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The healthcare sector has been the top performing group during the last six months, with a 6.8% gain during that period.

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Based on this observation I screened for companies in the healthcare sector where at least one insider made a buy transaction during the month of November. I wrote part I on November 5, part II on November 7, and part III on November 9, of an article series titled "5 Healthcare Companies With Insider Buying During November 2012." Here is a look at five additional stocks that I found.

1. Hansen Medical (HNSN), based in Mountain View, California, is the global leader in intravascular robotics, developing products and technology designed to enable the accurate positioning, manipulation and control of catheters and catheter-based technologies. The company's Magellan Robotic System, NorthStar Robotic Catheter and related accessories, which are intended to facilitate navigation to anatomical targets in the peripheral vasculature and subsequently provide a conduit for manual placement of therapeutic devices, have undergone both CE marking and 510[k] clearance and are commercially available in the European Union and the U.S. In the European Union, the company's Sensei X Robotic Catheter System and Artisan Control Catheter are cleared for use during electrophysiology [EP] procedures, such as guiding catheters in the treatment of atrial fibrillation [AF], and the Lynx Robotic Ablation Catheter is cleared for the treatment of AF. This robotic catheter system is compatible with fluoroscopy, ultrasound, 3D surface map and patient electrocardiogram data. In the U.S. the company's Sensei X Robotic Catheter System and Artisan Control Catheter were cleared by the U.S. Food and Drug Administration for manipulation and control of certain mapping catheters in EP procedures. In the United States, the Sensei System is not approved for use in guiding ablation procedures; this use remains experimental. The U.S. product labeling therefore provides that the safety and effectiveness of the Sensei X System and Artisan Control Catheter for use with cardiac ablation catheters in the treatment of cardiac arrhythmias, including AF, have not been established.

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Insider buys

Larry Feinberg purchased 178,452 shares on November 6-8, 100,843 shares on October 26, 170,000 shares on October 23-25 and 155,155 shares on October 16-17. Larry Feinberg controls 7,637,168 shares of the company. The company has 61,606,759 shares outstanding which makes Larry Feinberg a 12.4% owner of the company.

Financials

The company reported the third-quarter financial results on November 7, with the following highlights:

Revenue$5.1 million
Net loss$8.4 million
Cash$21.6 million

Hansen Medical announced on October 31 that it has signed an updated license agreement with Intuitive Surgical (ISRG).

Under the terms of the updated agreement, Intuitive Surgical's existing co-exclusive rights to Hansen Medical's patent portfolio to certain non-vascular approaches have been extended to include patents filed by Hansen Medical subsequent to the original 2005 agreement up to and including the period three years subsequent to this update. Hansen Medical retains the right to use its intellectual property for all clinical applications. This agreement is an update to the co-exclusive license agreement signed by the companies in 2005.

Intuitive Surgical will pay Hansen Medical a $20 million up front license fee and will purchase 5,291,005 shares of Hansen Medical common stock for $10 million through a private placement transaction. The shares were priced at $1.89, which represents a 5 percent premium to the trailing 10-day average of Hansen Medical's closing bid price on the Nasdaq Capital Market on October 26, 2012. The shares are subject to an 18-month lock-up period.

Under terms of the agreement the $10 million private placement closed on Monday October 29, 2012, and the $20 million upfront license fee was paid on Friday, November 2, 2012.

Competition

I chose three other medical robotic companies Mako Surgical (MAKO), Intuitive Surgical and Stereotaxis (STXS). Here is a table comparing these companies:

CompanyHNSNMAKOISRGSTXS
P/S6.946.3710.190.30
P/E--34.26-

Only Intuitive Surgical is profitable out of these four companies. Stereotaxis has the lowest P/S multiple out of these four companies.

My analysis

The stock is currently trading below its 200 day moving average. There have been four insider buy transactions and 10 insider sell transactions this year. There are three analyst buy ratings, 0 neutral ratings and 0 sell ratings for the stock currently. I have a neutral bias for the stock.

2. Spectranetics (SPNC) develops, manufactures, markets and distributes single-use medical devices used in minimally invasive procedures within the cardiovascular system. The company's products are sold in more than 40 countries and are used to treat arterial blockages in the heart and legs, as well as the removal of pacemaker and defibrillator leads.

The company's Vascular Intervention [VI] products include a range of peripheral and cardiac laser catheters for ablation of occluded arteries above and below the knee and within coronary arteries. The company also markets aspiration and thrombectomy catheters for the removal of thrombus and support catheters to facilitate crossing of coronary and peripheral arterial blockages.

