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The healthcare sector has been the best-performing sector YTD with a gain of 20.9%.

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In this article, I will feature three healthcare companies that have seen intensive insider buying during the last 35 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 increased their holdings by more than 10%.

1. Synta Pharmaceuticals Corp. (NASDAQ:SNTA), a biopharmaceutical company, focuses on the discovery, development, and commercialization of small molecule drugs for treating severe medical conditions, including cancer and chronic inflammatory diseases.

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Insider buying by insider (last 30 days)

  • Safi Bahcall purchased 10,000 shares on June 6 and currently holds 1,993,135 shares or 2.9% of the company. Dr. Bahcall co-founded Synta and has been Chief Executive Officer since July 2001.
  • Bruce Kovner purchased 2,000,000 shares on June 4-6 and currently controls 13,280,133 shares or 19.2% of the company. Bruce Kovner has been a member of the board of directors since July 2002.
  • Vojo Vukovic purchased 10,000 shares on June 5 and currently holds 35,249 shares or less than 0.1% of the company. Dr. Vukovic is Senior Vice President, Chief Medical Officer.
  • Robert Wilson purchased 10,000 shares on June 4 and currently holds 699,679 shares or 1.0% of the company. Robert Wilson has been a member of the board of directors since June 2003.

Insider buying by calendar month

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

MonthInsider buying / sharesInsider selling / shares
June 20132,030,0000
May 201300
April 201300
March 201300
February 201300
January 201300

The month of June has seen all of the insider buying this year.

Financials

The company reported the first-quarter financial results on April 30 with the following highlights:

Revenue$0
Net loss$20.7 million
Cash$90.4 million
Debt$23.6 million

Outlook

The company expects its cash resources of approximately $90.4 million will be sufficient to fund operations into the second quarter of 2014. This estimate assumes no additional funding from new partnership agreements or equity financing events, and that the timing and nature of certain activities contemplated for 2013 and 2014 will be conducted subject to the availability of sufficient financial resources.

Upcoming milestones

  • The company expects final progression-free survival and updated overall survival results from GALAXY-1 will be presented in the second half of 2013.
  • The first patients have been enrolled in the confirmatory GALAXY-2 Phase 3 trial in non-small cell lung adenocarcinoma, evaluating the same treatments and regimens as in the GALAXY-1 trial. Based on current projections, the company expects to conduct interim and final analyses for the overall survival primary endpoint of the GALAXY-2 trial in 2014.
  • Data collection continues for the CHIARA and ENCHANT trials, evaluating ganetespib monotherapy in ALK+ NSCLC and metastatic breast cancer, respectively. Results from these trials are expected to be presented in the second half of 2013.

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Competition

Ganetespib. If approved, ganetespib may compete against the currently approved therapies for the treatment of various cancer types and other cancer treatments currently under development. In particular, ganetespib may compete with other agents under development that inhibit Hsp90, including retaspimycin hydrochloride (IPI-504), being developed by Infinity Pharmaceuticals (NASDAQ:INFI), AUY922, KW-2478, being developed by Kyowa Hakko Kirin (OTC:KYKOF), AT13387, being developed by Astex Pharmaceuticals (NASDAQ:ASTX), Debio0932, being developed by Curis (NASDAQ:CRIS) / Debiopharma, DS-2248, being developed by Daiichi Sankyo (OTCPK:DSKYF), SNX-5422, being developed by Esanex, and PU-H71, being developed by Samus Therapeutics, among others.

Elesclomol. If approved, elesclomol may compete with the currently approved therapies for the treatment of cancers, and other cancer treatments currently under development. In particular, elesclomol may compete with other agents including but not limited to: a) agents whose mechanisms may involve the induction of oxidative stress including arsenic trioxide and hydroxyurea, among others; b) other mitochondria targeting agents and approaches for the selective delivery of anticancer agents to tumor cell mitochondria; and c) other modulators of cancer metabolism.

STA-9584. If approved, STA-9584 may compete with the currently approved therapies for the treatment of cancers, and other cancer treatments currently under development, including other vascular disrupting agents such as Zybrestat and OXi4503, being developed by OXiGENE (NASDAQ:OXGN); AVE8062 (ombrabulin), being developed by Sanofi (NYSE:SNY), BNC105, being developed by Bionomics (OTC:BMICF), EPC-2407 (crolibulin), being developed by EpiCept (OTC:EPCT), and NPI-2358 (plinabulin) being developed by Nereus Pharmaceuticals.

