Cramer on Zyprexa, an Anti-Psychotic Drug

I need you to think like me. Whenever there is a loser there is usually a winner. What did this drug do, Zyprexa, which made Lilly pay out $700? Caused some diabetes and weight gain for people who are trying not to be psychotic. This drug is a HUGE drug for Lilly. Most popular drug. It accounts for 32% of their sales, even more of their profits last year – Zyprexa had 4.4 billion dollars in sales. Zyprexa patent doesn’t expire until maybe 2011 so you’re thinking maybe “hand-over-fist” for as long as the eye can see right? WRONG! I think Zyprexa will be beaten to a pulp before then. It’s market share being gobbled up by a leaner, meaner class of drugs.

Zyprexa, especially after this settlement will continue to decline. That’s gonna hurt the Lilly. You know who it’s gonna help? It’s going to be outclassed by Abilify, a new anti-psychotic drug from Bristol-Myers (BMY). Sales grew by 63% for Abilify in 2004. In March of this year Abilify accounted for 11% of all new anti-psychotic prescriptions. Its 2004 sales were only 188 million so it’s got a lot of room to grow. BMY only gets 65% of net sales but I think this drug will sell so well that that’s just gonna be a little asterisk. Do you really care about these numbers? This is a really emotional topic for those involved. All anti-psychotic drugs have intense awful side effects. But Abilify is on the upswing because it doesn’t cause the kind of weight gain that’s causing Lilly $700 million in payouts. In fact in one study Abilify actually caused patients to lose three pounds compared to Zyprexa which caused patients to gain 9 pounds.

You’re saying Cramer, isn’t this already accounted for in BMY’s price? Analysts have been saying this drug could capture a billion dollars in sales by 2006 for the past 2 years. Analysts have been saying that and I think they’re on the right track. But sales haven’t been growing fast enough to meet that figure so the market and all the people, critics, analysts are saying it’s not gonna reach the number. If Zyprexa had 4.4 billion in sales why not Abilify - a drug that is just as effective as Zyprexa but doesn’t turn you into a blimp? I think this Zyprexa settlement is the turning point, and the beginning of Abilify’s dominance in the anti-psychotic market.

Now Bristol Myers hasn’t been in the greatest shape lately. In good conscious you can’t just buy it on Abilify. But the BOTTOM LINE in this Bristol Myers bull case is that I think Abilify is about to turn on the juice and in the interim you get a 4.5% dividend. You are being paid to wait for the good news to come out.

Q: Do you think the street is way too fixated on blockbuster drugs?

A: I made my career on a particular drug. I was at Goldman Sachs in 1986 and there was a drug called Mevacor, it was an anti-cholesterol drug. I went around and checked all the analysts on Wall Street and said what do you guys think on this Mevacor drug? Nobody had more than 200 million in sales for it. You know what the largest prescription class of drugs is now. The anti-cholesterol drugs and that’s what Merck had.

Big drugs are what matters in pharma. This drug could be HUGE. BULL – Anti-psychotics are gigantic.

Q: Should I swap out of JNJ and get into DNA?

A: I do not like MRK here, do not like PFE. I wouldn’t sell JNJ other than perhaps for the stock of BMY which I am changing my view on here and going out positive. Bottom line: Bristol, it’s now for me.

Kerkorian and GM

Maybe he was smartest than all of us. Maybe he knows more than all of us combined. He wasn’t stuck in his position trying to get loud so he could bolt. He’s still trying to buy. Others dismissed him; he’s just kind of a nutty guy. Here we are a few weeks later and who’s laughing at Kerkorian now? I think he had the most important variable in his head. The unions.

It’s not like nobody likes GM cars. They are bought by the millions, we may think its not as good as the beamer but wait a second. Any company that also makes as much money as GM does in finance can’t be all that moronic either can it? We also know in this country, at least until Kerkorian got involved, that you can’t defeat the unions once they are in. Once they are in we have learned to presume that the companies will no longer be competitive regardless of what the unions say about being able to work with management.

