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The healthcare sector has been the best-performing sector YTD with a gain of 22.9%.

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In this article I will feature two healthcare stocks that have seen intensive insider buying during the last 30 days. Intensive insider buying can be defined by the following three criteria:

  1. The stock is purchased by three or more insiders within one month.
  2. The stock is sold by no insiders in the month of intensive purchasing.
  3. At least two purchasers increase their holdings by more than 10%.

1. Receptos (NASDAQ:RCPT), a clinical-stage biopharmaceutical company, focuses on the discovery, development, and commercialization of various therapeutics for immune disorders.

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Insider buying by insider (last 30 days)

  • Lilly Ventures Fund I purchased 142,857 shares on May 14 pursuant to the initial public offering. Lilly Ventures Fund I currently holds 2,081,210 shares or 11.8% of Receptos.
  • Arch Venture Fund VII purchased 284,485 shares on May 14 pursuant to the initial public offering. Arch Venture Fund VII currently holds 2,101,376 shares or 11.9% of Receptos.
  • Flagship Ventures Fund 2007 purchased 107,142 shares on May 14 pursuant to the initial public offering. Flagship Ventures Fund 2007 currently holds 1,924,339 shares or 10.9% of Receptos.
  • William Rastetter purchased 71,428 shares on May 14 pursuant to the initial public offering. William Rastetter currently controls 332,234 shares or 1.9% of the company. William Rastetter has been a director and has served as Chairman of the Board since May 2009, and from May 2009 to November 2010 he was Receptos' Acting Chief Executive Officer. He is also a Co-Founder of Receptos.
  • Amir Nashat purchased 151,343 shares on May 14 by Polaris Venture Partners VI pursuant to the initial public offering. Polaris Venture Partners VI currently holds 1,186,940 shares or 6.7% of Receptos. Amir Nashat has served as one of Receptos' directors since February 2012. Amir Nashat is also a General Partner at Polaris Venture Partners.
  • Venrock Associates V purchased 265,567 shares on May 14 pursuant to the initial public offering. Venrock Associates V currently holds 2,082,761 shares or 11.8% of Receptos.

Insider buying by calendar month

Here is a table of Receptos' insider trading activity by calendar month.

MonthInsider buying / sharesInsider selling / shares
May 20131,022,8220
April 201300
March 201300
February 201300
January 201300

Receptos had its IPO in May.

Financials

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

Revenue$8.6 million
Net loss$17.7 million
Cash (Pro Forma)$92.1 million
Net tangible book value (Pro Forma)$4.91 per share

Upcoming milestones

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Competition

The biotechnology and pharmaceutical industries are intensely competitive and subject to rapid and significant technological change. In addition, the competition in the RMS market is intense. Receptos has competitors both in the US and internationally, including major multinational pharmaceutical companies, biotechnology companies and universities and other research institutions. For example, the branded RMS treatment market today includes the ABCRs (including Avonex (interferon [IFN] b -1a), Betaseron (IFN b -1b), Copaxone (glatiramer acetate) and Rebif (IFN b -1a)), Tysabri (natalizumab), mitoxantrone, Aubagio, Gilenya and the recently approved Tecfidera. In addition, in 2012 two drug candidates for RMS were submitted for regulatory approval, laquinimod (in the EU) and Lemtrada, and there are a number of active clinical trials ongoing in RMS for additional product candidates.

For Inflammatory Bowel Disease [IBD], which consists of UC and Crohn's Disease [CD], drug sales from three therapeutic categories substantially comprise the market, including intestinal anti-inflammatory drugs (including mesalamine, budesonide, hydrocortisone and others), immunosuppressive agents (including Remicade (infliximab), Tysabri, Cimzia (certolizumab pegol) and Humira (adalimumab)) and antimetabolites (including methotrexate and others), and there are several late-stage pipeline programs in development for IBD indications.

For EoE, there are currently no approved drugs indicated for that disorder, although steroids are prescribed off-label and several anti-inflammatory targeted drugs are in development for EoE.

My analysis

There have been six different insiders buying the shares and there have not been any insiders selling the shares during the last 30 days. The next data releases will be in mid-2014. The stock could be a good long-term play based on the intensive insider buying.

2. Hansen Medical (NASDAQ:HNSN) develops, manufactures, and sells medical robotics designed for the positioning, manipulation, and control of catheters and catheter-based technologies.

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Insider buying by insider (last 30 days)

  • Nadim Yared purchased 3,000 shares on May 13 and currently holds 3,000 shares or less than 0.1% of the company. Nadim Yared serves as a director of the company.
  • Larry Feinberg purchased 37,363 shares on May 13 and currently holds 338,206 shares or 0.5% of the company. Larry Feinberg serves as the managing member of Oracle Associates, which controls more than 10% of Hansen Medical.
  • Kevin Hykes purchased 7,500 shares on May 13 and currently holds 7,500 shares or less than 0.1% of the company. Kevin Hykes serves as a director of the company.
  • Christopher Lowe purchased 12,500 shares on May 13 and currently holds 22,500 shares or less than 0.1% of the company. Christopher Lowe has served as a director of Hansen since September 2006.
  • Stephen Newman purchased 7,000 shares on May 13 and currently holds 7,000 shares or less than 0.1% of the company. Stephen Newman serves as a director of the company.
  • William Rohn purchased 10,000 shares on May 13 and currently holds 10,000 shares or less than 0.1% of the company. William Rohn has served as a member of Board of Directors since March 2012.
  • Michael Eagle purchased 6,250 shares on May 13 and currently holds 6,250 shares or less than 0.1% of the company. Michael Eagle is Chairman of the Board.

Insider buying by calendar month

Here is a table of Hansen Medical's insider trading activity by calendar month.

MonthInsider buying / sharesInsider selling / shares
May 201383,6130
April 201300
March 201365,90050,891
February 2013130,3530
January 2013101,8510

There have been 381,717 shares purchased and 50,891 shares sold this year.

Financials

The company reported the first-quarter financial results on May 8 with the following highlights:

Revenue$2.9 million
Net loss$17.2 million
Cash$31.3 million
Debt$29.5 million

Outlook

Hansen Medical anticipates the commercialization of 14 to 17 total robotic catheter systems in 2013, as well as total estimated procedures of between 3,100 and 3,400 during the year. The company continues to expect improvement in gross margins over 2012 levels based on current volume assumptions of product sales and increased efficiency from cost savings initiatives. Hansen Medical also continues to anticipate that operating expenses will increase moderately, as the company expects to add resources to support the commercial launch of the Magellan System and the continuing adoption of the Sensei System. Hansen Medical will continue to invest in new products in 2013, and the company anticipates the commercial launch of its 6F vascular catheter for use in smaller vessel, peripheral applications by the end of 2013.

Competition

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

CompanyHNSNMAKOISRGSTXS
P/S6.054.798.480.30
P/E--28.46-

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

My analysis

There have been seven different insiders buying the shares and there have not been any insiders selling the shares during the last 30 days. The company has an insider ownership of 0.82% and the company has a book value of $0.37 per share. There are two analyst buy ratings, one neutral rating and one sell rating, with an average target price of $2.13. I have a cautiously bullish bias for the stock currently based on the intensive insider buying.

Source: 2 Healthcare Companies With Recent Intensive Insider Buying