CRACM Ion Channel Inhibitors. If approved, CRACM inhibitors may compete with the currently approved therapies for the treatment of inflammatory diseases, and other anti-inflammatory treatments currently under development, including other CRACM inhibitors, oral inhibitors of other targets, and biologics approaches.

IL-12/23 Inhibitors. If approved, IL-12/23 inhibitors may compete against the currently approved therapies for the treatment of chronic inflammatory diseases, including:

  • Stelara, a fully human monoclonal antibody targeting the p40 subunit of IL-12 and IL-23, marketed by Johnson & Johnson (NYSE:JNJ) and approved in the U.S. and Europe for the treatment of plaque psoriasis and in Japan for the treatment of plaque psoriasis and psoriatic arthritis. IL-12/23 inhibitors may also compete with briakinumab (ABT-874), a fully human anti-IL-12/23 monoclonal antibody being developed by Abbott Laboratories (NYSE:ABT).
  • large-molecule, injectable TNF-antagonists, including, among others: Remicade, marketed by Johnson & Johnson; Enbrel, marketed by Amgen (NASDAQ:AMGN) and Wyeth Pharmaceuticals; and Humira, marketed by Abbott Laboratories; and
  • broadly immunosuppressive small molecule agents including corticosteroids and azathioprine.

My analysis

There have been four 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 15.30%. There are four analyst buy ratings, four neutral ratings and zero sell ratings with an average target price of $15.40. On June 3 Synta announced positive overall survival results from GALAXY-1 Phase 2b/3 trial of Ganetespib in Second-Line Non-Small Cell Lung Cancer [NSCLC]. The stock plunged after the results and that is when the insiders started buying the shares. I have a cautiously bullish bias for the stock currently based on the intensive insider buying.

2. Solta Medical (NASDAQ:SLTM) designs, develops, manufactures, and markets energy-based medical device systems for aesthetic applications primarily in North America, the Asia Pacific, Europe, and the Middle East.

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Insider buying by insider (last 35 days)

  • Linda Graebner purchased 15,000 shares on May 10-30 and currently holds 37,909 shares or less than 0.1% of the company. Linda Graebner serves as a director of the company.
  • Cathy McCarthy purchased 10,000 shares on May 17 and currently holds 77,975 shares or 0.1% of the company. Cathy McCarthy serves as a director of the company.
  • Mark Sieczkarek purchased 150,000 shares on May 6 and currently holds 192,975 shares or 0.2% of the company. Mark Sieczkarek serves as a director of the company.

Insider buying by calendar month

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

MonthInsider buying / sharesInsider selling / shares
May 2013175,0000
April 201300
March 201300
February 2013050,000
January 201300

The month of May has seen all of the insider buying this year.

Financials

The company reported the first-quarter financial results on May 1 with the following highlights:

Revenue$34.5 million
Net loss$2.6 million
Cash$27.0 million
Debt$25.0 million

Outlook

Based on the first quarter results, the company updated its financial outlook for 2013 as follows:

  • The company revised its revenue outlook for full year 2013 to approximately $180 million, which would represent year-over-year revenue growth of approximately $36 million, or 25%, compared to full year 2012 revenue of $144.5 million. The company's previous revenue outlook for 2013 was a range of $182 million to $191 million.
  • The company reiterated its outlook for non-GAAP gross margin. Non-GAAP gross margin is expected to be in the range of 65% to 68% for the full year 2013. Non-GAAP gross margin for the first quarter 2013 was 67%.
  • The company reiterated its outlook for non-GAAP operating income. Non-GAAP operating income is expected to be in the range of $13 million to $16 million for the full year 2013. Non-GAAP operating income for the first six months of 2013 is expected to be in the range $3 million to $4 million. Non-GAAP operating income for the first quarter was $59,000.

Competition

Solta Medical's competitors include Palomar Medical Technologies (NASDAQ:PMTI) and Syneron Medical (NASDAQ:ELOS). Here is a table comparing these companies.