What people were really scoffing at when laughing at Kerkorian was the intransigence of the American Union worker. What if that’s not the case? What if the unions really do make real give ins? In the face of Kerkorian coming in and saying we’re gonna make these cars south of the border. What f the unions see a lock out coming and they know they gotta deal with this now? That’s what we’re dealing with in this stock which I think is now really on the upswing. It’s now screaming this - ALL ABOARD ALL ABOARD ALL ABOARD. If you get the costs down, you’re not going to have the next Google; you may not even have the next Time Warner. But, you’re going ot have a stck with earnings that might go higher, not lower. Bottom line: That’s what Kerkorian may have known all along. Hey, he’s a crafty guy.

Q: Would Sale of GM Financing Units Help Bonds More than Stock?

A: What I want to do is not break the company up, I want the costs down. IF you want to speculate in the bonds don’t own the GM parent bonds. The better bonds are the GMAC bonds which I would be buying hand over fist out three years.

Q: Is the declining in steel prices enough to justify getting back into Ford or GM?

A: The nuttiness about GM is that it isn’t nearly as levered to steel as it is to health care costs. The bottom line is: You don’t buy GM off of steel. You buy it off of union and health care, that’s all that matters.

UBS Analyst, Neil Currie joins Cramer:

Cramer: Currie downgraded Whole Foods today to reduce, which is genuine Wall St gibberish for sell.

Currie: This is a company with great sales growth, good management, execution. Think they can build a lot more stores and they are widening their demographic reach. At the end of the day we have to put it in valuation context and none of these things are new. We downgraded it on valuation, didn’t change our price target.

Cramer: You have it as a sell. Did you have it as a buy or super strong buy before this?

Currie: No it was a neutral or hold.

Cramer: Did you have it as a neutral or hold when it went from 70 to 120?

Currie: We raised our price targets through that period.

Cramer: Price target is 100. When it gets to 100 will you embrace it?

Currie: If nothing changes and it gets back to 100 its going to neutral.

Cramer: Bottom line: I’m a BULL – These 100 stocks, SHLD, WFMI, GOOG – If you were to start buying the WFMI and not buy once – candidly last week I thought it would bottoming at 116 last week, my very bad but I don’t have the denim jeans out to hang myself – I would tell you this: If you were buying 100 shares of WFMI, buy 25, goes down another 5 bucks get another 25, gets to 100 hey, then its really right. BULL sound.

Poking Fun at Microsoft: Does MSFT Need Defibrillators for a Jump Start?

Contrary view is that if MSFT is such a pitiful helpless giant why is it that every time it has a thought that comes through Ballmer’s head it knocks down the stock of whatever stock it might come in contact with. Today it was Adobe. Microsoft has some sort of Adobe killer ready for release. How about AAPL? 1.6 billion out of AAPL’s hide because MSFT has a new subscription service. Also SYMC. HYSL, BOBJ, COGN all getting whacked on business intelligence objectives from MSFT. GOOG occasionally on search. The contrary view says that if MSFT has that much going for it it’s got to be worth more than what its trading for. I just don’t know when. I would never short the stock but I just can’t pull the trigger on the long side. I can’t see how these new initiatives can add earnings to the heart of Microsoft. Maybe the new Xbox and / or Longhorn will add earnings. Until then, I’m giving it “Paddles”.

Q: Is Microsoft (MSFT) a Cheap Way to Play Google (GOOG)?

A: I do not want to use Microsoft as a cheap way to play GOOG. What’s good for Google is good for Google.

JetBlue CEO, David Neeleman joins Cramer:

Cramer: .26 cents this year you’re gonna beat that aren’t ya?

Neeleman: I’m not going to tell you. I’m just worried about getting through thunderstorms tonight. If I do that the earnings will take care of themselves.

Cramer: What made me want to do that set up was that I see a lot of estimates sneaking up by different analysts.

