Inspire Pharmaceuticals is an attractive stock, partly because it may be a takeover target, celebrity investor Jim Cramer said during his "Mad Money" TV show on Friday.
Inspire's larger partner Allergan has said it's interested in expanding and could consider buying promising products and companies. It would be easy for Allergan, with a $20 billion market cap, to absorb the much smaller Inspire, with a market cap of $560 million, Cramer noted.
Buying the Durham company would give Allergan new revenue from Inspire's treatments for eye diseases. It's also working on an experimental medicine for cystic fibrosis with the hopes of expanding into the market for pulmonary diseases.
Inspire "gives you two ways to win," Cramer said. Allergan already pays royalties to Inspire for the dry-eye drug Restasis, "so a merger here just makes sense."
While Cramer's rapid-fire rants and speculation don't cause big stock jumps as much as they once did, he remains popular with some investors who follow his recommendations.
Cramer also pointed out that Inspire's CEO Adrian Adams, who joined the company earlier this year, "seems to know how to get deals done."
Adams previously served as CEO of Sepacor, which was bought by Dainippon Sumitorno Pharmaceuticals in 2009. Before that, he was CEO of Kos Pharmaceuticals, which was acquired Abbott Labs in 2006.
Even without the takeover potential, Cramer likes Inspire's stock. The company is testing its pink-eye drug Azasite as a treatment for blepharitis, which causes eyelid inflammation in 34 million Americans a year. That will require Food and Drug Administration approval but it "could be huge," Cramer said.
And its denufosol treatment for cystic fibrosis is in the final stages of clinical testing and could be a "huge catalyst" for the stock if it wins FDA approval. Cramer said the drug could be worth up to $500 million a year.
Inspire's shares are up nearly 50 percent since late August. The stock closed Friday at $6.70, up 18 cents.
Inspire employs about 240 people, including 115 in the Triangle. In January, the company plans to move its headquarters to a new building in the Brier Creek area of Raleigh from its current offices about six miles away in Durham.
This month, Inspire filed plans filed plans with the Securities and Exchange Commission to raise as much as $150 million by selling common stock, debt or other securities on Wall Street.
Inspire disclosed that it could use the money raised for a variety of purposes, including repaying debt, capital expenditures and acquisitions.