3 Speculative Healthcare Companies With High Levels Of Insider Ownership - Part II

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 |  Includes: CO, DXR, TLGT
by: Markus Aarnio

Since my part I article titled "3 Speculative Healthcare Companies With High Levels Of Insider Ownership", which was published on February 19, there have been some noteworthy developments in the companies. On March 4, 2013, AcelRx Pharmaceuticals (NASDAQ:ACRX) announced top-line data results demonstrating that the first of two pivotal placebo-controlled Phase 3 studies for its investigational sublingual Sufentanil NanoTab PCA (patient-controlled analgesia) System met its primary endpoint. Adverse events reported in the study were generally mild or moderate in nature and similar in both placebo and treatment group.

There is one additional pivotal Phase 3 double-blind, placebo-controlled study of the Sufentanil NanoTab PCA System under way. The study began in August 2012, and is designed to enroll approximately 400 patients in a 3:1 randomization following hip or knee replacement surgery at up to 35 sites. The primary endpoint, SPID-48, is identical to the primary endpoint for the abdominal surgery trial. The company expects top-line results for this trial to be available in the second quarter of 2013.

On March 2, 2013, there was a story at MedPage Today about Canada's new medical isotope methods. Faced with an aging reactor and a looming shortage of medical isotopes, Canada is spending about $21 million to help bring alternatives to market and doctors the world over are hoping the efforts are successful. Advanced Medical Isotope Corporation (OTCPK:ADMD) utilizes a proton linear accelerator [PULSAR] to produce its medical isotopes. This is the same technology that the Prairie Isotope Production Enterprise is using, mentioned in the MedPage Today story.

Advanced Medical Isotope Corporation was also mentioned in Seattle Business Magazine in a story dated March 2013 with the title "2013 Leaders in Health Care, Innovation in Medical Devices." Advanced Medical Isotope Corporation received a silver award for its radiogel product. The company anticipates commercialization of this product later this year.

Acasti Pharma (NASDAQ:ACST) is still expecting the second Phase 2 open label clinical study for CaPre to be completed by the end of the first quarter of 2013. In this article, I will have a look at three additional healthcare companies with over 50% insider ownership.

1. China Cord Blood Corporation (NYSE:CO) engages in the provision of umbilical cord blood storage and ancillary services in the Peoples Republic of China.

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Insider Ownership

The company has a 92.55% insider ownership. There have been six insider buy transactions and there have not been any insider sell transactions since November 2009.

Financials

The company reported the third-quarter fiscal 2013, which ended December 31, 2012, financial results on February 26 with the following highlights:

Revenue $24.0 million
Net income $5.4 million
Cash $237.7 million
Debt $128.1 million
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Outlook

The company's fiscal year 2013 guidance was approximately 64,000 new subscribers. After first nine months of fiscal 2013, the company has already attained 56,000 new subscribers.

Competition

Here is a table comparing China Cord Blood Corporation against Medical Laboratories & Research industry.

Company CO Industry Average (Medical Laboratories & Research)
Market Cap: 206.60M 163.11M
Employees: 795 519.00
Qtrly Rev Growth (yoy): 0.57 0.21
Revenue: 78.61M 78.61M
Gross Margin: 0.79 0.52
EBITDA: 36.23M 2.81M
Operating Margin: 0.39 0.03
Net Income: 18.92M N/A
EPS: 0.25 N/A
P/E: 11.32 18.01
PEG (5 yr expected): 0.44 1.24
P/S: 2.63 2.54
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China Cord Blood is growing faster than the industry.

My analysis

The company has a 92.55% insider ownership. There are three analyst buy ratings, zero neutral ratings and zero sell ratings, with an average target price of $5.25. The stock is trading at a P/E ratio of 11.32 and a forward P/E ratio of 14.15. The company has a book value of $2.70 per share. I believe the stock could be a good pick at the book value.

