cramer comments from 3/24 (thanks to madmoney recap - their caps not mine)
"... 'ACID TEST'
RIGHT NOW, NEXIUM - YOU KNOW THE HEARTBURN/ACID REFLUX DRUG - DOES $4.4 BILLION IN SALES EACH YEAR.
HOW WOULD YOU LIKE TO OWN THE MAKER OF THE NEXT NEXIUM, SINCE YOU'RE NOT GOING TO MAKE ANY MONEY OFF NEXIUM NOW.
THE NEXT NEXIUM? I CALL IT SANTARUS (SNTS) !
THEIR DRUG IS ZEGERID! THIS DRUG IS A POWDER RIGHT NOW, BUT IT WILL LAUNCH IN CAPSULE FORM NEXT MONTH. AND I THINK YOU'VE GOT TO BE IN BEFORE THAT LAUNCH! BUY, BUY, BUY!
OBVIOUSLY, YOU SHOULD NOT BUY THIS STOCK AFTER THE CLOSE TONIGHT! YOU SHOULDN'T EVEN BUY IT ON MONDAY-TUESDAY-WEDNESDAY. YOU SHOULDN'T BUY IT UNLESS YOU GET A GOOD ENTRY POINT.
SNTS HAS A GREAT STORY. IT'S NOT GREAT BECAUSE ZEGERID IS A BETTER DRUG THAN WHAT THE COMPETITION HAS. THAT'S TRUE! IT'S JUST NOT THE REASON.
THE STORY IS GREAT BEACAUSE I DON'T THINK ZEGERID EVEN NEEDS TO DO WELL, EVEN NEEDS TO HAVE MEDIOCRE SALES FOR SNTS TO MAKE YOU SOME MAD MONEY.
THERE ARE TWO THINGS GOING ON HERE. FIRST, ZEGERID IS BETTER THAN BOTH NEXIUM AND PREVACID. THOSE ARE THE TWO DRUGS THAT CONTROL 2/3 OF THE MARKET FOR PROTEIN PUMP INHIBITORS.
SECOND, SNTS IS SO CHEAP THAT ZEGERID ONLY NEEDS TO TAKE ABOUT 1.6% OF THE MARKET FOR THESE DRUGS TO MAKE YOU SOME MONEY WITH THE PIN ACTION.
PLUS! IT'S THE ONLY NON-INTRAVENOUS DRUG THAT'S BEEN OKAY'D FOR GASTRO-INTESTINAL BLEEDING. SO, WE SHOULD EXPECT ZEGERID, BECAUSE IT WORKS WHERE THE OTHER DRUGS DON'T, TO HAVE PRETTY STRONG SALES. THAT'S WHAT I WOULD EXPECT, BUT I DON'T RELY ON IT.
RIGHT NOW, SNTS TRADES AT $6 AND CHANGE. ZEGERID ONLY NEEDS TO GAIN A SMALL MARKET SHARE FOR SNTS TO SEE PROFITS.
IN 2008, THE MARKET FOR PROTEIN PUMP INHIBITORS SHOULD BE BIGGER THAN $20 BILLION! WOW! THE GUYS AT THOMAS WEISEL THINK THAT BY 2008, ZEGERID CAN HAVE JUST 1.6% OF THAT MARKET.
THAT DOESN'T SOUND LIKE A LOT. BUT IT MEANS $323 MILLION IN SALES. NOW, MOST OF SNTS' PEERS TRADE AT 3x SALES. BUT, IF WE SAY IT TRADES AT JUST 1.5x SALES IN 2008, THEN WITH THOSE NUMBERS, THIS IS AN $8-$10 STOCK!
BUT, SINCE THE SCIENCE IS TELLING US THAT ZEGERID IS THE BETTER DRUG, I THINK WE SHOULD EXPECT IT TO TAKE SOMETHING IN THE RANGE OF 3-5% OF THE MARKET. THAT COULD PUT THIS STOCK ANYWHERE IN THE $10-$35 RANGE.
THE BOTTOM LINE!: YOU WANT TO TRY TO MAKE SOME MAD MONEY. I THINK THE OPPORTUNITY IS THERE AND IT'S IN SNTS! ..." |
