Final Segment 1

Final Segment 1 Title: 'The Sell Block' .  .  .  .  . Featured Stock(s): Novo Nordisk A/S (NVO) See NVO's official investor relations' site here. See the Yahoo! Finance profile for NVO here.

After this segment, you can see Jim's Sudden:Death picks here...

Jim:   In this Sunday's New York Times, and remember, don't always read the business section... The front page is chock full of great ideas... there was an article, and in that article it told us something staggering...

The number of prescriptions given to children for type II diabetes rose 151% from 2001 to 2007... I immediately took out my pen and paper and said we must make money off of this unbelievable, sad epidemic... but we have to... okay... because it's what you come to me on the show for... I don't want to profit off of anybody's misery but we have a diabetes epidemic in this country... And now it's infecting our kids... The rate of type II diabetes is increasing, this is staggering stuff, I tell you, I thought the article was really eye-opening, 10-15% a year... Now, I'm not going to harangue you about what to feed your kids here... although, 30% of American children are overweight and type II diabetes is a terrible disease to get...

Instead, we're going to try and find a company, yes indeed, to let's say, exploit the diabetes epidemic... Remember, it's Mad Money... It's not Mad Medical...

And to do this, we need to go to the Sell Block... Hmmm, I thought we were going to buy something, well wait a second... it's because I think that's where the best way to play the diabetes epidemic has been lingering... Times for a prisoner release jailbreak, just like I did for Martha Stewart last week after that quarter... People don't think so... I think at $7 and a quarter you buy that stock...

Now, we're releasing another member of the Sell Block today... and it's a foreign company so I'm going to say it very slow and I'll give you symbol... It's Novo Nordisk A/S (NVO)...

I know, confusing, because National Oilwell Varco (NOV*) is NOV... This is NVO... This kind of like we're playing Wheel of Fortune, NVO... I told you to sell this drug company, the top producer of insulin in the world, with a 52% global market share, back on May 10th of 2007 at $51.28... It was a tough market... I was worried about the drug stocks... We had a 14% gain from where I recommended it March 21st, and I just said you know what?... it's time... And the stock has been rotting away in the Sell Block since... although it has done really well while I've been negative on the company... which is another pretty decent reason to let NVO go... it didn't belong there.... and not to mention drink cheap scotch on my dirty linoleum floor because we missed this move... But you know what?... I've got to own my mistakes on this show... I have to, just have to... And if we go right through the bottom, like I've been saying, I'll own that too... I have to make calls, that's part of my job...

NVO doesn't just make insulin... It has what I regard as a diabetes II and weight loss wonder drug in its pipeline called Liraglutide.. This is one of the biggest drugs I have ever seen, perceptively... This drug is in the same class as AMLN's Byetta... a drug that made us lots of money... Remember, we bought the AMLN when we first started the show when it was released in 2005, and then took profits there... NVO's drug is a lot like Byetta, which is made from synthesized Ghila monster saliva... My daughter actually saw one of those, we were like climbing in the Red rocks and anyway... Well this one seems better... and part because it's human based... Liraglutide is people... But also because unlike Byetta, which has to be injected twice a day, NVO's drug only needs to be injected once a day, which is pretty good... It's slow release profile gives people taking it 24 hour coverage... while Byetta only provides 14 hour coverage... Which would you rather do, stick yourself twice or once?... I mean, think about it...

Liraglutide's trial data and approval should be a gigantic catalyst for this stock... The drug is expected to be in the US by the second quarter of next year... When you have something like that, you got to get ahead of it now, you've got to get way ahead of it because it's going to be so big... Also, we should hear more about the drug that NVO capital market stay in September... again, a very near term catalyst... for the stock that we want to be in ahead of... What happens if they show the data then?... they might...

Why do I think Liraglutide is such a wonder drug?... Listen to this... Back in June, NVO released head to head data on this stock against AMLN's Byetta... It showed Liraglutide was better at controlling blood sugar levels, caused similar levels of weight loss... and after 8-10 weeks, incidents of nausea in patients on Liraglutide to be reduced twice as much as Byetta... The drug works better at doing what it's supposed to do, controlling blood sugar and it makes you less sick with fewer side effects than the competitors drug... What's not to like?... In fact, this drug is apparently so good that in mid-June, NVO released the results of a one-year data study on obese non-diabetic patients... non-diabetic people who are overweight, to see if it was a good weight loss drug... And listen to these figures... now you're going to want to go get this on the black market... forget that... The average Liraglutide patient lost 16.5-17.6 pounds... The average patient on Zenocal, which we know has some side effects that are unpleasant, the leading weight loss medicine, dropped only 7.7-8.8 pounds... And even better, 80% of the Liraglutide patient who showed signs of pre-diabetes showed no sign after taking the drug for one year... This is a wonder drug...

This isn't just a diabetes treatment... It aims to be preventive... Again, Barack Obama, his healthcare plan, it is all about being preventive... and if he gets elected President, because prevention ultimately lowers healthcare costs... Obama was emphatic about it during the primaries... The Liraglutide... well I've got to tell you... That is going to be taken up big by our government should it enter phase three trials for obesity at the end of the year...

The market for the class of diabetes drugs Liraglutide belongs to... it is a class with only one other drug, Byetta on the market... $4.4 billion dollars by 2012... compared to just $636 million last year... And since the number of people with type II diabetes, especially children ages 8-12, I think it could be even bigger than that... Hey, let's throw on an anti-obesity kicker... and then I think we could be looking at a true major blockbuster...

Unlike so many other big pharma companies that I'm afraid to recommend on the show, NVO has got only one drug, Prandon, scheduled to lose its patents in 2009... Remember, patent expiration is why I'm not recommending Pfizer, even though they have a great dividend... and this one expires 2009 only in the US, 2011 in Europe... This will be one off negative gross margin impact... it will not be substantial.

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The Bottom Line!:    Novo Nordisk A/S (NVO) at $70 short term, that's where it's going... And who knows how much higher, if it's diabetes/obesity wonder drug comes out in the second quarter in 2009... I think this is your number 1 play on what obviously what you're going to see a million articles about... This is a diabetes epidemic... So I'm busting it out, even though I put it in my Sell Block... I'm busting it out of the Sell Block right now... The stock was up $2 bucks today, you do not need to chase it... It trades overseas... if it comes in a little, especially on a bad employment number, stick with some NVO.