Neeleman: You know, fares are going up. Are load factors for the last 4-5 months are up year over year. We are about 20% hedged for fuel.

Cramer: Why are airlines making so little money when every time I fly every plane is packed, there is no room in the overheads, we are squished in and we don’t even get peanuts anymore.

Neeleman: …Fuel is rising faster than the average fares are so obviously that puts a squeeze. It’s pricing power the reason that so many people are traveling is because they are paying low fares. If the fares were a lot higher maybe we wouldn’t see so many people on those planes.

Cramer: Why is that in any other business when you can’t pay the creditors the creditors take the companies over but in the airline business when your competitors can’t pay the creditors they go crying to congress and ask for a bailout and they get it?

Neeleman: They see themselves as a real security interest for the country so they ask for it and you know…

Cramer: Do you think that’s fair? That the other guys pay their executives hand over fist and as the pension gets in trouble they go crying to their congressman?

Neeleman: You’d like to see the invisible hand of the economy take care of the weak players and the strong would survive. In our industry it doesn’t seem to work that way.

Cramer: Bottom line: This man is a money maker. If I had to buy one airline I have to admit, it would be JetBlue. I think the numbers are low. BULL.

Disclaimer: I AM NOT JIM CRAMER. I sometimes write the summary in first person because my brain doesn't quite move fast enough to process and type at the same time, so please excuse that. This blog has no affiliation with Jim Cramer, CNBC, or Mad Money. If you'd like to contact Jim Cramer email him at madmoney@cnbc.com, or call 1-800-743-CNBC. This summary is done for you and I to be able to better track and follow Jim Cramer’s comments. The show goes by quickly so I try and catch as many keywords as possible for each stock because of this, ACCURACY IS NOT GUARANTEED but is however strived for.

NOTE: I've added today's closing price to each of the stocks listed below. The "m" next to the stock symbol links to the stock on moneycentral.msn.com while the "y" does the same to finance.yahoo.com

BMY - m y - 24.99 - Bristol Myers Squibb Co. - BULL - Its now for me - see comments earlier in show
PFE - m y - 27.68 - Pfizer Inc. - Don't like it here
MRK - m y - 31.39 - Merck & Co., Inc. - Don't like it here

