Wednesday, December 3, 2008
(Cont'd from above)...

Jim (cont'd):   

At this American Society of Hematology meeting, Cramer-fave, biotech company Celgene Corporation (CELG*)... has decided to... they're going have an investor dinner on Sunday, December 7th. The expectation is that Celgene will provide guidance for at least the first quarter of 2009 at that dinner, and the Street's expecting revenue growth of 44% and earnings-per-share of 6%.

We can't find those numbers elsewhere. We just can't.

This is a genuine catalyst for a genuinely-great stock that I own for ActionAlertsPlus.com, my charitable trust... that works as a trade off of the American Society of Hematology meeting... and also as an investment, because of its great portfolio of blood cancer drugs.

Even without its investor dinner, Celgene is expected to dominate the conference this year, because Revlimid, its top drug, the clear leader in the treatment of various different blood cancers, is supposed to be the sexiest thing at the meeting. I told you these guys... this beats the Shriners... not the Elks...

Celgene is going to be highlighting a hundred abstracts, with 20 poster presentations on its whole portfolio of drugs at the meeting. Wow. The whole thing should be just a great trading opportunity if you think their guidance will meet the Street's expectations.

That's enough about the trade. I want to talk to you about Celgene, the investment...

Because, frankly, there just aren't a lot of investable stocks at the moment... just a lot of trades... and I think Celgene happens to be one.

There aren't a lot of turbocharged 30%+ growth stocks either in this market. We just saw Research In Motion (RIMM) be shot down... but Celgene is one of these.

You want something more recession-resistant?... Everyone's that in biotech... You don't stop paying for life-extending cancer treatments, even if they cost $50,000 per patient... like Celgene's drugs do. Just because we've got a recession doesn't matter... at least not if you have medical insurance, and hopefully with Obama's "affordable medical insurance for all" scheme will mean more patients get Celgene's drugs. Good for patients. Good for shareholders. Everybody's happy.

Don't forget, unlike big pharma companies, biotech names like Celgene are also beloved by the democrats who have taken over the government...

What's Celgene got going for it? Revlimid is the big product that makes up 60% of Celgene's sales. You've heard about it before... Remember, we had Bob Hugin (CEO) at our University of Virginia show?... It treats different blood cancers, but was first approved for multiple myoloma, and its sales are expected to hit $3 billion by 2012. Revlimid's shown a 96% 1-year survival rate for patients with multiple myoloma. That's the highest survival rate for that disease. Plus it's a pill, not an IV, so it's much more pleasant to take.

We should look for Phase II data on Revlimid for aggressive non-Hodgkin's lymphoma, as well as data on Revlimid for chronic lymphonic leukemia coming out of this conference. These are big... these are big illnesses, and this could be very, very good for the stock.

Celgene's #2 drug is Vidaza, which is an orphan drug, meaning it's for a small population of patients. It gets exclusivity in the U.S. until 2011, and the E.U. until 2018. This is the first and only drug that demonstrates increased survival in patients with myelodysplastic syndromes. It's expected to have sales of $490 million in 2009.

Celgene's got more than 100 clinical trials in its pipeline to expand the usage of its drugs into additional forms of cancer. It's also developing new drugs for inflammation diseases and psoriatic arthritis.

So how do you value a company like Celgene... especially in this market?...

It's got three approved drugs with little or no competition which gives it really good earnings visibility. We know that that's hard to find anywhere... an important concept. We have a pretty good idea of what the baseline should be next year, and in 2010 and 2011... that's visibility... On a clear day, you can see Celgene's earnings...

Celgene has only penetrated a small fraction of the blood cancer market. It's layering on additional indications for its drugs that have already been approved. It's less risky than trying to get new drugs approved, because there's already a safety track record.

The company expects to finish 2008 with $2.2 billion in cash and cash equivalents... no debt. It's balance sheet is a thing of beauty. Right now, it's down 25 points from its high, trading at 23x earnings, despite this unbelievable growth. And you can believe in the multiple with a stock like CELG, because of the way you can trust the earnings, because they actually have visibility, even though it should see 40% earnings growth, and 30% cost-revenue growth, for the next three years...

I think the stock should trade at... with interest rates as low as they are... that's a function of P/E multiples... I think it should trade at 30x earnings. There are many, many stocks that do not have this level of growth. This is one of the few, so it gets a premium multiple.

I think CELG goes back to the high $60s next year.

Here's the bottom line...


The Bottom Line!:     Celgene Corporation (CELG*) is biotech, so I think it's safer in this kind of environment, where the economy... where like the ECB doesn't do the right thing, or the unemployment number shows a big spike... Celgene goes up. It's got a great catalyst coming up this weekend... fantastic drugs... unbelievable growth. That's right... Celgene... a terrific biotech... is a buy.

Read Jim's next Segment here