CompanySLTMPMTIELOSIndustry Average (Medical Appliances & Equipment)
Market Cap:171.53M267.69M312.03M1.52B
Employees:371250651810.00
Qtrly Rev Growth (yoy):0.060.22-0.020.18
Revenue:146.61M84.80M262.17M1.47B
Gross Margin:0.620.530.520.62
EBITDA:7.79M-1.92M5.89M280.86M
Operating Margin:-0.02-0.04-0.020.07
Net Income:-31.80M-4.99M-1.17MN/A
EPS:-0.47-0.27-0.040.82
P/E:N/AN/AN/A20.11
PEG (5 yr expected):8.682.200.601.36
P/S:1.183.171.193.83

Solta Medical's P/S ratio is below the industry average.

My analysis

There have been three different insiders buying the shares and there have not been any insiders selling the shares during the last 35 days. The company has an insider ownership of 3.81%. There are seven analyst buy ratings, zero neutral ratings and zero sell ratings with an average target price of $3.25. The stock is trading at a forward P/E ratio of 24.00 and the company has a book value of $1.62 per share. The stock could be a good pick at the book value.

3. Insys Therapeutics (NASDAQ:INSY), a development stage company, develops pharmaceutical products that target the unmet needs of cancer patients, with a focus on cancer-supportive care.

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Insider buying by insider (last 35 days)

  • Michael Babich purchased 1,250 shares on June 4 and currently holds 77,557 shares or 0.4% of the company. Michael Babich has served as President since November 2010 and was appointed as Chief Executive Officer in March 2011.
  • Pierre Lapalme purchased 3,000 shares on May 24 and currently controls 3,000 shares or less than 0.1% of the company. Pierre Lapalme has served on the board of directors since March 2011.
  • Patrick Fourteau purchased 60,000 shares on May 7-14 and currently controls 60,000 shares or 0.3% of the company. Patrick Fourteau has served on the board of directors since March 2011.

Insider buying by calendar month

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

MonthInsider buying / sharesInsider selling / shares
June 20131,2500
May 201363,0000
April 201300
March 201300
February 201300
January 201300

The company had its IPO in May.

Financials

The company reported the first-quarter financial results on June 3 with the following highlights:

Revenue$11.1 million
Net income$0.1 million
Cash$0.7 million
Debt$70.4 million

Subsequent to the end of the first quarter, Insys raised $31.0 million after underwriting discounts, commissions and estimated expenses in its initial public offering.

Competition

Subsys competes against numerous branded and generic products already being marketed and potentially those which are or will be in development. Many of these competitive products are offered in the United States by large, well-capitalized companies. Subsys is the fourth new branded transmucosal immediate-release fentanyl [TIRF] product in the last four years. In the breakthrough cancer pain [BTCP] market, physicians often treat BTCP with a variety of short-acting opioid medications, including morphine, morphine and codeine derivatives and fentanyl. Some currently marketed products against which Insys directly competes include Teva Pharmaceutical Industries Ltd.'s (NYSE:TEVA) Fentora and Actiq, Orexo AB's Abstral, Archimedes Pharma Ltd.'s Lazanda and BioDelivery Sciences International, Inc.'s (NASDAQ:BDSI) Onsolis. Some generic fentanyl products against which Subsys competes are marketed by Mallinckrodt, Inc., Par Pharmaceutical Companies, Inc. (NYSE:PRX) and Actavis, Inc. (NYSE:ACT). In addition, Insys is aware of numerous companies developing other treatments and technologies for rapid delivery of opioids to treat BTCP, including transmucosal, transdermal, nasal spray, and inhaled sublingual delivery systems. If these treatments and technologies are successfully developed and approved, they could represent significant additional competition to Subsys.

My analysis

The stock started trading on May 2 after the initial public offering. There have been three different insiders buying the shares and there have not been any insiders selling the shares since the IPO. The company has an insider ownership of 0.70%. The stock is trading at a forward P/E ratio of 25.37 and the company has a book value of -$75.55 per share. I have a cautiously bullish bias for the stock currently based on the intensive insider buying.

Source: 3 Healthcare Companies With Recent Intensive Insider Buying