The Lead Management [LM] product line includes excimer laser sheaths and cardiac lead management accessories for the removal of pacemaker and defibrillator cardiac leads.

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Insider buys

  • Scott Drake purchased 7,000 shares on November 2 and 13,000 shares on March 5-7. Scott Drake currently holds 27,365 shares of the company. Scott Drake joined Spectranetics as the Chief Executive Officer in August 2011.
  • John Fletcher purchased 1,000 shares on November 2 and 6,000 shares on May 25. John Fletcher currently holds 79,562 shares of the company. John Fletcher is the Chairman of the Board.
  • Daniel Pelak purchased 10,000 shares on March 12-13 and currently holds 26,193 shares of the company. Daniel Pelak serves as a director of the company.
  • Renée Boehme purchased 10,000 shares on March 9 and currently holds 25,842 shares of the company. Renée Boehme is the Vice President and General Manager for the Lead Management division.

Financials

The company reported the third-quarter financial results on October 30 with the following highlights:

Revenue$35.2 million
Net income$0.9 million
Cash$31.6 million

Outlook

Management projects that 2012 revenue will be in the range of $138.5 - $139.5 million, an increase of 9% - 10% from 2011, or 10% - 11% on a constant currency basis. This compares to the previous outlook for revenue in the range of $137.0 - $139.5 million.

Net income is projected to be in the range of $2.0 - $3.0 million, or $0.06 - $0.08 per diluted share. This compares to the previous outlook for net income in the range of $1.5 - $3.0 million, or $0.04 - $0.08 per diluted share. Management expects to continue making investments targeted at future revenue growth.

My analysis

The stock has a $18.75 price target from the Point and Figure chart. There have been six insider buy transactions and there have not been any insider sell transactions this year. There are five analyst buy ratings, one neutral rating and 0 sell ratings with a average target price of $14.50. The stock is trading at a P/E ratio of 301.40 and a forward P/E ratio of 115.92. I have a neutral bias for the stock currently.

3. Synta Pharmaceuticals (SNTA) is a biopharmaceutical company focused on discovering, developing, and commercializing small molecule drugs to extend and enhance the lives of patients with severe medical conditions, including cancer and chronic inflammatory diseases. Synta has a unique chemical compound library, an integrated discovery engine, and a diverse pipeline of clinical- and preclinical-stage drug candidates with distinct mechanisms of action and novel chemical structures. All Synta drug candidates were invented by Synta scientists using the company's compound library and discovery capabilities.

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Insider buys

  • Safi Bahcall purchased 10,000 shares on November 12 and 10,000 shares on June 29. Safi Bahcall currently controls 2,388,135 shares of the company. Dr. Bahcall co-founded Synta and has been Chief Executive Officer since July 2001. Dr. Bahcall has led Synta from inception through multiple acquisitions, financings, an initial public offering, and the establishment of integrated, multi-product drug discovery and development organization.
  • Bruce Kovner purchased 910,000 shares on June 29 and 1,136,363 shares on January 6. Bruce Kovner currently controls 8,481,852 shares of the company. Synta has 61,900,896 shares outstanding which makes Bruce Kovner a 13.7% owner of Synta. Bruce Kovner also serves as a director of the company.
  • Keith Gollust purchased 150,000 shares on June 29 by Wyandanch Partners. Keith Gollust currently controls 2,800,388 shares of Synta. Keith Gollust serves as a director of the company.
  • Vojo Vukovic purchased 3,000 shares on June 29 and currently holds 25,249 shares of the company. Dr. Vukovic joined Synta as Vice President, Clinical Research in January 2009. Dr. Vukovic has over 17 years experience in oncology drug development.

Financials

The company reported the third-quarter financial results on November 6 with the following highlights:

Revenue$0
Net loss$15.0 million
Cash$55.1 million

Outlook

The company expects to end 2012 with $38-$40 million in cash, cash equivalents and marketable securities. Based on the company's current operating levels Synta expects these cash resources will be sufficient to fund operations into the second half of 2013. These estimates assume no additional funding from new partnership agreements or equity financing events, and that the timing and nature of activities contemplated for 2013 will be conducted subject to the availability of sufficient financial resources.

Upcoming milestones

GALAXY Phase 2b

  • The 240 adenocarcinoma patient enrollment target for the Phase 2b portion of the GALAXY trial was achieved in October. Per protocol, additional adenocarcinoma patients with elevated baseline levels of lactate dehydrogenase [LDH] or with tumors exhibiting KRAS mutations, which are pre-specified patient subpopulations with especially high medical need, may continue to be enrolled until a specified maximum number of patients with these characteristics has been achieved. The company expects to enroll up to 60 additional patients in these subpopulations.
  • Based on our current projections, Synta anticipates final progression free survival [PFS] and updated overall survival data from the Phase 2b portion of GALAXY in the first half of 2013, and final overall survival data in the second half of 2013.

