks the central nervous system. Although there's no cure for MS, there are drugs that can keep the disease at bay by preventing relapses.

"And currently Biogen has two of them on the market, two blockbuster MS drugs, Avonex, which is one of the traditional treatments, and Tysabri, a newer, more effective drug that also has a higher risk of bad side effects," Cramer explained..

Also Biogen's is working on a third multiple sclerosis drug, BG-12, one that can be taken orally rather than injected.

Management has said it would appeal to a very broad patient population. In fact, BG-12 could become the new leading first-line treatment for MS, potentially doing $2.4 billion worth of sales in 2016.

"That's a big deal," said Cramer.

And chatter on the Street suggests the FDA could approve this new drug as soon as late March.

All told, Cramer is bullish.

"Biogen is a classic biotech stock with a bright future and I think it's exactly the kind of thing you should think about buying when we get broad market-wide weakness," he concluded.

Find out more about this company and drugs in the pipeline from Dr. George Scangos, the CEO of Biogen Idec, in the video above.

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