Cramer Speculates on Dialysis Drug (AMAG, XCR)

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On tonight’s MAD MONEY on CNBC, Jim Cramer said he had a speculative biotech stock.  His pick in the sector is AMAG Pharmaceuticals, Inc. (AMAG) because of its soon to be approved  ferumoxytol, a newer and better intravenous iron treatment for kidney disease patients on dialysis.    Cramer thinks there are many reasons to like this one:

  • ferumoxytol should be approved later in the year;
  • he thinks a secondary has put pressure on it, although that gives it more cash to stabilize the stock;
  • has its own strong sales force;
  • was given an untimely and unwarranted analyst downgrade;
  • will perform better than existing drugs on the market;
  • a competing biotech drug received negative FDA comments on safety, yet that isn’t AMAG’s issue; and he thinks this can expand the market from $400 million annually to much higher.

We recently covered a speculative portable dialysis device maker (in prototype and development stage) on our "10 Stocks Under $10" called Xcorporeal, Inc. (AMEX: XCR) which has risen in the last two weeks since being included.  We have also reviewed some of the lower-tier dialysis names for this as well.

We would note that this AMAG traded at $56.00 after an upgrade just in early February and shares closed under $40.00 Friday.

Jon C. Ogg
March 28, 2008

Jon Ogg produces the Special Situation Investing Newsletter and he can be reached at jonogg@247wallst.com; he does not own securities in the companies he covers.