2. Daxor Corporation (NYSEMKT:DXR) is an investment company with medical instrumentation and biotechnology operations. The company began reporting as an investment company as of January 1, 2012.

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Insider Ownership

The company has a 74.45% insider ownership. There have been 18 insider buy transactions and there have not been any insider sell transactions during the past six months.

Financials

The company reported the full year 2012 financial results on March 1 with the following highlights:

Net Assets (increase) $1.2 million
Book value $8.50 per share
Dividend $0.20 per share
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Outlook

Dr. Joseph Feldschuh, the President of Daxor, commented on March 1:

We are somewhat disappointed that our Volumex kit sales did not increase in 2012. However, we are guardedly optimistic about sales for 2013 because of the increase in Blood Volume Analyzers in service and the additional salespeople that we have hired. We realize there are no guarantees, but remain hopeful that members of the medical community will understand the need for measuring patient's blood volume precisely rather than using surrogate tests and clinical guesstimates, which can be grossly inaccurate. The precise knowledge of a patient's blood volume is essential for optimally treating critically ill medical and surgical patients. Our goal is to make blood volume measurement a standard of care for any patient experiencing a blood volume derangement.

Competition

Daxor's competitors include HemaCare (OTCPK:HEMA). Here is a table comparing these two companies.

Company DXR HEMA Industry Average (Medical Instruments & Supplies)
Market Cap: 31.24M 1.55M 174.30M
Employees: N/A 85 215.00
Qtrly Rev Growth (yoy): 0.68 0.01 0.11
Revenue: 1.91M 16.85M 87.82M
Gross Margin: 0.83 0.16 0.53
EBITDA: -988.58K -1.18M 2.00M
Operating Margin: -0.67 -0.10 0.02
Net Income: -7.48M -1.78M N/A
EPS: -1.78 0.12 N/A
P/E: N/A 1.27 20.56
PEG (5 yr expected): N/A N/A 1.28
P/S: 16.34 0.09 2.50
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Daxor is growing faster than the industry.

My analysis

The company has a 74.45% insider ownership. Besides having medical instrumentation and biotechnology operations, the company also has an investment portfolio. At December 31, 2012, investments in electric utilities made up 83.9% of the value of the company's portfolio. The company also engages in the short selling of stock. At December 31, 2012 the net short position was 1.72% of the value of the company's portfolio. The stock is currently trading below the book value of $8.50 per share, which could be a good entry point for the stock.

3. IGI Laboratories (IG) engages in developing, manufacturing, filling, and packaging topical semi-solid and liquid products for cosmetic, cosmeceutical, and pharmaceutical customers in the United States.

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Insider Ownership

The company has a 71.32% insider ownership. There have not been any insider buy or sell transactions during the past six months.

Financials

The company reported the full year 2012 financial results on March 5 with the following highlights:

Revenue $8.6 million
Net loss $3.9 million
Cash $2.5 million
Debt $1.0 million
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Outlook

The company has the following goals for 2013:

  • To at least double 2012 total revenue.
  • To achieve profitability.
  • To file at least six Abbreviated New Drug Applications.

Competition

Here is a table comparing IGI Laboratories to the Biotechnology industry.

Company IG Industry Average (Biotechnology)
Market Cap: 46.40M 107.95M
Employees: 36 48.00
Qtrly Rev Growth (yoy): -0.06 0.18
Revenue: 8.56M 12.91M
Gross Margin: 0.30 0.68
EBITDA: -2.10M -6.09M
Operating Margin: -0.31 -1.06
Net Income: -3.93M N/A
EPS: -0.10 -0.13
P/E: N/A 19.57
PEG (5 yr expected): N/A N/A
P/S: 5.56 9.23
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IGI Laboratories is trading below the industry average P/S ratio.

My analysis

The company has a 71.32% insider ownership. The stock has a $4.88 price target from the Point and Figure chart. The company is aiming to be profitable for 2013, which makes the stock look attractive at the current level.

Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in CO over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.