GALAXY Phase 3

  • Synta recently completed an End-of-Phase 2 [EOP2] meeting with the Food and Drug Administration [FDA] to review plans for the Phase 3 portion of the GALAXY program. Synta has incorporated comments from the EOP2 meeting into the Phase 3 protocol and is currently initiating this trial. Enrollment is expected to begin early next year.
  • Two event-driven interim analyses for the Phase 3 trial have been specified. Based on current projections and statistical assumptions, the company expects these analyses, together with the final analysis, to occur in 2014. Additional elements of the Phase 3 trial design will be announced following the start of enrollment.

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My analysis

The stock has a $18.25 price target from the Point and Figure chart. There have been six insider buy transactions and five insider sell transactions this year. There are six analyst buy ratings, one neutral rating and 0 sell ratings with a average target price of $10.80. I have a bullish bias for the stock currently.

4. Medical Action (MDCI) is a diversified manufacturer and distributor of disposable medical devices and a leader in many of the markets where it competes. Its products are marketed primarily to acute care facilities in domestic and certain international markets. The company has expanded its target market to include physician, dental and veterinary offices, out-patient surgery centers, long-term care facilities and laboratories. Medical Action's products are marketed nationally by its direct sales personnel and extensive network of healthcare distributors. The company has preferred vendor agreements with national and regional distributors, as well as sole and multi-source agreements with group purchasing organizations.

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Insider buys

  • John Sheffield purchased 5,000 shares on November 7. John Sheffield is Executive Vice President, Chief Financial Officer and Secretary of the company.
  • Kenneth Davidson purchased 20,000 shares on August 10-13. Kenneth Davidson serves as a director of the company.

Financials

The company reported the second quarter fiscal year 2013, which ended September 30, financial results on October 31 with the following highlights:

Revenue$112.1 million
Net income$0.1 million
Cash$0.5 million

Competition

The company's two direct competitors are Cardinal Health (CAH) and Becton, Dickinson and Company (BDX). Here is a table comparing these companies.

CompanyMDCICAHBDX
Market Cap$45.3M$13.6B$15B
Revenue$443.1M$106.7B$7.7B
P/S0.100.131.94
P/E-12.5814.30

Medical Action is the cheapest with the P/S ratio but is currently unprofitable for the first six months of fiscal 2013.

My analysis

The stock is currently trading at its 52 -week lows. There have been two insider buy transactions and there have not been any insider sell transactions this year. The stock is trading at a forward P/E ratio of 9.20. The company has a book value of $9.08 per share. I have a neutral bias for the stock currently.

5. MELA Sciences (MELA) is a medical device company focused on the design, development and commercialization of non-invasive tools to provide additional information to dermatologists during melanoma skin examinations. The company's flagship product, MelaFind, is intended to be used when a trained dermatologist chooses to obtain additional information to help decide whether to biopsy certain indeterminate pigmented skin lesions. The FDA has approved MelaFind for use in the U.S. It has received the CE Mark for use in the European Union.

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Insider buys

  • Joseph Gulfo purchased 10,000 shares on November 12 and 10,000 shares on May 8. Joseph Gulfo currently holds 163,311 shares of the company. Joseph Gulfo has served as the company's President and Chief Executive Officer and a member of Board of Directors since January 2004 and as Chairman since December 2011.
  • John Goddard purchased 10,000 shares on May 17. John Goddard was appointed as a member of the company's Board of Directors in December 2011.

Financials

The company reported the third-quarter financial results on November 7 with the following highlights:

Revenue$0.1 million
Net loss$5.4 million
Cash$13.3 million

Outlook

The company believes it remains on track to achieve its stated goals in the U.S. and Germany for the first 12 months of commercialization. That is by March 31, 2013, having signed user agreements in place for 200 systems in the U.S. and 75 in Germany. Based on experience in the third quarter, the company expects that over 90% of the systems will be installed and revenue recognized by March 31, 2013.

As the company looks to 2013, it expects to continue its trajectory of MelaFind placements and expects to place 50% more systems in 2013 versus what it placed in 2012.

My analysis

The stock is currently trading at its 52 -week lows. There have been three insider buy transactions and there have not been any insider sell transactions this year. There are three analyst buy ratings, 0 neutral ratings and one sell rating with a average target price of $11.00. I have a neutral bias for the stock currently.

Source: 5 Healthcare Companies With Significant Recent Insider Buying (Part IV)