The Lightning Round:
AOC - m y - 24.7 - Aon Corporation - Personal foul - we don't play the takeover game. I say swap into MMC
INTC - m y - 26.98 - Intel Corporation - It will eventually get to 30 but at 30 I think we gotta go because enough is enough
CVS - m y - 29.03 - CVS Corporation - BULL - Guy who came on the show earlier in the week, forget his name, was bad mouthing it and he's wrong
PA - m y - 20.25 - PanAmSat Holding Corp. - This may be the video internet play that I've been waiting for. I think the stock goes higher - BULL
CHE - m y - 41.17 - Chemed Corporation - BULL - roto rooter - its going higher
CME - m y - 247.3 - Chicago Mercantile Exchange Holdings - SELL SELL SELL - I think you saw the high his week. Get back in at 220, its too high right now. Move on.
GW - m y - 6.7 - Grey Wolf, Inc. - One of my absolute favorite land drillers - BULL - think that stock is ready to rock
SWC - m y - 6.95 - Stillwater Mining Company - BULL - I like that stock.. Don't forget, gold 52 week high in euros today
ATVI - m y - 17.15 - Activision, Inc. - Swap out - go into ERTS, no forget that - I need you to be in GME that gets em all!
CYBX - m y - 39.45 - Cyberonics, Inc. - The guy who runs cyberonix is the reason why that stock goes higher
SAFC - m y - 54.51 - SAFECO Corporation - Good I like PGR more BULL
DPZ - m y - 21.95 - Domino's Pizza, Inc. - I like Papa Johns and Domino's - the world is big enough for both those players - BULL
PZZA - m y - 40 - Papa John's Int'l, Inc. - I like Papa Johns and Domino's - the world is big enough for both those players - BULL
NBR - m y - 59.5 - Nabors Industries Ltd. - Like it and these others - BULL
HAL - m y - 44.8 - Halliburton Company - Like it and these others - BULL
SLB - m y - 73.25 - Schlumberger Limited - Like it and these others - BULL
OII - m y - 40.32 - Oceaneering International - Like it and these others - BULL
BHI - m y - 48.56 - Baker Hughes Incorporated - Like it and these others - BULL
PHEL - m y - 25.51 - Petroleum Helicopters - Like it and these others - BULL
BR - m y - 53.27 - Burlington Resources Inc. - BULL - natural gas is for me
ECA - m y - 39.38 - EnCana Corporation (USA) - While getting BR get this
CHK - m y - 21.5 - Chesapeake Energy Corporation - Boosted dividend after close, two thumbs up
GLW - m y - 15.96 - Corning Incorporated - Don't like fiber at GLW, LCD business is en fuego my friend - BULL - two thumbs up for corning
GFIG - m y - 32.37 - GFI Group Inc. - Get Metris (MXT) instead
MHS - m y - 49.75 - Medco Health Solutions Inc. - Should do very well under Medicare changes in 2006. Get into UNH instead
UNH - m y - 50.79 - UnitedHealth Group Inc. - BULL - more upside than MHS - better story - deal with WAG and AARP
AMZN - m y - 34.95 - Amazon.com, Inc. - Least favorite dot com. Get into YHOO which is better
YHOO - m y - 36.81 - Yahoo! Inc. - Better than AMZN
WDC - m y - 15.65 - Western Digital Corp. - Here's the problem - there are new plants coming on in 2006 that will hurt pricing and the allocation for disk drives from Maxcor just ended. You're in the 8th inning for WDC
HSP - m y - 38.82 - Hospira, Inc. - People are buying cause they think its gonna be the next misnamed. I endorse that idea, HSP is a good company

REMOVED PREVIOUS OII entry

BSX - m y - 28.6 - Boston Scientific Corp. - GDT and JNJ merger will be better - that's a bull
SPH - m y - 34.24 - Suburban Propane Partners, L.P. - Good cheap stock, hold on to that - nice dividend too - BULL
SNE - m y - 35.85 - Sony Corporation (ADR) - Ehh. Ring the register - Bear
NE - m y - 61.6 - Noble Corporation - Noble is like Grey wolf but with a better balance sheet and management - BULL- I'll take it higher from here
CTAS - m y - 39.73 - Cintas Corporation - Like the business but think about Aramark which is also in the uniform business
SAFM - m y - 39.89 - Sanderson Farms, Inc. - Chicken business is okay. Be careful though. Pork wasn't able to price this week, an IPO that failed
CSCO - m y - 19.24 - Cisco Systems, Inc. - Sell sell sell
SYY - m y - 37 - SYSCO Corporation - All the places it bring the food to are hitting 52 week highs and so is it - BULL
ADCT - m y - 22.56 - ADC Telecommunications - En fuego there. Thinking the telecom companies are starting to spend
PNRA - m y - 64.59 - Panera Bread Company - Not gonna tell you to let go of it. Think its in the sweet spot of the restaurant business. It goes higher from here.
WEN - m y - 47.9 - Wendy's International - Think it goes higher from here
NDAQ - m y - 19.23 - Nasdaq Stock Market Inc. - I think I would take profits in it - think the stock is too high - ring the register
ASD - m y - 42.88 - American Standard Companies Inc. - I love American standard - may have the best CEO in America - Fred Poses
AMAT - m y - 17.15 - Applied Materials, Inc. - DIVE DIVE DIVE DIVE DIVE - SELL SELL SELL SELL SELL
LYO - m y - 24.07 - Lyondell Chemical Company - No no no
DRYS - m y - 16.05 - DryShips Inc. - I don't like any shipping company, I'm not going to Greece.
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